The Income Tax Appellate Tribunal (ITAT) held that no tax applicable on the shipping income of foreign vessels under the India-Singapore Tax Treaty.
The assessee, M/s. Bengal Tiger Line Pte Ltd. is a resident of Singapore and involved in the business of operation of ships in International Traffic. The assessee was the freight beneficiary in respect of various vessels which sailed from ports in the Indian subcontinent and South East Asia during the financial year 2014- 15.
The assessee has claimed exemption from tax on income received from shipping operations in India in pursuant to the India-Singapore tax treaty on the ground that as per Article 8 of India-Singapore DTAA, tax resident of Singapore involved in the operations of ships in international traffic, is assessable to tax in Singapore on global income received from its shipping business.
The AO has denied the benefit of Article 8 of India Singapore DTAA and further, taxed income received from shipping operations in India under section 44B of the Act on the ground that Article 24 of India Singapore DTAA limits the benefits of exemption, in case income received outside India is exempt from tax under Singapore Income Tax laws.
The coram consisting of Duvvuru R.L Reddy and G. Manjunatha held that Article 8 of India Singapore DTAA is applicable and as per which shipping income of a resident of Singapore is taxable only in Singapore but not in India.
The ITAT observed that the AO has made an attempt to deny the benefit of exemption claimed by the assessee by invoking Article 24 of India Singapore DTAA, even though the conditions stipulated under Article 24 are not satisfied.
Hence, the tribunal directed the Assessing Officer to delete the additions made towards shipping income of assessee earned in India.
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