M/s Interocean Shipp. (I) P. Ltd.,, GANDHIDHAM v. The Income Tax Officer (Inter. Taxa.), GANDHIDHAM

ITA 410/RJT/2016 | 2015-2016
Pronouncement Date: 28-11-2017 | Result: Allowed

Appeal Details

RSA Number 41024914 RSA 2016
Assessee PAN AAACI0143F
Bench Rajkot
Appeal Number ITA 410/RJT/2016
Duration Of Justice 1 year(s) 19 day(s)
Appellant M/s Interocean Shipp. (I) P. Ltd.,, GANDHIDHAM
Respondent The Income Tax Officer (Inter. Taxa.), GANDHIDHAM
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 28-11-2017
Assessment Year 2015-2016
Appeal Filed On 08-11-2016
Judgment Text
ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM] ITA NO. 410/RJT/2016 ASSESSMENT YEAR: 2015-16 BP SINGAPORE PTE LTD ...........................APPELLANT [INTEROCEAN SHIPPING (INDIA) PVT LTD- AS AGENTS] PLOT NO.72 WARD-10/A OPPOSITE IFFCO COLONY MAIN GATE GANDHIDHAM-370 201 [PAN: AAACI 0143 F] VS. INCOME TAX OFFICER- INTERNATIONAL TAXATION GANDHIDHAM ........RESPONDENT APPEARANCES BY: NEERAJ AGARWAL FOR THE APPELLANT HAR GOVIND SINGH FOR THE RESPONDENT DATES OF HEARING OF THIS APPEAL : NOVEMBER 2 AND 3 2017 DATE OF PRONOUNCING THE ORDER : NOVEMBER 28 2017 O R D E R PER PRAMOD KUMAR AM: 1. BY WAY OF THIS APPEAL THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 12 TH AUGUST 2016 PASSED BY THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS)-13 AHMEDABAD UPHOLDING THE ASSESSMEN T UNDER SECTION 172(4) OF THE INCOME TAX ACT 1961 IN RESPECT OF M.V. PACIFIC RA INBOW FOR THE ASSESSMENT YEAR 2015-16. 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS : 1. THE COMMISSIONER OF INCOME TAX (APPEALS) AHM EDABAD [HEREINAFTER REFERRED TO AS 'THE CIT (A)'] ERRED IN CONFIRMING T HE ORDER OF THE INCOME TAX OFFICER (INTERNATIONAL TAXATION) GANDHIDHAM (HEREI NAFTER REFERRED TO AS 'THE ITO') DENYING APPELLANT THE BENEFIT OF THE AGREEMEN T FOR AVOIDANCE OF DOUBLE TAX BETWEEN INDIA AND SINGAPORE (HEREINAFTER REFERR ED TO AS 'DTAA'). 2. THE CIT (A) ERRED IN NOT DIRECTING ITO TO ASS ESS THE INCOME AS NIL OF FREIGHT BENEFICIARY I.E. BP SINGAPORE PTE LTD. WHIL E LOSING SIGHT OF THE FACT THAT BP SINGAPORE PTE LTD. IS A SINGAPORE TAX RESIDENT C OMPANY ENGAGED IN OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC AND HEN CE ENTITLED TO BENEFIT OF ARTICLE 8 OF THE DTAA AND THEIR INCOME FROM OPERATION OF SH IPS IN INTERNATIONAL TRAFFIC CANNOT BE TAXED IN INDIA. ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 2 OF 12 3. THE CIT (A) ERRED IN CONFIRMING THE ORDER OF I TO APPLYING ARTICLE 24 OF DTAA WHICH PROVIDES FOR LIMITATION OF RELIEF WHICH IS MADE APPLICABLE TO ONLY LIMITED CATEGORY WHICH HAVE BEEN EXEMPTED FROM PAYM ENT OF TAX AS PER DTAA OR TAXED AT REDUCED RATE AND HAS NO APPLICATION TO THE INCOME REFERRED TO IN ARTICLE 8. 4. THE CIT (A) ERRED IN CONFIRMING THE ORDER OF ITO HOLDING THAT SINCE THE FREIGHT BENEFICIARY WAS OF SINGAPORE AND HENCE FUND S OUGHT TO HAVE REMITTED TO SINGAPORE BUT FUNDS WERE NOT REMITTED TO SINGAPO RE THE BENEFIT OF DTAA CANNOT BE GRANTED. THE CIT(A) FAILED TO APPRECIATE THAT WHEN ARTICLE 24 OF DTAA HAS NO APPLICATION IT HAS NO RELEVANCE WHETHE R THE FUNDS HAVE BEEN RECEIVED BY BP SINGAPORE PTE LTD. IN SINGAPORE OR U SA OR SOMEWHERE ELSE. 5. THE CIT (A) ERRED IN NOT APPRECIATING THAT TH E ITO HAS MISINTERPRETED THE PROVISIONS OF DTAA AND THEREUPON WRONGLY HELD THAT DTAA CLEARLY STATES THAT THE FUNDS SHOULD BE REMITTED TO SINGAPORE ONLY WHIL E LOSING SIGHT OF THE FACT THAT THE SAID FREIGHT INCOME HAS BEEN OFFERED FOR T AX PURPOSE AND IN FACT CHARGED TO TAX IN SINGAPORE BY OBSERVING THAT THERE WAS NO EVIDENCE BROUGHT ON RECORD TO ESTABLISH THE ACTUAL REMITTANCE TO SIN GAPORE AND THEY OUGHT TO BE ASSESSED TO NIL INCOME IN INDIA WITH REGARD TO THE PROFITS FROM THE OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC AS THEY ARE AN EN TERPRISE OF SINGAPORE. 6. THE CIT (A) ERRED IN IGNORING SETTLED POSITIO N OF LAW THAT ONCE THE INCOME HAS BEEN CHARGED TO TAX IN CONTRACTING STATE I.E. S INGAPORE IN PRESENT CASE IT IS NOT NECESSARY TO ESTABLISH THAT REMITTANCE HAS T O BE MADE OR ACTUALLY BEEN MADE TO SINGAPORE TO AVAIL BENEFIT OF DTAA. IN ANY CASE THE CIT (A) FAILED TO APPRECIATE THAT WHERE THE INCOME IS TAXABLE ON ACCR UAL BASIS ARTICLE 24 OF DTAA HAS NO SIGNIFICANCE AND THE BENEFITS OF DTAA I S APPLICABLE IRRESPECTIVE OF WHETHER REMITTANCE IS RECEIVED IN SINGAPORE OR N OT. 7. THE CIT (A) ERRED IN DISCARDING THE SUBMISSIO NS AND CASE LAW RELIED UPON BY THE APPELLANT. THE CIT (A) FAILED TO APPRECIATE THAT THE FACTS IN PRESENT CASE AND THE FACTS IN THE CASE OF ITA NO. 392/RJT/2 014 ARE IDENTICAL AND THE SAID DECISION SQUARELY APPLIES IN PRESENT CASE. 8. THE CIT(A) ERRED IN HOLDING THAT THE DOCUMENTS RELIED UPON BY THE APPELLANT ARE THE NATURE OF ADDITIONAL EVIDENCE WHI CH CANNOT BE CONSIDERED IN ABSENCE OF FORMAL APPLICATION AND BEING CERTIFICATE S FROM PRIVATE PARTIES CANNOT OVERRIDE THE FACTS HIGHLIGHTED BY THE AO OR THAT THE REMITTANCE OF FREIGHT TO SINGAPORE HAS NOT BEEN STILL EVIDENT AND HENCE CONCLUSION DRAWN BY AO IN DENYING THE BENEFIT WOULD BE JUSTIFIED. 