JALDHI OVERSEAS PTE. LTD.,SINGAPORE V. ACIT/DCIT, INTERNATIONAL TAXATION-1(2), CHENNAI

ITA 366/CHNY/2025

AI Insights

Jaldhi Overseas Pte. Ltd., a Singaporean company, appealed against the assessment order by the Assistant Commissioner of Income Tax, which treated their shipping income as taxable in India under section 44B of the Income Tax Act, 1961, and denied the benefits of the India-Singapore DTAA. The Tribunal examined the applicability of Article 8 of the DTAA, which grants exclusive taxing rights to the country of residence (Singapore, in this case) for shipping income. The Tribunal referenced several precedents and the specific provisions of the DTAA, concluding that the income should only be taxed in Singapore and not in India, thus rejecting the application of the Limitation of Benefit clause under Article 24 of the DTAA.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716734 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2022-2023
• Appeal Filed On: 04-02-2025
• Other Referred Cases: M/s. Bengal Tiger Line Pte. Ltd. V. DCIT, Marina Express Lines Pte. Ltd. V. DCIT, M.T. Maersk Mikage, APL Co. Pte. Ltd. V. DCIT, D.B. International (Asia) Ltd. V. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: E.PAVUNA SUNDARI
• Assessee Lawyers: ASHIK SHAH
• Keywords: Question of law; Rule of consistency; Principle of natural justice; Competent authority; Double taxation relief; Benefit of exemption; Non-deduction of tax
• Section: 143(3)

Judgement Text

" आयकर अपीलीय अिधकरण, ‘ए’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL , ‘A’ BENCH, CHENNAI ŵी मनु क ुमार िगįर ,Ɋाियक सद˟ एवं ŵी अिमताभ शुƑा, लेखा सद˟ क े समƗ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.366/Chny/2025 िनधाŊरण वषŊ/Assessment Year: 2022-23 Jaldhi Overseas Pte. Ltd., #25-60, Tong Eng Building, 101, Cecil Street, Singapore 069533. C/o. Bothra Shipping Services Private Limited, Vasundhara, 9th Floor, Unit-A, 2/7 Sarat Bose Road, L.R. Sarani S.O., Kalkata, West Bengal 700 020. v. The Assistant Commissioner of Income Tax, International Taxation, DCIT, Intl. Tax 1(2), Chennai. [PAN: AADCJ0165F] (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से/ Appellant by : Shri Ashik Shah, C.A. ŮȑथŎ की ओर से /Respondent by : Ms. E. Pavuna Sundari, CIT सुनवाईकीतारीख/Date of Hearing : 13.08.2025 घोषणाकीतारीख /Date of Pronouncement : 19.08.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: This appeal by the assessee is arising out of the order of the Deputy Commissioner of Income Tax, International Taxation 1(2), Chennai passed u/s.143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (in short ‘’the Act’) vide order dated 16.12.2024 for assessment year 2022-2023. 2. Facts of the case are that the assessee, Jaldhi Overseas Pte. Ltd. is a foreign company incorporated on November 18, 2004 and domiciled with its registered office and place of business at 101, Cecil Street, #25-06, Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 2 :: Tong Eng Building, Singapore 069533. During the year under consideration and in all the previous years since its incorporation, the assessee’s place of effective management was in Singapore. Since, the assessee is a tax resident of Singapore as per Article 1 read with Article 4 of the Double Tax Avoidance Agreement entered between India and Singapore ('India- Singapore DTAA'), it is eligible to claim benefits under the India-Singapore DTAA. Accordingly, for the AY 2022-23, the assessee filed its return of income ('ROI) declaring a total income of NIL, as per the India Singapore DTAA. The return filed by the assessee was selected for scrutiny proceedings under section 143(2) of the Act. The Assessing Officer proposed draft assessment order under section 144C(1) of the Act dated 19.02.2024 for making an addition of ₹.86,66,228/- treating the shipping income as taxable in India under section 44B of the Act, and by not providing the benefit of India Singapore DTAA by invoking Limitation of Benefit clause. The assessee filed objections before the Dispute Resolution Panel (‘DRP’), which was disposed vide directions dated 29.11.2024 upholding the order of the Assessing Officer. Subsequently, the final assessment order dated 16.12.2024 was completed under section 143(3) r.w.s. 144C(13) of the Act against which the assessee is in appeal before the Tribunal by raising following grounds: Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 3 :: 1. The Ld. AO and Ld. DRP (hereinafter collectively referred as 'lower authorities') have erred in finalizing an order of assessment which suffers from legal defects such as being passed in violation of principles of natural justice, contrary to the provisions of the Act, not backed by valid sanctions/approvals, barred by limitation, is devoid of merits and are contrary to facts on record and applicable law and has been completed without adequate inquiries and as such is liable to be quashed. 2. On the facts and in the circumstances of the case and in law, the final assessment order dated December 16, 2024 passed under section 143(3) read with section 144C(13) having been passed beyond the limitation provided in section 153, is barred by limitation and therefore, is void-ab-initio, bad in law and is accordingly liable to be quashed. 