Law:

Section:

Section 90, read with section 172, of the Income-tax Act, 1961 and article 7 of the Double Taxation Avoidance Agreement between India and Switzerland - Double taxation relief - Where agreement exists - Assessment years 2008-09 and 2009-10 - Whether shipping business income earned by a non-resident from international operations is outside purview of Treaty and it is to be taxed under domestic law - Held, yes - Applicant is a non-resident shipping company incorporated under laws of Switzerland - It entered into a shipping contract with a company 'Dubai Charterer' for transportation of cargo from Indian ports to outside India - Said company was an independent party engaged in business of transportation/arranging transportation of cargoes - As per said agreement, amount of freight for transportation of cargoes was invoiced and received by applicant and it paid a certain percentage of freight amount to Dubai Charterer as commission - Later, applicant appointed a firm as its port agent in India for handling cargoes - Said firm had deposited income-tax under section 172 on behalf of applicant - During relevant assessment years, it filed its returns of income under section 172(3) - Assessing Officer passed an order of assessment under section 172(4) for assessment year 2008-09 - Subsequently, applicant elected for assessment of its total income as per section 172(7) by relying upon article 7 and article 22 of DTAA and claimed that if those provisions of Treaty would be applied, then its income from shipping of cargoes from Indian ports to outside India would not be subjected to tax because it has no permanent establishment in India - Whether, on facts, freight income received by applicant on account of carrying cargoes from Indian ports to foreign ports by deploying chartered vessels is liable to be taxed in India under provisions of Income-tax Act, 1961 and such income is not covered by DTAA between India and Swiss Confederation - Held, yes FACTS The applicant is a non-resident shipping company incorporated under the laws of Switzerland. During the relevant financial years, it entered into a shipping contract with a company 'Dubai Charterer' for transportation of…

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