9. THE APPELLANT SUBMITS THAT MATTER ARISING OU T OF INTERPRETATION OF DTAA CANNOT LEAD TO INITIATION OF PENALTY PROCEEDINGS U/ S 271(1) (C) OF THE ACT. 10. THE APPELLANT CRAVES LEAVE TO ADD ALTER DE LETE MODIFY OR RESCIND ANY OF THE GROUNDS AS AND WHEN NECESSARY. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT WHATE VER WE DECIDE IN THE CASE OF BP SINGAPORE PTE LTD VS. ITO (ITA NO. 409/RJT/2016) WILL BE EQUALLY APPLICABLE HERE AS WELL. VIDE OUR ORDER OF EVEN DATE IN THE SAID CASE WE HAVE HELD AS FOLLOWS: ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 3 OF 12 4. THE ASSESSEE BEFORE US IS A SINGAPORE BASED CO MPANY SAID TO BE ENGAGED IN THE BUSINESS OF INTER ALIA OPERATIONS OF SHIPS IN THE INTERNATIONAL TRAFFIC. THE ASSESSEE IS FREIGHT BENEFICIARY IN RES PECT OF A VESSEL BY THE NAME OF MT PACIFIC RAINBOW WHICH SAILED FROM VADINAR A N INDIAN PORT ON 30 TH JUNE 2014. IT WAS IN THIS BACKDROP THAT INDIAN AGEN T OF THE ASSESSEE I.E. SEAWORLD SHIPPING AND LOGISTICS PVT LTD HAD FILED A RETURN UNDER SECTION 172(4) AND CLAIMED EXEMPTION UNDER ARTICLE 8 OF IN DO SINGAPORE TAX TREATY OF INCOME EMBEDDED IN THE RELEVANT FREIGHT RECEIPTS AG GREGATING TO RS 5 19 63 857. THIS CLAIM DID NOT FIND FAVOUR WITH T HE ASSESSING OFFICER. HE WAS OF THE VIEW THAT THERE IS NO EVIDENCE TO SHOW THAT THE MONEY HAS BEEN ACTUALLY REMITTED TO SINGAPORE AND SUFFERED THE TAX . IT SEEMS THAT AS FOR THE CLAIM OF THE ASSESSEE THAT THE MONIES THOUGH REMIT TED TO USA HAVE ACTUALLY SUFFERED TAX IN SINGAPORE THE ASSESSING OFFICER RE JECTED THE SAME AND OBSERVED THAT THIS IS NOT IN THE PURVIEW OF THE IN DIAN TAX AUTHORITIES TO VERIFY THE TAX TREATMENT OF THE REMITTANCES MADE BY ANY PE RSON FROM USA TO SINGAPORE AND ALSO NOT AWARE ABOUT WHETHER THE REC EIPTS WERE CONSIDERED FOR TAX AT SINGAPORE OR NOT . (AND) HENCE THE CLA IM OF THE ASSESSEE IS NOT ACCEPTABLE.. WHILE THE MAIN THRUST OF THE ASSESSEE WAS ON ARTICLE 24 OF INDO SINGAPORE TAX TREATY THE ASSESSING OFFICER DID MEN TION THAT THERE IS NO EVIDENCE TO ESTABLISH THAT THE INCOME RELATED TO TH E FREIGHT RECEIPTS HAS BEEN TAXED IN SINGAPORE. THE ASSESSING OFFICER WAS OF TH E VIEW THAT THE INCOME GENERATED FROM FREIGHT INCOME DEFINITELY IS OUTSIDE THE PURVIEW OF CHARGEABILITY IN SINGAPORE AND ON THIS BASIS AND INVOKING THE P ROVISIONS OF ARTICLE 24 OF INDIA SINGAPORE TAX TREATY THE ASSESSING OFFICER D ECLINED TREATY BENEFITS TO THE ASSESSEE AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NO T SATISFIED AND IS IN APPEAL BEFORE US. 5 THIS APPEAL WAS FIRST TAKEN UP FOR HEARING ON 2 ND NOVEMBER 2017 AND THE RECORD OF PROCEEDINGS FOR THAT DAY READS AS FOL LOWS: 1. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING SHR I NEERAJ AGARWAL LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTEN TION TO HIS PETITION FOR THE ADMISSION OF ADDITIONAL EVIDENCE BY WAY OF LETTER D ATED 21 ST FEBRUARY 2017 ISSUED BY THE INLAND REVENUE AUTHORITY OF SINGAPORE WHICH INTER ALIA CERTIFIES THAT THE FREIGHT INCOME FROM INDIA HAD B EEN BROUGHT TO TAX IN SINGAPORE. HE SUBMITS THAT ONCE THIS PIECE OF ADDI TIONAL EVIDENCE IS ADMITTED WHICH GOES TO THE ROOT OF THE MATTER IT WILL BE CLEAR THAT THE FREIGHT RECEIPTS TAXABILITY OF WHICH IS IMPUGNED IN APPEAL BEFORE US HAS ALREADY SUFFERED TAX IN SINGAPORE AND CANNOT THUS BE DENIED TREATY PROTECTION IN INDIA. 2. HAVING HEARD THE LEARNED DEPARTMENTAL REPRESENTA TIVE WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL EVIDENCE. ORDERE D ACCORDINGLY. 