Rajkot ITAT holds that
income of assessee (a UAE Co.) arising from operation of ships in India, not
taxable, grants relief under Article 8 of India-UAE DTAA for AY 2008-09;
Revenue had denied treaty benefits claiming that assessee could not be treated
as a resident of UAE considering that its directors and shareholders were not
UAE residents and its AGM was held outside UAE; ITAT notes that assessee
was ‘liable to tax’ in UAE by the virtue of incorporation in UAE and hence it
satisfied the ‘residency condition’, further rejects Revenue's invocation of
tie breaker rule under Article 4(4) (which determines residence based on place
of effective management - POEM) holding it would come into play when the
assessee is resident of both the Contracting States, however, it is not AO's
case that assessee is a resident of India; Also upholds CIT(A)’s observation
that since the Board meetings and important decisions were taken at Dubai
and senior staff including MD were resident of Dubai, assessee’s POEM was
in UAE, further upholds CIT(A)’s order that place of holding of AGM and
residential status of shareholders are not relevant factor for determining
residential status of the company; Similarly, ITAT rejects Revenue’s invocation
of Limitation of Benefit (‘LOB’) clause under Article 29 of India-UAE treaty on
the ground that entire share capital of the assessee was held by German
entities, holds that in order to invoke Article 29, “what is to be established
is that if the assessee company was not to be formed in the UAE, the assessee
would not have been entitled for such benefits”, relies upon MUR Shipping
DMC Co ruling; ITAT holds that whether the company was to be formed in UAE or
in Germany, would not have made any material difference as the Indo-German DTAA
also grants similar treaty protection with regard to taxability of shipping
profits:ITAT
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