The Supreme Court on Wednesday agreed to examine the Income Tax Department’s challenge to a Gujarat High Court judgment that granted Singapore-based ST Shipping the benefit of Article 8 of the India-Singapore Double Taxation Avoidance Agreement (DTAA).
Article 8 of the India-Singapore DTAA governs the taxation of shipping and air transport.
A Bench of Justices P S Narasimha and Alok Aradhe issued notice on the Revenue’s appeal and said the matter would be listed for hearing on a later date.
The dispute concerns the tax treatment of freight income earned by ST Shipping from the operation of ships in international traffic. Under Article 8 of the India-Singapore DTAA, such income is taxable only in the country where the enterprise is resident.
The Income Tax Department denied the treaty benefit, contending that the freight receipts had been remitted to the company’s bank account in London instead of Singapore. It argued that the exemption was unavailable because of Article 24 of the DTAA, the limitation of relief clause, which governs situations where income is taxed on a remittance basis.
The assessment was upheld by the Commissioner of Income Tax (Appeals). However, the Income Tax Appellate Tribunal (ITAT), Rajkot, remanded the matter to the Assessing Officer to verify a tax residency certificate issued by the Inland Revenue Authority of Singapore (IRAS). The Tribunal observed that if the Revenue failed to rebut the certificate, the assessee would be entitled to relief in line with the Gujarat High Court’s earlier ruling in M.T. Maersk Mikage.
The Gujarat High Court, in its October 15, 2025, judgment, set aside the ITAT’s remand order. It held that the Tribunal could not reopen an issue that had already been settled by the High Court in M.T. Maersk Mikage.
Relying on that precedent, the High Court reiterated that Article 24 would not apply where the income was taxable in Singapore on an accrual basis rather than only upon remittance. It also noted that the Revenue had failed to produce any material casting doubt on the validity of the IRAS certificate.
The High Court consequently held that ST Shipping was entitled to the benefit of Article 8 of the India-Singapore DTAA, making its shipping profits taxable only in Singapore.