3. LEARNED COUNSEL WAS THEN ASKED WHETHER THE FREIG HT RECEIPTS IN QUESTION WERE ACTUALLY SUBJECTED TO TAX IN SINGAPOR E. HE REPLIES IN AFFIRMATIVE. OUR QUESTION WAS FOLLOWED UP BY AN EVEN MORE SPECIF IC QUESTION I.E. WHETHER THE ASSESSEE AVAILED THE EXEMPTION UNDER SECTION 13 F OF SINGAPORE INCOME TAX ACT AND AS SUCH THE FREIGHT RECEIPTS WERE NO T ACTUALLY SUBJECTED TO TAX IN ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 4 OF 12 SINGAPORE. HE ADMITS THAT THE EXEMPTION UNDER SECTI ON 13 F WAS INDEED AVAILED BY THE ASSESSEE IN SINGAPORE AND THAT TO THAT EXTENT HIS EARLIER SUBMISSION WAS GIVING AN INCORRECT IMPRESSION AND W AS RATHER TECHNICALLY WORDED. LEARNED COUNSEL ADMITS THAT THE IMPRESSION GIVEN BY THE CERTIFICATION BY THE INLAND REVENUE AUTHORITY OF SINGAPORE THOUG H TECHNICALLY CORRECT WAS GIVING A RATHER MISLEADING IMPRESSION ABOUT THE STA TUS OF ACTUAL TAXABILITY OF THE FREIGHT RECEIPTS FROM INDIA IN SINGAPORE. HE A LSO STATED THAT EVEN HE WAS NOT AWARE ABOUT THIS ASPECT OF THE MATTER UNTIL HE IN RESPONSE TO BENCHS QUESTION SOUGHT SPECIFIC INSTRUCTIONS FROM THE ASS ESSEE. LEARNED COUNSEL HOWEVER HASTENS TO ADD THAT IT WILL NOT AFFECT THE OUTCOME OF PRESENT APPEAL INASMUCH AS ALL THAT IT IS NECESSARY TO INVOKE THE TREATY PROTECTION IS SINGAPORES RIGHT TO TAX THE SUBJECT FREIGHT RECEIP TS AND NOT THE ACTUAL TAXABILITY IN SINGAPORE. HE SEEKS THE PERMISSION TO RAISE THE FORMAL PLEA TO THAT EFFECT. LEARNED COUNSEL SEEKS ONE DAYS TIME S O THAT THE BENCH MAY BE ADDRESSED ON THIS ASPECT. 4. LEARNED COUNSELS PRAYER IS ACCEPTED AND ACCOR DINGLY THE ADJOURNMENT IS GRANTED FOR ONE DAY. THE HEARING OF THESE APPEALS WILL RESUME TOMORROW I.E. ON 3 RD NOVEMBER 2017 SD/XX 2.11.17 SD/XX 2.11.17 RAJPAL YADAV PRAMOD KUMAR JUDICIAL MEMBER ACCOUNTANT MEMBER SD/XX 3.11.2017 NEERAJ AGARWAL (AR) 6. THE MATTER WAS THEN HEARD ON 3 RD NOVEMBER 2017. PURSUANT TO THE LIBERTY GRANTED BY US THE ASSESSEE HAS ALSO FILED WRITTEN SUBMISSIONS WHICH ARE TAKEN TO RECORD. THE ASSESSEE WAS ASKED TO ARG UE THE MATTER ON THE FIRST PRINCIPLES SINCE IN ALL THE JUDICIAL PRECEDENTS CIT ED BY THE LEARNED COUNSEL AUTHORITIES HAVE PROCEEDED TO ACCEPT WITHOUT ANY Q UESTION OR DOUBT THE CLAIM OF THE ASSESSEE THAT THE RELEVANT INCOME HAS BEEN S UBJECTED TO TAX IN SINGAPORE - A CLAIM WHICH FOR THE DETAILED REASO NS WE WILL SET OUT IN A SHORT WHILE WE HAVE RESERVATIONS ON. WE WILL DEAL WITH T HESE JUDICIAL PRECEDENTS A LITTLE LATER. LEARNED COUNSELS FIRST PLEA IS THAT THE PROVISIONS OF ARTICLE 24 OF INDIA SINGAPORE TAX TREATY CANNOT BE INVOKED ON THE FACTS OF THE PRESENT CASE FOR THE ELEMENTARY REASON THAT THE INDIAN SHIPPING INCOME OF THE SINGAPOREAN ASSESSEE TO QUOTE THE WORDS OF THE LEARNED COUNSEL IS NEITHER EXEMPT FROM TAX IN INDIA NOR TAXED AT REDUCED RATE IN INDIA. H E THEN GOES ON TO DISCUSS THE DIFFERENCE BETWEEN AN INCOME EXEMPT FROM TAX AND AN INCOME WHICH TAXABLE ONLY IN ONE OF THE CONTRACTING STATE. HE THEN REFERS TO ARTICLE 20 21 AND 22 WHICH USE THE EXPRESSION EXEMPT FROM TAX I N THE CONTEXT OF STUDENTS AND TRAINEE AND TEACHERS AND RESEARCHERS. WE ARE U RGED TO COMPARE THE EXPRESSION EMPLOYED IN THESE THREE ARTICLES WITH TH E EXPRESSION EMPLOYED IN ARTICLE 8 WHICH MERELY SAYS THAT THE PROFITS DERIV ED BY AN ENTERPRISE OF A CONTRACTING STATE FROM THE OPERATION OF SHIPS OR AI RCRAFT IN INTERNATIONAL TRAFFIC SHALL BE TAXABLE ONLY IN THAT STATE. ESSENTIALLY THEREFORE THIS INCOME CANNOT BE TREATED AS EXEMPT FROM TAX IN INDIA AS INDIA DO ES NOT HAVE THE RIGHT TO TAX ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 5 OF 12 IT AT ALL AND SINCE IT IS NOT AN INCOME EXEMPT FRO M TAX IN INDIA ARTICLE 24 OF INDIA SINGAPORE TAX TREATY CANNOT AT ALL BE INVOKED . LEARNED COUNSEL THEN RELIES UPON AN ORDER PASSED BY THE TRIBUNAL IN THE CASE OF APL CO PTE LTD VS CIT [(2017) 78 TAXMANN.COM 240 (MUM)] IN SUPPORT OF THIS PROPOSITION. LEARNED COUNSEL THEN SUBMITS THAT THE INCOME IN QUE STION IS TAXABLE ON ACCRUAL BASIS AND NOT ON RECEIPTS BASIS AND FOR THIS SHORT REASON ALONE ARTICLE 24 OF INDO SINGAPORE TAX TREATY DOES NOT CO ME INTO PLAY AT ALL. HE THEN SUBMITS THAT BASED ON THE CERTIFICATE ISSUED BY THE INLAND REVENUE AUTHORITY OF SINGAPORE REGARDING SHIPPING INCOME BEING BROUG HT TO TAX ON ACCRUAL BASIS THIS VERY BENCH OF THE TRIBUNAL IN THE CASE OF ALABRA SHIPPING PTE LTD VS ITO [(2015) 62 TAXMANN.COM 185] HAS UPHELD TREATY ENTITLEMENT OF THE SINGAPOREAN SHIPPING COMPANIES IN INDIA WHICH HAS NOW BEEN CONFIRMED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF MT MAERSK MIKAGE VS DIT [(2016) 72 TAXMANN.COM 359 (GUJ)]. LEARNED COUNSEL THEN REFERS APPARENTLY TREATING THE EXPRESSIONS LIABLE TO TAX AND SUBJECT TO TAX AS SYNONYMOUS TO HONBLE GUJARAT HIGH COURTS JUDGMENT IN THE CASE OF DIT VS VENKATESH KARRIER LTD [ (2012) 349 ITR 124 (GUJ)] AND EMIRATES SHIPPING LINE FZE VS ADIT [(2012) 349 ITR 493 (DEL)] UPHOLDING TREATY PROTECTION FROM UAE SHIPPING