What the courts have decided on section Article 8, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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M/s Atlantic Shipping Pvt Ltd v ITO (International Taxation)
High CourtHelps taxpayerValidity unconfirmed
Our principal's freight was exempt under Article 8, but the officer says Article 24 applies because the freight went to a London account. Who wins?
The shipowner wins on these facts. The Gujarat High Court held that the assessee is entitled to the benefit of Article 8 of the India-Singapore treaty and that Article 24, the limitation of relief clause, does not apply, quashing the Tribunal's direction to send the matter back to the Assessing Officer to verify the Singapore tax authority's certificate.
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DIT (International Taxation) v Venkatesh Karrier Ltd — Article 8 of the India-UAE treaty ousts the section 172 levy where the ship belongs to a UAE resident
High CourtHelps taxpayerValidity unconfirmed
We are the Indian agent of a ship owned by a UAE company. We filed the section 172(3) return claiming nothing was payable because of the treaty, and the Assessing Officer taxed 7.5 per cent of the freight without explaining why. Does the treaty defeat the section 172 levy, and what does the Board say?
On the India-UAE treaty, yes. The Gujarat High Court held that where the owner of the ship is admittedly a resident of the UAE, Article 8 of the India-UAE Double Taxation Avoidance Agreement leaves no scope for taxing the income of the ship at any Indian port, because the agreement between the two countries has ousted the jurisdiction of the Indian taxing officers to tax profits derived by the enterprise. The Court reached that conclusion on Article 8 read with two Board circulars which it described but which are not reproduced in the judgment and which I did not read in their own words: Circular No. 333 dated 2 February 1982, which the Court said states that the provisions made in a DTAA prevail over the general provisions of the Act, and Circular No. 732 dated 20 December 1995, which the Court said clarifies that where ships are owned by an enterprise of a country with which India has a treaty providing for taxation of shipping profits only in the country of residence, no tax is payable by such ships at Indian ports.
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DDIT (International Taxation) v Safmarine Container Lines NV — inland haulage charges fall within Article 8 of the India-Belgium treaty, and the domestic charge then becomes academic
ITATHelps taxpayerValidity unconfirmed
Our Belgian shipping client bills its exporters a single freight covering carriage from an inland container depot to the Indian port and then to the foreign destination. The Assessing Officer has taxed the inland leg separately as business profits. Does the shipping Article cover the inland haulage?
Under the India-Belgium treaty, on these facts, yes. The Mumbai Bench of the Tribunal dismissed the Revenue's appeal, holding that the issue was covered by a coordinate bench decision in the assessee's own case for assessment year 2001-02, reported at 120 ITD 71, which had held that inland transportation coupled with the further shipping of the cargo by the assessee from the Indian port to the foreign country is an "activity directly connected with such transportation" falling within Article 8(2)(b)(ii) of the India-Belgium agreement, and expressed its considered and respectful agreement with that view. Because the treaty allots the income exclusively to the residence State, the Tribunal held the question whether the income was chargeable under the domestic Act at all was wholly academic.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.