ITA no.449/Mum./2017. Case: APL Co. Pte. Ltd. Vs DCIT(IT) 1(1)(2). ITAT (Income Tax Appellate Tribunal)
| Case Number | ITA no.449/Mum./2017 |
| Counsel | For Appellant: Shri. P.J Pardiwala/Arati Visanji, Adv. and For Respondents: Shri. Jasbir Chouhan |
| Judges | Shri Shamim Yahya, Accountant Member And Shri Sandeep Gosain, Judicial Member |
| Issue | Income Tax Act - Section 10(1) |
| Judgement Date | April 28, 2017 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
Shri Shamim Yahya, J.
-
This appeal by the assessee is directed against order of assessing officer dated 14.12.2016 passed under section 143(3) read with section 144C (13) of the I.T Act, under the direction of dispute resolution panel 1 Mumbai vide direction dated 01.12.2015.
-
The grounds of appeal read as under:
Ground No. 1
1.1. On the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel ('DRP') and the learned Deputy Commissioner of Income-tax (International Taxation) - 1(1)(2), Mumbai (DCIT) erred in denying the benefit of Article 8 of the India Singapore Double Taxation Avoidance Agreement ('Tax Treaty') to the freight income earned by the Appellant by invoking provisions of Article 24 (limitation of relief) of the Tax Treaty without appreciating that Article 24 of the Tax Treaty has no applicability in the present case.
1.2. The Hon'ble DRP and learned DCIT erred in not appreciating that Article 24 of the Tax Treaty does not apply to the Appellant as the Appellant's freight income is taxable in Singapore on accrual basis and not on remittance or receipt basis (i.e. entire freight income is taxable in Singapore irrespective of remittance of freight to Singapore).
The Appellant prays that the benefit of Article 8 of Tax Treaty should be accordingly allowed in the present case.
-
Ground No. 2
2.1. On the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in not accepting the letter dated 7 September 2016 issued by the Inland Revenue Authority of Singapore wherein it has been confirmed that freight income of the Appellant is assessed to tax in Singapore on accrual basis (i.e. not on remittance basis) and therefore Article 24 would not be applicable.
2.2. On the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in not accepting the global audited financial statements, computation of total income and tax return filed in Singapore for the calendar years 2011 and 2012 in support of accrual basis of taxation of Appellant's income in Singapore under the tax laws of Singapore.
The Appellant prays that the benefit of Article 8 of Tax Treaty should be accordingly allowed to the Appellant in the present case.
-
Ground No. 3
3.1. Without prejudice to the above, the Hon'ble DRP and learned DCIT erred in not appreciating that the condition of remittance to Singapore prescribed in Article 24 has been satisfied as the freight collections have been ultimately remitted to the Appellant's bank account in Singapore.
3.2. The Hon‟ble DRP erred in not accepting the bank statements in support of remittance of freight collections to Singapore. The Appellant prays that the benefit of Article 8 of Tax Treaty should be accordingly allowed to the Appellant in the present case.
Ground No. 4
4.1. On the facts and in the circumstances of the case and in law, the Hon'ble DRP and learned DCIT erred in holding that the Appellant has a fixed place Permanent Establishment ('PE') in India under Article 5(1) of the Tax Treaty.
4.2. On the facts and in the circumstances of the case and in law, the Hon'ble DRP and learned DCIT erred in holding APL India Private Limited („APL India') as an agency PE of the Appellant in India under Article 5(8) of the Tax Treaty.
-
Ground No. 5
Without prejudice to the above, the Hon'ble DRP and learned DCIT erred in not appreciating that no income of the Appellant could be brought to tax in India as the arm's length commission paid to its agent, APL India (and accepted by the tax department), which is taxable in India in the hands of APL India, fully extinguishes the tax liability of the Appellant in India.
-
Ground No. 6
On the facts and in the circumstances of the case and in law, the learned DCIT erred in levying interest under section 234B of the IT Act without appreciating that the Appellant was not liable to pay any advance tax on the basis of (a) Double Income Tax Relief Certificate issued by the Tax Department itself and (b) the fact that freight income of the Appellant was tax deductible at source having regard to the specific provisions of section 209(1)(d) of the IT Act.
The Appellant craves leave to add, alter, amend, vary, omit or substitute all or any of the Grounds of Appeal or add a new ground or Grounds of Appeal and to submit such statements, documents and papers as may be considered necessary at or before the appeals hearing.
-
Apropos ground number 1 and 2
In this case assessee is a Pvt. Ltd. Company and a tax resident of Singapore. The assessee is engaged in the business of operation of ship of international traffic. The assessing officer has observed that in the return of income, the assessee has claimed that the gross freight earnings including detention collection of Rs.15,82,56,80,977/- is not taxable as per Article 8 of the Agreement for Avoidance of Double Taxation between India and Singapore as the profits derived from the operation of ships international traffic by an enterprises of Singapore are taxable only in Singapore. During the course of the assessment proceedings vide order sheet noting dated 18.12.2016, the assessee was asked to explain whether they have complied with the provisions of Limitation of Relief as per Article 24 of the Double Taxation Avoidance Agreement between India and Singapore. The provisions of this Article are as under:
-
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.
-
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.
In reply, the assessee has stated that the freight receipt available for remittance after excluding the expenses incurred in India and certain amounts retained in India for specific purposes have been remitted to the assessee's account with Citibank, New York. The assessee has also stated that the said remittance to New York have been transferred to Singapore. However, the assessee has failed to produce any documents/statements of bank account whereby it could be proved that the said amounts remitted from India have been received in Singapore as there is no nexus between freight collected from India and the amount finally received in Singapore. The assessee has further stated that though the funds are not directly received by the assessee in Singapore, the freight income from Indian operations is ultimately remitted to Singapore through its account in Bermuda and therefore, the same amounts to constructive receipt by...
To continue reading
Request your trial