COMPANIES EVEN THOUGH BEYOND ANY DISPUTE OR CONTRO VERSY THESE SHIPPING COMPANIES DID NOT PAY ANY TAXES IN UAE EITHER. IT I S THUS CONTENDED THAT THE PAYMENT OF TAX IS NOT A CONDITION PRECEDENT FOR AVA ILING THE TREATY BENEFIT. LEARNED COUNSEL THEN REFERS TO HONBLE SUPREME COU RTS JUDGMENT IN THE CASE OF UNION OF INDIA VS AZADI BACHAO ANDOLAN [(2003) 276 ITR 370 (SC)] AND SPECIFICALLY REFERS TO THE OBSERVATION MADE TH EREIN TO THE EFFECT THAT TO THE EXTENT AN EXEMPTION IS AGREED TO ITS EFFEC T IN PRINCIPLE IS INDEPENDENT OF BOTH WHETHER THE OTHER CONTRACTING STATE IMPOSES A TAX IN A SITUATION TO WHICH THE EXEMPTION APPLIES AND OF WHETHER THE STAT E ACTUALLY APPLIES THE TAX AND THAT THE TREATY NOT ONLY PREVENT CURRENT BUT A LSO POTENTIAL DOUBLE TAXATION. LEARNED COUNSEL THUS URGES US TO HOLD T HAT THE BENEFIT OF ARTICLE 8 OF INDIA SINGAPORE TAX TREATY ARE ADMISSIBLE TO THE AS SESSEE ON THE FACTS OF THIS CASE AND THAT ACCORDINGLY HIS INCOME SHOULD NOT BE HELD TO BE TAXABLE IN INDIA. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND POINTS OUT THAT THE JUDICIAL PRECEDENTS IN FAVOUR OF THE ASSES SEE WERE OBTAINED WITH THE HELP OF MISREPRESENTATION OF FACTS AND THE JUDICIA L PRECEDENTS SO OBTAINED CANNOT HAVE ANY PRECEDENCE VALUE. IT IS POINTED OUT THAT IN THESE JUDICIAL PRECEDENTS THE ASSESSEE HAD ALL ALONG GIVEN THE IMP RESSION THAT THE INCOME IN QUESTION HAS BEEN TAXED IN SINGAPORE AND EVIDENC E IN SUPPORT OF THIS PROPOSITION WERE ALSO FILED AND YET AS IT HAS NOW COME OUT IN OPEN NO TAXES WERE ACTUALLY PAID IN SINGAPORE EITHER. THE ASSESSE E HAS NOW ACCEPTED THAT THE INCOME IN QUESTION WAS AS A RESULT OF AN INCEN TIVE PROVISION IN SINGAPOREAN LAW NOT TAXABLE IN SINGAPORE. WHEN ASS ESSEE HIMSELF ACCEPTS THAT THE INCOME IN QUESTION WAS EXEMPT FROM TAX IN SINGAPORE IT CANNOT BE SAID TO BE HAVE BEEN SUBJECTED TO TAX IN SINGAPORE. THESE EVIDENCES AT THE MINIMUM WERE MISLEADING AND AIMED AT CREATING A WR ONG IMPRESSION ABOUT THE SINGAPOREAN TAXABILITY OF INCOME IN QUESTION. H E POINTS OUT THAT IT IS FOR THE FIRST TIME AND AS A RESULT OF SPECIFIC QUESTIONS B Y THE BENCH THAT THE FACT OF THIS INCOME BEING EXEMPT FROM TAX IN SINGAPORE HAS COME TO THE LIGHT NOW. HE SUBMITS THAT LOOKING TO THE SCHEME OF THE INDO SING APORE TAX TREATY WHICH ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 6 OF 12 SPECIFICALLY STATES THAT ONLY SUCH INCOME CAN BE GI VEN TREATY BENEFIT IN INDIA WHICH HAS SUFFERED TAX IN SINGAPORE- AS EVIDENT FRO M ARTICLE 24 AN INCOME WHICH IS NOT TAXED IN SINGAPORE CANNOT BE GRANTED T AX EXEMPTION IN INDIA. LEARNED DEPARTMENTAL REPRESENTATIVE RELIES UPON THE STAND OF THE AUTHORITIES BELOW AND AS IF TAKING A CUE FROM THE OBSERVATION S MADE BY US FROM THE BENCH SUBMITS THAT ARTICLE 24 AT LEAST MAKES IT CL EAR THAT WHAT HAS NOT ACTUALLY SUFFERED TAX IN ONE COUNTRY CANNOT AT ALL BE ALLOWE D TREATY BENEFIT IN THE OTHER COUNTRY AND FOR THIS SHORT REASON ALONE THE ASSE SSEE CANNOT BE ALLOWED TREATY BENEFIT IN INDIA. HE SEEKS LIBERTY TO FILE T HE WRITTEN SUBMISSION ON THE BASIS OF INPUTS FROM THE INTERNATIONAL TAXATION WIN G AND IN ANY CASE SUBMITS THAT AS EVIDENT FROM THE QUESTIONS PUT BY THE BENC H- WHICH LEARNED COUNSEL HAS NOT BEEN ABLE TO ANSWER THESE PLEAS ARE NOT SU STAINABLE IN LAW. WE ARE URGED TO CONFIRM THE STAND OF THE AUTHORITIES BELOW AND DECLINE TO INTERFERE IN THE MATTER. WE HAVE HEARD THE RIVAL CONTENTIONS PE RUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. WE MAY BEGIN BY REPRODUCING THE CERTIFICA TES OBTAINED BY THE ASSESSEE FROM THE KPMG AND THE INLAND REVENUE AUTHO RITY OF SINGAPORE WHICH READ AS FOLLOWS: 1. CERTIFICATE FROM THE KPMG SERVICES PTE LTD 20 FEBRUARY 2017 . WE ISSUE THIS CLARIFICATION IN THE CAPACITY AS TAX ADVISORS TO BP SINGAPORE PTE LTD. BASED ON THE AUDITOR'S CERTIFICATION DATED 14 JUNE 2016 THAT THE FREIGHT INCOME OF BP SINGAPORE PTE LTD (AS SPECIFIED PREVIO USLY IN APPENDIX 1 OF OUR FETTER DATED 24 JUNE 2016) FOR THE FINANCIA L YEARS ENDED DECEMBER 2014 AND DECEMBER 2015 HAVE BEEN INCLUDED AS PART OF THE COMPANY'S PROFITS IN THE RESPECTIVE FINANCIAL YEARS WE CONFIRM THAT SUCH FREIGHT INCOME HAS BEEN LIABLE TO SINGAPORE IN COME TAX AND HAS BEEN INCLUDED IN THE SINGAPORE INCOME TAX RETURNS F OR THE YEARS OF ASSESSMENT 2015 AND 2016 RESPECTIVELY. 