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Tax Publishers Shipping business - denial of DTAA benefits as per Indo-Singapore DTAA Article 24 - Limitation of benefits class *Facts:* Assessee was the agent of a non-resident shipping line based out of Singapore. They had claimed tax relief as per Article 8 pertaining to Shipping business as per Indo-Singapore DTAA for freight receipts received from India on the plea that the same was to be taxed in the country of actual residence viz. Singapore. It was noticed by the AO that the remittance was being done to a bank account in London instead of Singapore and thus AO invoked Article 24 of the Indo-Singapore DTAA (LOB clause) citing that Companies domiciled in Singapore are not taxed for incomes not brought into Singapore, Thus no matter production of a certificate from Singapore Internal revenue authorities assessee was not entitled to the benefits of the Indo-Singapore DTAA. On appeal, CIT(A) voiced views of the AO. On higher appeal to ITAT assessee's plea was that vide M. T. Maersk Mikage vs. DIT (Intl. Taxation) (2016) 72 taxmann.com 359 (Gujarat-HC) : 2016 TaxPub(DT) 3859 (Guj-HC) had accepted the certificate of the Singapore revenue authorities and had granted the benefit of Article 8 to analogous shipping business, thus they were also entitled to the same. Held against the assessee that when Article 24 has made an explicit mention that the amounts ought to have been received in Singapore to avail DTAA exemption as Singapore does not tax a foreign company for monies not repatriated into Singapore/retained overseas. The certificate issued does not expressly mention if the same incomes were subject to tax in Singapore to avail DTAA benefit. If not taxed it would become a case of non-taxation via DTAA exemption/relief. Accordingly the certificate requires investigation with the Singapore tax authorities and thus remanded back to the AO for the same. *Applied:* Abacus International Pvt. Ltd. (2013) 34 taxmann.com 21 (Mumbai-Tribunal) : 2013 TaxPub(DT) 2059 (Mum-Trib) *Ed Note:* The LOB clause is a Damocles sword especially given that the conditions imposed on it need to be met diligently to avail DTAA relief/exemptions. There are contrary verdicts also on this specific case of the assessee on shipping line taxation. But the way the case has been dealt shows that Indian tax authorities are not going to accept any DTAA relief/exemption on the face of it. *Case:* Atlantic Shipping (P) Ltd. v. ITO 2024 TaxPub(DT) 1429 (Rjk-Trib)

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Shipping business - denial of DTAA benefits as per Indo-Singapore DTAA Article 24 - Limitation of benefits class

Facts:

Assessee was the agent of a non-resident shipping line based out of Singapore. They had claimed tax relief as per Article 8 pertaining to Shipping business as per Indo-Singapore DTAA for freight receipts received from India on the plea that the same was to be taxed in the country of actual residence viz. Singapore. It was noticed by the AO that the remittance was being done to a bank account in London instead of Singapore and thus AO invoked Article 24 of the Indo-Singapore DTAA (LOB clause) citing that Companies domiciled in Singapore are not taxed for incomes not brought into Singapore, Thus no matter production of a certificate from Singapore Internal revenue authorities assessee was not entitled to the benefits of the Indo-Singapore DTAA. On appeal, CIT(A) voiced views of the AO. On higher appeal to ITAT assessee's plea was that vide M. T. Maersk Mikage vs. DIT (Intl. Taxation) (2016) 72 taxmann.com 359 (Gujarat-HC) : 2016 TaxPub(DT) 3859 (Guj-HC) had accepted the certificate of the Singapore revenue authorities and had granted the benefit of Article 8 to analogous shipping business, thus they were also entitled to the same.

Held against the assessee that when Article 24 has made an explicit mention that the amounts ought to have been received in Singapore to avail DTAA exemption as Singapore does not tax a foreign company for monies not repatriated into Singapore/retained overseas. The certificate issued does not expressly mention if the same incomes were subject to tax in Singapore to avail DTAA benefit. If not taxed it would become a case of non-taxation via DTAA exemption/relief. Accordingly the certificate requires investigation with the Singapore tax authorities and thus remanded back to the AO for the same.

Applied:

Abacus International Pvt. Ltd. (2013) 34 taxmann.com 21 (Mumbai-Tribunal) : 2013 TaxPub(DT) 2059 (Mum-Trib)

Ed Note: The LOB clause is a Damocles sword especially given that the conditions imposed on it need to be met diligently to avail DTAA relief/exemptions. There are contrary verdicts also on this specific case of the assessee on shipping line taxation. But the way the case has been dealt shows that Indian tax authorities are not going to accept any DTAA relief/exemption on the face of it.

Case: Atlantic Shipping (P) Ltd. v. ITO 2024 TaxPub(DT) 1429 (Rjk-Trib)