ITAT : Grants UAE treaty benefit, holds LOB inapplicable; Accepts CIT(A)'s POEM observations

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