2. CERTIFICATE FROM INLAND REVENUE AUTHORITY OF SIN GAPORE .. DATE: 21/02/17 I REFER TO YOUR EMAILS DATED 10 AND 13 FEBRUARY 201 7 AND OUR TELEPHONE CONVERSATION ON 13 FEBRUARY 2017 IN RESPECT OF YOUR REQUEST FOR CONFIRMATION THAT THE FREIGHT INCOME RECEIVED FROM INDIA HAD BEEN SUBJECT TO TAX IN SINGAPORE. SECTION 10(1)(A) OF THE SINGAPORE INCOME TAX ACT (S ITA) PROVIDES THAT TAX SHALL BE PAYABLE UPON THE INCOME OF ANY PERSON ACCRUING IN OR DERIVED FROM SINGAPORE OR RECEIVED IN SINGAPORE FRO M OUTSIDE SINGAPORE IN RESPECT OF GAINS OR PROFITS FROM ANY T RADE BUSINESS PROFESSION OR VOCATION. AS SUCH WHERE THE INCOME I S ACCRUING IN OR DERIVED FROM SINGAPORE IT WOULD BE TAXED IN SINGAP ORE EVEN IF IT IS NOT ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 7 OF 12 REMITTED INTO SINGAPORE. IN THIS REGARD WE UNDERST AND THAT THE FREIGHT INCOME RECEIVED FROM INDIA HAD BEEN ACCRUED IN/ DER IVED FROM SINGAPORE. IN COMPLIANCE WITH SINGAPORE TAX LAWS T HE FREIGHT INCOME HAD BEEN BROUGHT TO TAX IN SINGAPORE ON AN ACCRUAL BASIS IN THE RELEVANT YEARS EVEN THOUGH IT HAD NOT BEEN REMITTED INTO SIN GAPORE. YOU HAVE REQUESTED FOR US TO CONFIRM THAT THE FREIG HT INCOME RECEIVED FROM INDIA HAD BEEN TAXED IN SINGAPORE. IN RELATION TO THIS WE HAVE REVIEWED THE INFORMATION PROVIDED AND CONFIRM THAT THE FREIGHT INCOME RECEIVED FROM INDIA HAD BEEN BROUGHT TO TAX IN SING APORE IN THE YEARS OF ASSESSMENT ('YA') 2015 (BASIS PERIOD: 1 JANUARY 201 4 TO 31 DECEMBER 2014) AND 2016 (BASIS PERIOD: 1 JANUARY 2015 TO 31 DECEMBER 2015). WE TRUST THE ABOVE IS SUFFICIENT FOR YOUR REQUIREME NTS. 7. THESE CERTIFICATES GIVE AN IMPRESSION THAT THE F REIGHT INCOME RECEIVED FROM INDIA HAS BEEN SUBJECTED TO TAX IN SINGAPORE. IN RESPONSE TO ASSESSEES REQUEST FOR CONFIRMING THAT FREIGHT INCOME RECEIVE D FROM INDIA HAS BEEN TAXED IN SINGAPORE THE IRAS HAS STATED THAT BASED ON T HEIR REVIEW OF INFORMATION SUPPLIED BY THE ASSESSEE THE FREIGHT INCOME RECEI VED FROM INDIA HAS BEEN BROUGHT TO TAX IN SINGAPORE. LET US CONSIDER THIS IS IN THE LIGHT OF THE FACTUAL POSITION ADMITTED BEFORE US TO THE EFFECT THAT THE ASSESSEE HAS AVAILED EXEMPTION UNDER SECTION 13F OF THE SINGAPORES INCO ME TAX ACT AND TO THAT EXTENT THE INCOME EMBEDDED IN THESE RECEIPTS HAS N OT ACTUALLY BEEN TAXED IN SINGAPORE. WHEN LEARNED COUNSEL IS CONFRONTED WITH THIS GLARING CONTRADICTION HE SUBMITS THAT A MERE EXEMPTION OF INCOME IN SINGA PORE DOES NOT TAKE THAT INCOME OUT OF THE AMBIT OF INCOME LIABLE TO BE TAXE D IN SINGAPORE AND IT WILL BE ELIGIBLE FOR TREATY BENEFITS NEVERTHELESS. WE WI LL TAKE UP THESE LEGAL NICETIES A LITTLE LATER BUT STAYING WITH THE FACTUAL ASPECT OF THE MATTER IT IS NOT IN DISPUTE THAT THE INCOME EMBEDDED IN THE FREIGHT RECEIPTS FR OM INDIA WAS NOT ACTUALLY SUBJECTED TO TAX IN SINGAPORE EVEN THOUGH IT WAS LI ABLE TO BE TAXED THERE BY THE VIRTUE OF FISCAL DOMICILE OF THE ASSESSEE. TO P UT A QUESTION TO OURSELVES IS IT WHAT IS ACTUALLY CONVEYED BY THE CERTIFICATES IS SUED BY THE INLAND REVENUE OF AUTHORITY OF SINGAPORE OR THE PUBLIC ACCOUNTING FIRM KPMG. WE DO NOT THINK SO. KMPG CERTIFICATE TALKS ABOUT TAXATION OF ACCRUAL BASIS UNDER SECTION 10(1) OF THE SINGAPORE INCOME TAX ACT WITHOUT ANY FIRM COMMENTS ON ACTUAL TAXABILITY AND IRAS CERTIFICATE RELYING UPON THE INFORMATION FURNISHED BY THE ASSESSEE CONFIRMS THAT THE SAID INCOME HAS BEEN BR OUGHT TO TAX IN SINGAPORE. BRINGING AN INCOME TO TAX IN SINGAPORE TO A LAYMAN AND EVEN TO JUDICIAL OFFICERS LIKE US WITH CUMULATIVE EXPERIENC E OF OVER 33 YEARS IN THE INCOME TAX APPELLATE TRIBUNAL ITSELF SUGGESTS AN INCOME BEING ACTUALLY TAXED IN SINGAPORE BUT THIS IS ADMITTEDLY NOT THE CORRECT POSITION. THE SAID INCOME WAS NEVER ACTUALLY TAXED IN SINGAPORE. WHAT THESE CERTIFICATES MISS OUT IS THE VITAL FACT THAT THE SAID INCOME WAS NEVE R ACTUALLY TAXABLE IN SINGAPORE- THOUGH BY THE VIRTUE OF A SPECIFIC INCEN TIVE PROVISION. UNDOUBTEDLY BY THE VIRTUE OF THE ASSESSEE BEING FISCALLY DOMICI LED IN SINGAPORE THE SAID INCOME WAS LIABLE TO TAX BUT THEN LIABLE TO TAX IS NOT THE SAME THING AS SUBJECT TO TAX. ELABORATING UPON IMPORTANT DIFFER ENCE BETWEEN THE SCOPE OF THESE TWO IMPRESSIONS HONBLE AUTHORITY FOR ADVANC E RULING IN THE CASE OF ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 8 OF 12 GENERAL ELECTRIC PENSION TRUST IN RE [(2006) 280 IT R 425 (AAR)] HAS OBSERVED THAT IT IS WORTH POINTING OUT THAT THE PHRASE 'LIABLE TO TAX IN PARA 1 AND THE PHRASE 'SUBJECT TO TAX IN PROVISO ( B) ARE NOT SYNONYMOUS. IF BOTH WERE TO BE READ AS SYNONYMOUS PROVISO (B) WOULD BECOME OTIOSE . THERE CANNOT BE ANY DISPUTE OR CONTROVERSY ON TH IS PROPOSITION AND WE ARE CONSIDERED AGREEMENT WITH THESE OBSERVATIONS OF THE AUTHORITY