3. The order of the lower authorities is erroneous in so far as assessing the international shipping income from freight operations as an income taxable in India under section 44B of the Act. 4. The lower authorities failed to appreciate that as per Article 8 of the India Singapore DTAA, any shipping income of a non-resident is taxable only in the country of residence, ie., Singapore and as such cannot be assessed to tax in India. 5. The lower authorities failed to appreciate that the provisions of Article 24 of the India - Singapore DTAA are not applicable in the facts of the present case. 6. The lower authorities erred in disregarding the letter certificate issued by the Singapore Tax Authorities [ie., Inland Revenue Authority of Singapore (\"IRAS\")) which clearly states that international shipping income is taxable in Singapore only on accrual basis and not on receipt basis and therefore the provisions of Article 24 of the India - Singapore DTAA would have no application. 7. Without prejudice to the above, the levy of interest and penalty under the Act shall stand deleted/reduced on giving effect to the above-mentioned grounds. 8. That on the facts and circumstances of the case and in law, the Ld. AO erred in initiating penalty proceedings under section 270A of the Act for under reporting and misreporting of income. 3. Ground Nos. 1 & 2 are not pressed as per written submissions filed by the assessee and thus, dismissed as not pressed. Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 4 :: 4. In Grounds 3 to 6, the assessee challenged the taxability of international shipping income from freight operation as an income taxable in India under section 44B of the Act. 5. The assessee company plies its ships globally, including through Indian ports and earns freight and other charges that arise from this activity. It also provides customized end to end logistics services. The revenue from shipping business of the company from its customers in India generally promises of (i) freight for transportation of goods; and (ii) demurrage charges for delay in loading/unloading of the goods as per the agree time slot. The assessee claimed the income earned as exempt by virtue of Article 8 of the India-Singapore Double Taxation Avoidance Agreement. The assessee filed detailed written submissions before the TPO and placed reliance on the decision of this Tribunal in the case of M/s. Bengal Tiger Line Pte. Ltd. V. DCIT in IT(TP)A No. 11/Chny/2020 dated 06.11.2020. After considering the same and by observing that the Revenue has preferred an appeal before the Hon’ble High Court against the decision of the Tribunal in the case M/s. Bengal Tiger Line Pte. Ltd. V. DCIT (supra), the Assessing Officer computed the shipping income by treating it as Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 5 :: taxable in India under section 44B of the Act proposed addition of ₹.86,66,228/- in the draft assessment order. 6. The assessee preferred its objections before the DRP. After considering the objections and written submissions filed by the assessee, the DRP confirmed the addition proposed by the Assessing Officer in the draft assessment order and rejected the grounds raised by the assessee. As per the directions of the DRP under section 144C(5) of the Act dated 29.11.2024, the Assessing Officer concluded that the shipping income earned by the assessee is not eligible for the benefit of India-Singapore DTAA on account of Limitation of Benefit clause and computed the income of the assessee as per section 44B of the Act at ₹.86,66,228/- and completed the assessment order under section 143(3) r.w.s. 144C(13) of the Act dated 16.12.2024. On being aggrieved, the assessee is in appeal before the Tribunal by raising the above grounds. 7. Before us, the ld. Counsel for the assessee has submitted the following written submissions: A. Article 8(1) of the India - Singapore DTAA provides exclusive right of taxation of income to the residence country  As per the provisions of Article 8 of the India Singapore DTAA, shipping profits from international shipping business are taxed in the state of residence i.e., Singapore. In this regard, it is evident to note that the taxing rights are given exclusively to the state of residence. Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 6 ::  The Appellant further submits that the exclusive right of taxation in one contracting state is not the same as a specific exemption being available in the other contracting state. There is a fundamental conceptual difference between right of taxation and specific exemption. In this connection, the Appellant draws reference to Article 20, 21, and 22 of the India-Singapore DTAA, wherein the word 'exempt' has been used.  Thus, it is evident that Article 8(1) is not an 'exemption' provision, but an enabling provision which provides an exclusive right of taxation of income to the residence country, which in the Appellant's case is Singapore, since Appellant is a tax resident of Singapore (Refer Tax Residency Certificate enclosed in page 14 of paper book).  In this connection, the Appellant relies upon the ruling of the Hon'ble Jurisdictional High Court in the case of Anand Transport (P.) Ltd. (370 ITR 524) (refer Page 157 of case law compilation) wherein it was held that the income of the Appellant from shipping operations in India are not taxable by virtue of Article 8 of the India- Singapore DTAA.  