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This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-10, Hyderabad vide ITA No.0075/CIT(A)-10/2016-17 CIT(A), Hyd-10/10254/2016-17 dated 22.03.2018 for the Assessment Year (A.Y.) 2015-16.
2. All the grounds of appeal are related to the tax demand of Rs.11,30,086/- raised u/s 172 of the Income Tax Act, 1961 (in short ‘Act’). In this case, M/s Navship Marine Services Private Ltd., Visakhapatnam (Rep. Assessee) is an Indian agent of M/s Voyage Ship Management Pte. Ltd., Singapore. The Rep. assessee has filed No Objection Certificate (NOC) on 13.06.2014 in respect of the vessel M.V.Arnad Queen with a request to treat M/s Navship Marine Services Private Ltd as agents to the Master of the said vessel and also to the non-resident freight beneficiary i.e. M/s Voyage Ship Management Pte. Ltd., Singapore. The AO had issued NOC on 13.06.2014 along with order u/s 163 of the Act treating M/s Navship Marine Services Pvt. Ltd Visakhapatnam as agent of the Master of the vessel and also to the said non –resident shipping company (M/s Voyage Ship Management Pte. Ltd., Singapore.) i.e. freight beneficiary. The agent was also directed by the AO to file the return of income u/s 172(3) of the Act in respect of freight tax payable by the above stated non-resident freight beneficiary for the said voyage within 30 days from the date of departure of the vessel from Visakhapatnam.
2.1. In response to the notice, the Representative assessee filed the return of income u/s 172(3) on 28.11.2014 declaring total income of Rs.11,49,633/- and claimed the entire amount as exempt under DTAA. The AO found that the vessel left Visakhapatnam on 18.06.2014 carrying 30,470 MTS of Calcinated Alumina Powder to Jebel Ali, UAE. Accordingly, the total income earned and tax payable on the freight of the said non-resident shipping company on account of this particular voyage was computed as under :
Since there was no remittance proof furnished by the assessee, keeping in view of the provisions of Article 24 of Indo Singapore DTAA, the Assessing Officer (AO) raised the demand of Rs.11,30,086/- on the representative assessee and completed the assessment by an order 172(4) dated 29.12.2015.
3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and argued that in the assessee’s case, Article 24 has no application and relied on the decision of ITAT Rajkot Bench in the case of Alabra Shipping Pte Ltd. (2016) 129 DTR (Rjt) (Trib) 43. The Ld.CIT(A) considered the submissions made by the assessee and observed that Inland Revenue Authority of Singapore has confirmed that the freight income has been regarded as Singapore sourced income and brought to tax on accrual basis and not on remittance basis in the year of the assessment. The assessee also filed confirmation in the case of Alabra Shipping Ptd. Ltd., that the freight earned from the vessel was included in the global income offered to tax by the company in Singapore. Accordingly, the Ld.CIT(A) distinguished the case law relied upon by the assessee. Since the assessee failed to produce any evidence with regard to the remittance made to Singapore or the relevant income is taxable on accrual basis in the source country, the Ld.CIT(A) held that in the instant case, Article 24 of DTAA is applicable and accordingly confirmed the demand raised by the AO and dismissed the appeal of the assessee.
4. Aggrieved by the order of the Ld.CIT(A), the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld.AR argued that the AO has applied Article 24 of DTAA and raised the demand, since, the assessee has not produced evidence for remittance to Singapore. The income of the assessee is taxable in Singapore on accrual basis. Hence, argued that there is no application of Article 24 in the assessee’s case, but Article 8 is applicable. The Ld.AR further submitted that Article 8 supersedes Article 24, when Article 8 is applicable, there is no case for application of Article 24. The Ld.AR relied on the decision of Hon’ble High Court of Gujarat in the case of M T Maersk Mikage &Ors. Vs. Director of Income Tax (International Taxation) 242 Taxman 0300 in paragraph Nos.8, 10, 15,16, 18 and 20 of the order of the Hon’ble High Court of Gujarat, which reads as under :
“8. Before the Commissioner, during the proceedings under section 264 of the Act, the petitioner also produced a letter dated 09.01.2013 issued by Inland Revenue Authority of Singapore, in which, it was stated that the income in question derived by the ST Shipping would be considered to be income accruing in or derived from a business carried on in Singapore and the income would be therefore assessable to tax in Singapore on accrual basis.' This was in response to the petitioner’s letter to the said Revenue authority of Singapore concerning the applicability of Article 24 of the DTAA. The contents of the letter dated 09.01.2013 of the authority may be reproduced.
"We refer to your letter dated 2 January 2013.
2. You have stated that ST Shipping and Transport Pte Ltd's principal business activity revolved around the shipping and it received charter