OF ADVANCE RULING. AS REGARDS LEARNED COUNSELS RELIA NCE UPON THE JUDICIAL PRECEDENTS IN THE CASES OF AZADI BACHAO ANDOLAN (SUPRA) VENKATESH KARRIER (SUPRA) AND EMIRATE SHIPPING LINES (SUPRA) THESE WERE THE CASES IN WHICH THE EXPRESSION LIABLE TO TAX IN THE CON TEXT OF ARTICLE 4(1) OF INDIA UAE DOUBLE TAXATION AVOIDANCE AGREEMENT AND INDIA M AURITIUS DOUBLE TAXATION AVOIDANCE AGREEMENT WHICH APPEARED ALONGW ITH THE WORDS 'BY REASON OF DOMICILE RESIDENCE PLACE OF MANAGEMENT PLACE OF INCORPORATION OR ANY OTHER CRITERION OF SIMILAR NATURE. THESE DTAAS ARE QUITE DIFFERENT FROM THE ONE THAT WE ARE DEALING WITH INASMUCH AS THE EMPHAS IS ON SUBJECT TO TAX IN THE INDIA SINGAPORE DTAA IS CLEAR AND UNAMBIGUOUS AND ARTICLE 24 LEAVES NO DOUBT ABOUT THIS UNDERLYING THRUST OF THE DOUBLE TA XATION AVOIDANCE AGREEMENT. AS TO WHAT IS THE SCOPE OF SUBJECT TO TAX WE FIND GUIDANCE FROM UKS HMRC INTERNATIONAL MANUAL ( HTTPS://WWW.GOV.UK/HMRC-INTERNAL- MANUALS/INTERNATIONAL-MANUAL/INTM162090 ) WHICH INTER ALIA STATES THAT IT SHOULD BE NOTED THAT THE TERM SUBJECT TO TAX IS DIFFERENT FROM BEING LIABLE TO TAX. LIABLE TO TAX MEANS THAT THE CUS TOMER ONLY NEEDS TO BE WITHIN THE GENERAL SCOPE OF TAX IN THE UK.. ON TH E OTHER HAND SUBJECT TO TAX MEANS THAT THE RELEVANT INCOME HAS TO BE ACTUALLY TAXABLE AND THE CUSTOMER CANNOT BE EXEMPT FROM TAX ON THAT INCOME. 8. CLEARLY THEREFORE THE RELIEF GRANTED IN THE JU DICIAL PRECEDENTS IN QUESTION MAY HAVE BEEN BASED ON AN ERRONEOUS IMPRES SION OF THE FACT REGARDING ACTUAL TAXABILITY IN SINGAPORE OF THE I NCOME EMBEDDED IN THE FREIGHT RECEIPTS FROM INDIA PARTICULARLY AS THE IN COME WAS ACTUALLY EXEMPT FROM TAX IN SINGAPORE AS WELL. AS A MATTER OF FACT WHEN THE ISSUE REGARDING NON-TAXABILITY OF THIS INCOME IN SINGAPORE WAS RAIS ED BEFORE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MT MERSEK MIKAGE (SUPRA). THEIR LORDSHIPS DECLINED TO DEAL WITH THIS ASPECT OF THE MATTER AS IT WAS BEING RAISED BEFORE THEIR LORDSHIPS FOR THE FIRST TIME BU T THEN THEIR LORDSHIPS SPECIFICALLY LEFT THIS ISSUE OPEN TO BE DECIDED IN AN APPROPRIATE CASE BY OBSERVING AS FOLLOWS: 21. BEFORE CLOSING WE MAY BRIEFLY TOUCH ON ONE MORE ASPECT SOUGHT TO BE RAISED BY THE REVENUE VIZ. OF THE ACTU AL TAX BEING PAID BY THE ASSESSEE ON SUCH INCOME AT SINGAPORE ON THE GRO UND THAT SUCH INCOME IS EXEMPT FROM PAYMENT OF TAX THE REVENUE D ESIRED TO IMPOSE TAX IN INDIA. . 22. IN THE PRESENT CASE HOWEVER WE ARE NOT INCLIN ED TO CONCLUDE THIS ISSUE SINCE THIS WAS NOT EVEN A GROUND ON WHICH EIT HER THE ASSESSING OFFICER OR THE COMMISSIONER HAS REFUSED TO GRANT TH E BENEFIT TO THE PETITIONER. IT IS A GROUND SOUGHT TO BE RAISED FOR THE FIRST TIME BEFORE US BY THE REVENUE FOR WHICH NEITHER FULL FACTUAL EVI DENCE NOR LEGAL ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 9 OF 12 FOUNDATION IS LAID. WE LEAVE SUCH AN ISSUE OPEN TO BE DECIDED IN THE APPROPRIATE CASE. 9. AS REGARDS THE PLEA THAT ASSESSEES INCOME EMBE DDED IN FREIGHT RECEIPTS FROM INDIA IS NOT EXEMPT FROM TAX IN INDIA SUCH A PLEA IS CONTRARY TO THE SCHEME OF THEE INDIA SINGAPORE TAX TREATY. WHIL E ASSIGNING MEANING TO A TERM EMPLOYED IN THE TAX TREATY ONE MUST NOT LOSE SIGHT OF ARTICLE 3(2) WHICH GIVES PRIMACY TO THE CONTEXT IN WHICH THE TERM IS U SED. ELABORATING UPON THIS PRINCIPLE A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HINDALCO INDUSTRIES LIMITED VS ACIT [(2005) 94 ITD 242 (MUM) ] IN PARAGRAPH 18 THEREOF HAD OBSERVED THAT . THE PURPOSE OF THE RELEVANT PROVISION IN THE TAX TREATY IS INDEED ONE OF THE RELEVANT CONSIDERAT IONS IN DECIDING THE CONTEXTUAL MEANING. SECOND EVEN IF IT IS DEBATABLE AS TO WHETHER CONTEXTUAL MEANING OF A TERM HAS PRECEDENCE OVER TH E DOMESTIC TAX LAW MEANING OF THAT TERM IT IS ALSO CERTAINLY NOT ANYB ODYS CASE THAT DOMESTIC LAW MEANING OF A TERM WILL HAVE PRECEDENCE OVER THE CONTEXTUAL MEANING OF THAT TERM; THE DISPUTE IS ONL Y WITH REGARD TO WHETHER AN INTERPRETATION SEEKING ADOPTION OF CONTE XTUAL MEANING OR TREATY MEANING AS LEARNED AUTHORS PUT IT HAS TO ON US TO DEMONSTRATE THAT SUCH A MEANING MUST BE ADOPTED IN THE PRESENT CONTEXT . THE EXPRESSION EXEMPT FROM TAX IS AN UNDEFINED TERM I N THE TREATY AND THE CONTEXT IN WHICH IT IS USED IN ARTICLE 24 IS THAT W HEN AN INCOME IS GRANTED AN EXCLUSION FROM TAXABLE INCOME IN ONE OF THE CONTRAC TING STATE OR TAXED AT A LOWER RATE IN ONE OF THE CONTRACTING STATE SUCH AN EXCLUSION MUST DEPEND ON ITS STATUS OF TAXABILITY IN THE OTHER CONTRACTING S TATE. THE CONTEXT IN