Further, it has also been held by the Learned Commissioner of Income Tax (Appeals) in the case of Bothra Shipping Services Private Limited (refer Page 151 of paper book) that the freight income is not taxable in India in terms of Article 8 of the India- Singapore DTAA.  Based on the above, it is humbly submitted that the income earned by the Appellant from shipping operations in India is not taxable by virtue of Article 8 of the India- Singapore DTAA. B. Non-applicability of Article 24 (Limitation of Relief clause) of the India - Singapore DTAA to freight income earned by the Appellant  Article 24 of India - Singapore DTAA contemplates twin conditions for its applicability, which are as follows: - income is sourced in a Contracting State (in the Appellant's case, in India) and such income should be exempt or taxed at a reduced rate in that Contracting State (India) - under the laws in force of the Other Contracting State (i.e., Singapore), the said income is subject to tax by reference thereof to the amount remitted to or received in the other contracting state, i.e., in Singapore.  In this connection, the Appellant submits that the income from shipping operations is taxable on an accrual basis in Singapore and the taxation rights of the shipping income vests with Singapore as per Article 8 of the India-Singapore DTAA. The Appellant, in this connection also relies upon the letter issued by the Inland Revenue Authority of Singapore (IRAS) clarifying that the freight income would be taxable on accrual basis in Singapore (refer Page 187 of the Case law compilation). Therefore, Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 7 :: the income cannot be stated as exempt or taxed at a reduced rate in India, thereby, failing the 1st condition.  Further, in the Appellant's case, the income from shipping operations is not taxable on a remittance basis under the laws of Singapore but is taxed in-principle on accrual basis under the income tax laws of Singapore. In the present case, it is an undisputed position that the Appellant is carrying on their business in Singapore and the entire freight income earned by the Company is treated as sourced in Singapore and taxable on accrual basis.  Thus, since the shipping income is taxed in Singapore on an accrual basis and not on receipt basis, the second condition contemplated in Article 24 is not applicable in the Appellant's case.  Accordingly, since both the conditions of Article 24 are not satisfied in the Appellant's case, the provisions of Article 24 of the India-Singapore DTAA are not applicable.  The above aspects have been considered and dealt with in detail by this Hon'ble Jurisdictional Tribunal in the following cases, wherein it has been held that shipping income earned by a resident of Singapore is not taxable in India by virtue of Article 8 of India-Singapore DTAA and has also concluded that Article 24 is not applicable since the twin conditions are not satisfied: - Bengal Tiger Line Pte. Ltd. (150 taxmann.com 199) - Page 12 of Case law compilation - Bengal Tiger Line Pte. Ltd. (188 ITD 397) - Page 54 of Case law compilation - Pacific International Lines Pvt. Ltd. (2024 (6) TMI 873) - Page 72 of Case law compilation - Mariana Express Lines Pte. Ltd. (ITA No. 557/CHNY/2025) Page 188 of Case law compilation.  It may also be pertinent to note that Hon'ble Jurisdictional High Court has not admitted any question of law on this issue in the appeal filed by the Revenue against the decision of this Hon'ble Jurisdictional Tribunal in the case of Bengal Tiger Pte. Ltd. (150 taxmann.com 199), and hence, this issue has reached finality (Refer page 10 of Case law compilation).  The above issue has also been dealt with by High Courts and Coordinate Benches of this Hon'ble Tribunal in the following cases: Name of the case Forum Citation Page No. M.T. Maersk Mikage Gujarat HC 390 ITR 427 1 APL Co. Pte. Ltd. Bombay HC 156 taxmann.com 530 101 APL Co. Pte. Ltd. Mumbai ITAT 185 TTJ 305 106 Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 8 :: Alabra Shipping Pte Ltd. Rajkot ITAT 175 TTJ 359 123 Maersk Tankers Singapore Pte. Ltd. Rajkot ITAT 199 ITD 284 127 Far Shipping (Singapore) Pte. Ltd. Hyderabad ITAT 166 ITD 321 151  Based on the above, it is humbly prayed that the income from shipping operations earned by the Appellant is not taxable in India. 8. The ld. DR, on the other hand, strongly relied on assessment order passed by the Assessing Officer. 9. We have heard the submissions of both the parties and find merits in the arguments of the ld. AR. We have also perused the recent decision of this Tribunal in the case of Marina Express Lines Pte. Ltd. V. DCIT in ITA No. 557/Chny/2025 dated 25.07.2025, wherein, by relying upon various decisions, the Coordinate Benches of this Tribunal has observed as under: 7. We heard the parties and perused the material on record. The assessee is a Singapore based company, deriving income from operation of ships including operations of ships in Indian ports. The assessee while filing the return of income claimed the benefit of Article 8 of the India-Singapore DTAA and offered Nil income in India. The AO invoked Article 24 of India- Singapore DTAA to state that only the actual amount received in Singapore is eligible for benefit under Article 8 of India-Singapore DTAA. Therefore before proceeding further we will look at the relevant Articles of India- Singapore DTAA. ARTICLE 8 SHIPPING AND AIR TRANSPORT 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State 2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency engaged in the operation of ships or aircraft. Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 9 :: 3. Interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest. 4. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall mean profits derived from the transportation by sea or air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of the ships or aircraft, including profits from: (a) the sale of tickets for such transportation on behalf of other enterprises, (b) the incidental lease of ships or aircraft used in such transportation; (c) the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with such transportation, and (d) any other activity directly connected with such transportation. ARTICLE 24 LIMITATION OF RELIEF 1. Where this Agreement provides (with or without other conditions) that income from sources in a Contracting State shall be exempt from tax, or taxed at a reduced rate in that Contracting State and under the laws in force in the other Contracting State the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in the first-mentioned Contracting State shall apply to so much of the income as is remitted to or received in that other Contracting State. 2. However, this limitation does not apply to income derived by the Government of a Contracting State or any person approved by the competent authority of that State for the purpose of this paragraph. The term \"Government\" includes its agencies and statutory bodies. 8. The issue for our consideration is whether limitation of relief as stated in Article 24 is applicable to the income derived by the assessee from operation of ships which is taxed only in the country of residence i.e. Singapore. Article 24 restricts the relief as under – (i) In the source country the income derived is either exempt or taxed at a lower rate Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 10 :: (ii) In the country of residence the income is taxed only on receipt basis and not on accrual basis (iii) If both the above conditions are applicable to a particular income, then the exemption or the lower rate of tax in the source country is restricted to the amount actually remitted to the country of residence. 9. The contention of the assessee with regard to invoking Article 24 is that the income from shipping business is taxable on accrual basis and not on receipt basis in Singapore. The assessee is further contending that when India has given up the taxing right of shipping income, the question invoking Article 24 does not arise. The assessee is also contending that as per the Singapore Income Tax Act, the income from operation of ship is not taxable subject to certain conditions and therefore the AO is not correct in stating the impugned income is not taxed in either of the countries. The argument of the revenue is that when the impugned income is exempt from getting taxed in India then testing the same under Article 24 would automatically arise. The next argument of the revenue is that the impugned income is not getting taxed in Singapore as per the provisions of Singapore Income Tax Act, there by the impugned income is not taxed in either of the countries which is not true intention of entering into DTAA. 10. We notice that that the coordinate bench of the Tribunal in the case of Bengal Tiger Line Pte. Ltd. (supra) has considered the applicability of Article 24 in the context of income getting taxed only in Singapore under Article 8 and held that \"13. As regards the main issue before us, we have considered arguments of counsels for both sides and perused materials on record along with relevant case laws cited before us. There is no dispute to the fact that the assessee is a tax resident of Singapore. Even the factual finding recorded by the Id.DRP was that the assessee is a tax resident and does not have a PE in India. Undisputedly, the activities carried out by the assessee in India are covered under Article 8 of India-Singapore DTAA As per Article 8 of India-Singapore DTAA, the profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. Therefore, by virtue of Article 8 of India-Singapore DTAA, the international shipping income of a resident of a Contracting State is taxable only in that State Le, the shipping income of a Singaporean resident by the operations of ships in international waters is taxable only in Singapore on accrual basis. Similarly, Article 24 of India-Singapore DTAA limits the relief on the basis of income from sources in a Contracting State is exempt from tax or taxed at a reduced rate in that Contracting State and under the laws Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 11 :: in force in the other Contracting State, the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this agreement in the first-mentioned Contracting State shall apply to so much of the income as is remitted to or received in that other Contracting State. From the combined reading of