WHICH EXPRESSION EXEMPT FROM TAX IS SET OUT IN ARTICLE 24 IT ESSENTIALLY IMPLIES THAT THE TREATY BENEFIT OF NON-TAXATION OF AN INCOME OR ITS BEING TAXED AT A LOWER RATE IN A CONTRACTING STATE DEPENDS ON THE STATUS OF TAXABILITY IN ANOTHER CONTRACTING STATE. IN SUCH A SITUATION TO HOLD THA T ONLY INCOME COVERED BY ARTICLE 20 21 AND 22 CAN BE SAID TO BE EXEMPT IN T HE SOURCE STATE BECAUSE THE EXPRESSION EXEMPT FROM TAX IS USED THEREIN I S PLAINLY CONTRARY TO THE CONTEXT IN WHICH EXPRESSION EXEMPT FROM TAX IS US ED; IT IS THE NET EFFECT NOT THE WORDING WHICH IS RELEVANT IN THE PRESENT CONTEX T. IN ANY CASE WHAT IS REFERRED TO AS EXEMPTION UNDER ARTICLE 20 21 AND 2 2 OF INDO SINGAPORE TAX TREATY IN THE SOURCE COUNTRY ARE CONDITIONAL EXEMPT IONS SUBJECT TO THE RIDERS WHEREAS AN INCOME EXEMPT UNDER ARTICLE 8 IS PLAIN V ANILLA PROVISION. WHETHER AN INCOME IS TAXED ONLY IN THE RESIDENCE COUNTRY OR WHETHER AN INCOME IS EXEMPT FROM TAX IN THE SOURCE COUNTRY THE EFFECT O N EXEMPTION OF INCOME IN THE SOURCE COUNTRY IS THE SAME- PARTICULARLY IN THE CONTEXT OF THE TREATY BENEFIT BEING DEPENDENT ON THE TAXATION INN THE RESIDENCE C OUNTRY IS CONCERNED. THE WORDINGS MAY DIFFER BUT THE IMPACT IS THE SAME AND THAT IS ALL THE MORE CLEAR WHEN SEEN IN THE CONTEXT IN WHICH THE ISSUE ARISES. EVEN IF THE MEANING CANVASSED BY THE LEARNED COUNSEL WAS TO BE DEFINED IN THE STATUTE OR THE TREATY ITSELF IN VIEW OF THE CONTEXTUAL REQUIREMEN TS SUCH A MEANING WAS TO BE DISCARDED IN THE PRESENT CONTEXT. HAVING SAID THAT WE ARE AWARE THAT THERE IS A DIVISION BENCH WHICH HAS TAKEN A CONTRARY VIEW ON T HE BASIS OF A VERY ERUDITE ANALYSIS OF THE TREATY PROVISIONS BUT WITHOUT TAK ING INTO ACCOUNT THE PROVISIONS OF ARTICLE 3(2) AND BINDING JUDICIAL PRE CEDENT ON THE SAME. WHILE ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 10 OF 12 WE HAVE HIGHEST RESPECT AND REVERENCE FOR THE VIEW SO ADOPTED BY THE COORDINATE BENCH AS WELL IT IS JUST THAT WE DO NOT FIND OURSELVES IN AGREEMENT WITH THE SAME. TO US IT APPEARS THAT THE VIEW EXPR ESSED BY THE COORDINATE BENCH IS SO MUCH OUT OF CONTEXT THAT EVEN THE IRAS CERTIFICATE FROM THE RESIDENCE COUNTRY WHICH HAS BEEN REPRODUCED IN THE ORDER ITSELF DOES NOT ENVISAGE TREATY BENEFIT IN A SITUATION IN WHICH THE SHIPPING PROFITS IN INDIA ARE TAXED ON REMITTANCE BASIS IN SINGAPORE AND THE REM ITTANCES TO SINGAPORE HAVE NOT BEEN MADE BUT THEN GOING BY THE ANALYSIS OF THE COORDINATE BENCH THE TAXATION IN SINGAPORE IN SUCH A SITUATION IS WH OLLY IRRELEVANT. THATS CLEARLY AN INCONGRUITY AND IS GOING MUCH BEYOND WHAT IS EVE N IMAGINED BY SINGAPORE. AS FOR THE REFERENCES TO ARTICLE 20 21 A ND 22 FOR THE APPLICATION OF ARTICLE 24 LOB CLAUSE IT IS WHOLLY MISCONCEIVED IN ASMUCH AS IN THE ARTICLE 20 AND 21 SITUATION TAX OBJECT IS CURRENT RESIDENT OF SOURCE STATE (WHO WERE RESIDENT OF THE OTHER CONTRACTING STATE IN THE IMME DIATELY PRECEDING PERIOD- I.E. SINGAPORE IN THE PRESENT CONTEXT) AND AS SUCH REMIT TANCE RULE DOES NOT AT ALL COME INTO PLAY AND IN THE ARTICLE 22 ONLY GOVERNME NTAL INSTITUTIONS ARE REFERRED WHICH ARE ANYWAY NOT TAXABLE IN THE RESID ENCE STATE REMITTANCE RULE DOES NOT COME INTO PLAY AT ALL. THE CONCLUSION THUS ARRIVED AT BY THE BENCH LEADS TO A SITUATION IN WHICH ARTICLE 24 IS OTIOSE BUT THEN AS IS THE ELEMENTARY LEGAL POSITION A TREATY OR A STATUTE CANNOT BE INT ERPRETED IN SUCH A MANNER SO AS TO MAKE A PROVISION REDUNDANT AS IS REFLECTED I N THE LEGAL MAXIM UT RES MAGIS VALEAT QUAM PEREAT [ SEE HERMAN JS OBSERVATIONS IN UNION TEXAS PETROLEUM CORPORATION VS. CRITCHLEY (1988) STC 69 AFFIRMING THE OBSERVATIONS OF GOULDING J. IN IRC VS. EXXON CORPORATION (1982) STC 356 AT P. 359 REFERRED IN HINDALCO INDUSTRIES (SUPRA)]. IN ANY CASE THE INTERPRETATION OF A TAX TREATY IS NOT THE SAME THIN G AS INTERPRETATION OF A STATUTE AND THERE ARE WELL SETTLED GROUND RULES FOR INTERPR ETATION OF STATUTES WHICH HAVE BEEN LAID DOWN BY SEVERAL DECISIONS OF THE COO RDINATE BENCHES AND THE INTERPRETATION BY THE COORDINATE BENCH IS CLEARLY C ONTRARY TO THE LAW LAID DOWN BY THESE BINDING JUDICIAL PRECEDENTS. FOR ALL THESE REASONS TAKEN TOGETHER AS ALSO INDEPENDENT OF EACH OTHER THE VIEWS OF THE CO ORDINATE BENCH DO NOT APPEAL TO US AND WE DO NOT THINK IT APPROPRIATE TO UPHOLD THIS PLEA OF THE ASSESSEE. NOTWITHSTANDING OUR INABILITY TO CONCUR WITH THE VI EWS OF THE COORDINATE BENCH HOWEVER WE SEE NO NEED TO REFER THE MATTER TO A LARGER BENCH AS THE EARLIER BINDING JUDICIAL PRECEDENTS S UCH AS HINDALCO INDUSTRIES (SUPRA) ON THE ROLE OF CONTEXT IN INTERPRETATION O F A TREATY TERM WERE NOT BROUGHT TO THE NOTICE OF THE BENCH AND TO THAT EX TENT THIS DECISION DOES NOT CONSTITUTE A BINDING JUDICIAL PRECEDENT IN THE LIGH T OF LAW LAID DOWN BY HONBLE AP HIGH COURTS FULL BENCH DECISION IN THE CASE OF CIT VS B R CONSTRUCTIONS [(2002) 202 ITR 222 (AP)]. THAT APART FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE WE ARE NOT ADJUDICATING THE MATTER ON MERITS ANYWAY AND THEREFORE THERE CANNOT BE ANY OCCASION TO REFER TH IS ISSUE WHICH IS PURELY ACADEMIC AS ON NOW TO A LARGER BENCH. 10. WE HAVE NOTED THAT THE ADDITIONAL EVIDENCE SUBM ITTED BY THE ASSESSEE WAS ADMITTED BY US AND THIS ADDITIONAL EVIDENCE HAS NOT BEEN CONSIDERED BY ANY OF THE AUTHORITIES BELOW AND THAT CERTAIN FACT UAL ASPECTS OF THE MATTER HAVE COME TO LIGHT ONLY AS A RESULT OF QUESTIONS PU T BY THE BENCH AND THE ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 11 OF 12 AUTHORITIES BELOW THEREFORE DID NOT HAVE ANY OCCA SION TO DEAL WITH THESE ASPECTS IN SUFFICIENT DETAIL. AS A RESULT OF THESE FACTUAL ASPECTS COMING TO LIGHT THERE ARE SOME INTERESTING LEGAL PROPOSITIONS HAVE ALSO COME TO THE CENTRE STAGE. IT IS AN ASPECT TO BE CONSIDERED WHETHER EVE N IF THE INCOME IS ACTUALLY EXEMPT FROM TAX IN THE RESIDENCE JURISDICTION GIVE N THE UNAMBIGUOUS THRUST OF THE TREATY ON INCOME BEING SUBJECTED TO TAX IN ONE CONTRACTING STATE TO BE ABLE TO CLAIM TREATY PROTECTION IN THE OTHER CONTRACTING STATE AND AVOIDANCE OF DOUBLE NON-TAXATION IS A CLEAR OBJECTIVE OF THE IND O SINGAPORE TAX TREATY SUCH AN EXEMPT INCOME WILL ALSO BE LIABLE TO GET TREATY PROTECTION IN THE SOURCE STATE. WE DID NOT HAVE THE BENEFIT OF HEARING PARTI ES IN SUFFICIENT DETAIL ON THESE ISSUES NOR IS IT REASONABLE TO EXPECT THAT SU CH ISSUES COMING UP FOR THE FIRST TIME BEFORE US CAN BE ADDRESSED SUITABLY ON SUCH SHORT NOTICE. LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO MADE A SPECIFIC R EQUEST FOR DETAILED HEARING ON THE NEW ISSUES THAT HAVE COME TO THE LIG HT DURING THE COURSE OF HEARING OF THIS APPEAL. LEARNED DEPARTMENTAL REPRES ENTATIVE WHO HAD SOUGHT LIBERTY TO FILE WRITTEN SUBMISSIONS IN THE L IGHT OF INPUTS FROM THE DIRECTORATE OF INTERNATIONAL TAXATION HAS ALSO NOT BEEN ABLE TO FILE THE WRITTEN SUBMISSIONS TILL NOW AND WE DO NOT HAVE THE BENEFI T OF DEPARTMENTAL STAND ON THESE ISSUES EITHER. IN ANY EVENT AS ADDITIONAL EV IDENCE IS SUBMITTED AT THE STAGE OF PROCEEDINGS BEFORE US AND AS THE NEW FACTS HAVE COME TO LIGHT AT THE STAGE OF HEARING BEFORE US THE PARTIES ALSO SHOULD HAVE A FULL OPPORTUNITY OF PRESENTING THEIR CASE IN THE LIGHT OF THESE FACTS EVEN THOUGH THIS SITUATION HAS ARISEN DUE TO THEIR EVASIVE AND NOT SO TRANSPARENT CONDUCT. LET ALL THE RELEVANT ASPECTS BE EXAMINED AFRESH IN THIS LIGHT AND THE PE RSPECTIVES OF BOTH THE PARTIES BE TAKEN TO THE RECORD AND BE ANALYSED PROP ERLY PARTICULARLY AS THIS ISSUE CONCERNS A LARGE NUMBER OF SINGAPOREAN COMPAN IES OPERATING INDIA. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND ENTIR ETY OF THE CASE WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF T HE LEARNED CIT(A) FOR ADJUDICATION DE NOVO IN THE LIGHT OF THE NEW FACTS EMERGING AS ABOVE IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING OR DER. ALL THE ISSUES ARE LEFT OPEN. WE DIRECT SO. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF TH E MATTER THAN THE VIEW SO TAKEN BY US AS ABOVE. RESPECTFULLY FOLLOWING OUR VIEWS AS ABOVE WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER IN THIS CASE AS W ELL. OUR OBSERVATIONS AS ABOVE WILL APPLY MUTATIS MUTANDIS IN THIS CASE AS WELL. 5. IN THE RESULT THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 28 TH DAY OF NOVEMBER 2017. SD/- SD/- RAJPAL YADAV PRA MOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 28 TH DAY OF NOVEMBER 2017 **AM**BT ITA NO. 410/RJT/2016 INTEROCEAN SHIPPING (I) PVT LTD VS. ITO ASSESSMENT YEAR: 2015-16 PAGE 12 OF 12 COPIES TO: (1) THE APPELLANT (2) THE RESPONDE NT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT 1. DATE OF DICTATION: ..27.11.2017- PREPARED BY HO NBLE AM ON HIS OWN COMPUTER-...... ... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ....27.11.2017....... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: 28.11.2017....... . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 28.11.2017.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : 28.11.2017.. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE 8. ON THE ORDER: ..