Articles 8 and 24 of India-Singapore DTAA, it is very clear that article 8 provides exclusive right of taxation to country of residence, i.e. Singapore on accrual basis. Similarly, article 24 limits the exemption, in case income is exempt or taxed at reduced rate in source country, Le in India and further such income is taxable in country of residence on receipt basis. The AO, referring to Article 24 of the tax treaty, was of the opinion that although global shipping income of a Singapore tax resident is taxable only at resident State, but by virtue of Article 24 exemption would apply only to the extent of the amount repatriated/ remitted to Singapore. In our view, the above conclusion of the AO is under the misconception of the provisions of India-Singapore tax treaty, because as per Article 8 of India-Singapore tax treaty, it was clearly specified that only the resident country has the right of taxation of freight income earned from operation of ships in international traffic. As may be seen from the provisions of Article 8(1), we are of the considered view that it is not an exemption provision but an enabling provision which provides an exclusive right of taxation of income to the residence country. Further, by entering into treaty with Singapore, India has given up its right to tax shipping income of a non-resident in India. Therefore, any income of a non- resident shipping company which is a tax resident of Singapore is liable to tax only in Singapore but not in India. 14. The provision of Article 24 of India-Singapore DTAA is applicable for income which is exempt from tax as per the tax treaty. As has been clarified above, it may be noted that Article 8 is unambiguously not an exemption provision but only a provision which provides a taxation right to the country of residence. Therefore, the international shipping income earned by the assessee is not exempted in India, whereas it is taxable only in the country of residence i.e., Singapore. From the above, it is very clear that exclusive right of taxation in one Contracting State is not the same as the specific exemption being available in other Contracting State. Further, shipping income dealt with in Article 8 states that profits derived by an enterprise of a Contracting State by operation of ships in international traffic shall be taxable only in the State of residence. The word 'only debars the other Contracting State to tax the shipping income; ie. India is precluded from taxing the shipping income even if it is sourced from India. When India does not have any taxation right on a shipping Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 12 :: income of non-resident entity, exemption or reduced rate of taxation in the source state is of no relevance because once the taxing right has been given off, the other conditions like exemption of reduced rate of tax has no bearing on the taxability of particular income in other Contracting State. From the reading of Article 8, which clearly envisages derivable or jurisdictional rights for taxing the income and as per which India has no jurisdiction for taxing any income which are covered by Article 8. Therefore, we are of the considered view that international shipping income of a non-resident of a Contracting State is taxable only in that state and in this case, the assessee being tax resident of Singapore, shipping income earned from India on international waters is taxable only at Singapore on accrual basis. 15. Having said so, let us examine the applicability of Article 24 of India- Singapore DTAA. Article 24 of India-Singapore DTAA contemplates twin conditions for its applicability. The first condition is that income sourced in a Contracting State and such income should be exempt or taxed at a reduced rate by virtue of any article under the India-Singapore DTAA. As we noted earlier Article 8 of India- Singapore DTAA does not provide for exemption or reduced rate of taxation of such income. It is crucial to note that Article 8 of India- Singapore DTAA contemplates the taxation rights of a particular income in particular State. As per said article, the country of residence is having exclusive right over taxation of shipping income and that being the case, the assessee being resident of Singapore vest with right to tax such income under the Singapore Income Tax laws. Accordingly, the shipping income earned in India is neither exempt nor taxed at reduced rate as per Article 8 of DTAA which is a condition precedent for applicability of Article 24. This fact has been clarified by the IRAS vide its letter dated 17-9-2018, where it was specifically stated that provisions of Article 24 of India-Singapore DTAA would not be applicable to the shipping income. The second condition that is required to be looked into before applying Article 24 of DTAA is income of the non-resident should be taxable \"receipt\" basis in Singapore. As we have already noted in earlier para of this order, under Article 8 of India-Singapore DTAA, global shipping income of a tax resident of Singapore is only taxable in the country of residence. Once the income is taxable in the country of residence on \"accrual\" basis, the second condition prescribed under Article 24 of India-Singapore DTAA is not satisfied. This fact is further strengthened by the letter of the Inland Revenue Authority Singapore (IRAS) letter 17-9-2018, where it was clarified that the income of a Singaporean company from the operation of ships in international traffic is taxable in Singapore on \"accrual\" basis. Thus, both the conditions of Article 24 is not satisfied in the present case. We, therefore are of the considered view that the AO was erred in Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 13 :: invoking Article 24 of India-Singapore DTAA to tax the income earned by the assessee from shipping operations in India. 16. The interplay between Articles 8 and 24 of India-Singapore DTAA has been considered by various Tribunals and Courts. As per the settled position of law, the Article 24 Limitation of Benefit is not applicable once shipping income of a non-resident is taxable on \"accrual\" basis in the country of residence. This principle is well settled by the decision of the Hon'ble Gujarat High Court in the case of M.T. Maersk Mikage (supra), where the Hon'ble court clearly held that where income earned by Singapore based shipping company through shipping business carried out at Indian Ports, was not taxable at Singapore on basis of remittance but on basis of accrual, clause (1) of Article 24 of Indo-Singapore DTAA would not apply to deny benefit of Article 8 of Indo-Singapore DTAA to said company. The Hon'ble High Court while considering the issue has analyzed the provisions of Article 8 vis-a-vis Article 24 of DTAA and after considering relevant facts, the court held that in case certain income is taxed by a Contracting State not on the basis of accrual but on the basis of remittance, applicability of Article 8 would be ousted to the extent such income is not remitted. The court further held that this clause does not provide that in every case of non-remittance of income to the Contracting State, Article 8 would not apply irrespective of tax treatment such income is given. The Hon'ble court while arriving at the above conclusion has taken support from the letter issued by Singapore Revenue Authority clarifying the taxation position of global shipping income of tax resident of Singapore and held that when shipping income of a tax resident of Singapore was taxable at Singapore on the basis of accrual, the very basis of applying Article 24 would not survive. This issue was further considered by the Mumbai Bench of ITAT in the case of APL Co. Pte Ltd. (supra), where it was held that in order to invoke provisions of Article 24, two conditions need to be fulfilled. Firstly, income earned from source State (India) is exempt from tax or is taxed at a reduced rate in source State (India) as per DTAA; and secondly as per the laws in force of resident state (Singapore), such income is subject to tax by reference to amount thereof which is remitted to or received in resident State and not by reference to full amount thereof. The Tribunal further noted that the key phrases which need to be borne in mind while understanding Article 24 is \"under the laws in force in other contracting state\" (Singapore). Here, in this case, the income of assessee company from shipping operations is not taxable on remittance basis under the laws of Singapore, albeit is liable to be taxed in principle on accrual basis by virtue of the fact that this income under the income tax laws of Singapore is regarded as \"accruing in or derived from Singapore\". A similar view has been Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 14 :: expressed by the Hyderabad Bench of the Tribunal in the case of For Shipping (Singapore) Pte Ltd. (supra). Further, the Mumbai Bench of the Tribunal in the case of D.B. International (Asia) Ltd. (supra) has dealt with the interplay between the Articles 13 and 24 and after considering relevant clauses categorically held that income derived by a resident of a Contracting State shall be taxable only in that state in view of the clear and unambiguous terms of DTAA. Therefore, we are of the considered view that in terms of Article 8 of India- Singapore DTAA, global income of a tax resident of Singapore from shipping operations, even though which is earned outside Singapore is taxable only in Singapore on accrual basis and consequently Article 24 of India-Singapore DTAA cannot be invoked to deny the benefit of exemption merely for the simple reason that the said income was not taxed in Singapore by virtue of separate exemptions provided under Singapore Income Tax Act. 17. In this case, the Assessing Officer has attempted to deny the exemption claimed by the assessee under Article 8 by invoking Article 24 of India-Singapore tax treaty on a misconception of two clauses of India-Singapore DTAA by referring to the provisions of Section 13F of the Singapore Income Tax Act, ignoring the fact that Section 13F of the Singapore Income Tax Act was already in existence since 1-4- 1991 and as such the articles provided in India-Singapore DTAA which was came into existence from 27-5-1994 was inserted by the Competent Authorities of both the Contracting States after thoroughly considering the provisions of Section 13F of Singapore Income Tax Act and further choose not to alter the taxation right of shipping income which is generally available to the country of residence. We further noted that two sovereign nations have entered into a bilateral agreement and specifically agreed on the taxing rights of particular streams of income, the provisions of such agreement should be merely given effect to and as such the action of the AO to claim taxing right over the said income which is not provided in the treaty is ultra vires the power of the AO and will amount to dishonouring the bilateral agreement between two sovereign nations. We further noted that the Assessing Officer has taken resident that is accrued or received in Singapore is chargeable to tax in Singapore at the specified income tax from taxation as per Section 13F of Singapore Income Tax Act, but such income is always liable to tax in Singapore. The exemption provided u/s 13F of Singapore Income Tax Act is only on a case to case basis for a limited period of time and it is subject to certain conditions. Therefore, we are of the considered view that the liability to taxation is not dependent on whether taxes are actually paid in the said jurisdiction. This fact is strengthened by the decision of the Hon'ble Supreme Court in the case of Azadi Bachao Andolan (supra) where the Hon'ble Supreme Court in para 79 of the order has states Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 15 :: that \"merely because exemption has been granted in respect of taxability of a particular source of income, it cannot be postulated that the entity is not able to tax' as contended by the respondents.\" The ITAT, Mumbai Bench in the case of Bhagwan T. Shivioni (supra) has considered an identical issue and by following the decision of Hon'ble Supreme Court in the case of Union of India v. Azadi Bachao Andolan (supra) has held that the expression liable to tax' in Contracting State as used in Article 4(1) of Indo-UAE DTAA does not necessarily imply that person should actually be liable to tax in that contracting State. It is enough if other contracting State has right to tax such person, whether or not such a right is exercised. This fact is further strengthened by Article 31(1) of Vienna Convention where it was stated that as per the general rule of interpretation, ordinary meaning is to be given to the terms of the treaty in the context and in the light of its object and purpose. The object and purpose of having Article 8 in the India-Singapore DTAA is to clearly allocate the taxing rights of international shipping income to the residence country i.e., Singapore in the present assessee case. Therefore, as per sub-clause (2) of Article 31 of the Vienna Convention, the 'context' for the purpose of interpretation of a treaty would primarily include the text, preamble and annexure to the treaty. Therefore, in order to give the ordinary meanings to the terms in their 'context' the whole treaty should be read as it is without giving any meaning which is not the purpose intended by the Articles. In this case, the AO has stated that the preamble should be read to understand the object and purpose. However it may be noted that Article 31(2) of Vienna Convention does not cover object and purpose. Therefore, we are of the considered view that AO has misunderstood the general rules of interpretation in the Vienna Convention. Even assuming without conceding that the preamble should be referred to understand the object and purpose, the stated objective of the treaty is \"avoidance of double taxation\". This object can be achieved in two ways, which one way by credit mechanism when both the countries tax the same income and the second way is providing 'exclusive right of taxation' to one country and thereby double taxation can be avoided. In the present case, Article 8 provides exclusive right of taxation of shipping income to Singapore in order to avoid double taxation method where India has given up its right of taxation of international shipping income of a Singaporean resident and as such Singapore has reserved its exclusive right to tax the same. Once the country of resident is having exclusive rights to tax a particular income by way of separate Article, then limiting or denying such benefit by interpreting the other Articles which are provided for limiting the benefit in case such income is exempt or taxed at reduced rate of tax in otherContracting State is contrary to the purpose and object of DTAA. Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 16 :: 18. In this case, the Assessing Officer has denied the benefit only on the simple ground that the income of the assessee received in India is exempt by virtue of separate provisions of Singapore Income Tax Act and on the misconception of law to come to the conclusion that once a country of residence has exempts particular income from tax, the other Contracting State (source country) can levy tax on such income without understanding the true meaning of Article 8 of India- Singapore DTAA. The AO has also ignored the arguments taken by the assessee in the light of DIT relief certificate issued by the Department for the subject assessment year, where the AO after considering the TRC and supporting documents issued DIT Relief Certificate dated 25-6-2014 and 14-8-2014 by holding that Article 8 of India-Singapore DTAA is applicable to the assessee and income from operation in international traffic will not be taxable in India. No doubt, the certificate is issued for the purpose of non-deduction of tax at source as argued by the Ld. DR, but fact remains is that unless the AO has bring on record any change in fact or law which was prevalent at the time of issuing DIT Relief Certificate and at the time of framing assessment, no contrary view can be taken in violation of Doctrine of Promissory Estoppel. No doubt, the fundamental principles of res judicata will not be applicable to income tax proceedings, but the rule of consistency needs to be followed unless there is change in fact or law while taking a different view. This view is supported by the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang (supra). 11. On perusal of the above decision we notice that the coordinate bench has laid down the following principles with respect to applicability of Article 24 limiting the relief granted under Article 8 of the India Singapore DTAA – (i) Article 24 gets invoked in cases of exemption and in the given case the income from shipping business is not exempt but is taxed in the residence country (ii) Article 8 is not an exemption provision but is an enabling provision granting exclusive taxing right to the resident country i.e. Singapore and not source country i.e. India (iii) Under Article 8 India has given up the right to tax and therefore the income can be taxed ONLY in Singapore. (iv) The test of whether the income is exempt or taxed at lower rate is of no relevance once the right to tax is given up (v) In Singapore when the shipping is taxed on accrual basis, Article 24 cannot be applied since the said Article can be invoked Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 17 :: only when the income is taxed on receipt basis in the country of residence i.e. Singapore (vi) Once the country of resident is having exclusive rights to tax a particular income by way of separate Article, then limiting or denying such benefit by interpreting the other Articles which are provided for limiting the benefit in case such income is exempt or taxed at reduced rate of tax in other Contracting State is contrary to the purpose and object of DTAA (vii) When Article 8 of India Singapore DTAA came into existence from 27.05.1994, Section 13Fof Singapore Income Tax Act was in existence and Competent Authorities still choose not to alter the taxation right of shipping income which is generally available to the country of residence. (viii) The avoidance of double taxation is achieved either by 'credit mechanism' when both the countries tax the same income or by providing 'exclusive right of taxation' to one country and Article 8 provides exclusive right of taxation of shipping income to Singapore in order to avoid double taxation method 12. In the light of the above ratio when we examine the assessee's case we notice that the facts are identical and the assessee in the present case also has obtained the certificate from IRAS stating that the income is taxable on accrual basis in Singapore which is held as not foolproof by the AO. We further notice that the above decision of the coordinate bench has not been considered by the AO on the ground that the revenue has filed further appeal before the Hon'ble High Court and that the AO has not given any specific findings distinguishing the facts in assessee's case. Therefore in our considered view, there is merit in the submission that the decision of the coordinate bench is applicable to assessee's case also. This is further strengthened by the decisions as listed above of the Hon'ble Bombay High Court and the Hon'ble Gujarat High Court where a similar view has been held. It is relevant to mention here that the findings of the AO for not applying the ratio laid down in this regard by judicial precedence have been well addressed in the above decision of the coordinate bench. Accordingly we hold that AO is not correct in making addition towards the income derived from operation of ships which is taxable exclusively in Singapore under Article 8 of India-Singapore DTAA by invoking the limitation of relief under Article 24 of India-Singapore DTAA. We therefore direct the AO to delete the addition made in this regard. 10. On careful reading of the above order of the Coordinate Benches of this Tribunal, we find that on an identical issue in similar facts and Printed from counselvise.com ITA No.366/Chny/2025 (AY -22-23) Jaldhi Oversears Pte. Ltd. :: 18 :: circumstances, by following various decisions of various courts, directed the Assessing Officer to delete the addition by holding that the income from shipping operations earned by the assessee is not taxable in India. Respectfully following the decision in the case of Marina Express Lines Pte. Ltd. V. DCIT (supra), the addition made by the Assessing Officer stands deleted and thus, allowed the grounds on merits raised by the assessee. Other legal grounds have become academic and left open accordingly. 11. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on the 19th August, 2025, in Chennai. Sd/- (अिमताभ शुƑा) (AMITABH SHUKLA) लेखा सद᭭य/ACCOUNTANT MEMBER Sd/- (मनु क ुमार िगįर) (MANU KUMAR GIRI) ᭠याियक सद᭭य/JUDICIAL MEMBER चे᳖ई/Chennai, ᳰदनांक/Dated: 19.08.2025. Vm/- 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF Printed from counselvise.com "