SPLENDOUR MARINE TRADING FZE,CHENNAI vs. ASSISTANT COMMISSIONER OF INCOME TAX , DELHI

ITITA 542/DEL/2025Status: DisposedITAT Delhi12 March 2026AY 2022-239 pages
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What were the facts?

The assessee, Splendour Marine PTE. Ltd. (Singapore) and Splendour Marine Trading FZE (UAE), filed appeals against the final assessment orders for Assessment Years (AY) 2021-22 and 2022-23. These orders were passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961, pursuant to directions from the Dispute Resolution Panel (DRP). For AY 2021-22, Splendour Marine PTE. Ltd. leased a vessel to Bharat Petroleum Company Ltd. (BPCL) and claimed exemption under Article 8 of the India-Singapore Double Taxation Avoidance Agreement (DTAA) on income of Rs. 7,83,25,536/-. The Assessing Officer (AO) invoked Section 44B of the Act, deeming profits at 7.5% of total receipts, amounting to Rs. 58,74,415/-, as the vessel was used only in Indian waters. Similar issues arose for Splendour Marine Trading FZE for AY 2022-23.

What did the Tribunal hold?

The Tribunal held that the assessee was not entitled to the benefit of Article 8 of the India-Singapore DTAA. This was based on the finding that the vessel was converted to a coastal run vessel on December 16, 2020, and the income taxed was for the period from December 16, 2020, to March 31, 2021. The Tribunal rejected the assessee's claim for the applicability of Article 8. Regarding the issue of Permanent Establishment (PE) under Article 5 and attribution of profits under Article 7 of the DTAA, the Tribunal noted that this issue was raised before the DRP but not adjudicated. Consequently, the AO also did not consider it in the final assessment order. Therefore, the Tribunal restored the matter to the AO to examine these issues and pass a fresh order on merits. The grounds related to PE and attribution of profits were allowed for statistical purposes.

What were the issues?

1. Whether the assessee is entitled to the benefit of Article 8 of the India-Singapore DTAA concerning income from chartering of ships, as argued by the assessee, or if the AO was correct in holding that Article 8 is not applicable due to the vessel's operation solely in Indian waters, as contended by the revenue. 2. Whether the AO erred in invoking Section 44B of the Income Tax Act for computing profits, when the assessee argued that this section is only applicable to income attributable to a Permanent Establishment (PE) in India, and alternatively, that no PE existed in India as per Article 5 of the India-Singapore DTAA, thus no profits should be attributable to India under Article 7, as argued by the assessee. The revenue did not record specific arguments on these points, but the AO's actions indicate a disagreement with the assessee's claims.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(5),Section 4,Section 5,Section 44B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, D: NEW DELHI

Before: SHRI VIKAS AWASTHY, HON’BLE & SMT. RENU JAUHRI, HON’BLE

For Appellant: Adv. Sh. DarshanBothra, CA
Hearing: 12.03.2026Pronounced: 12.03.2026

Heard together (2 matters)

ITA. No. 3602/Del/2023
ITA. No. 3601/Del/2023

Read from the judgment's own cause title. This page is filed under one of them.

PER RENU JAUHRI:

The above captioned three appeals i.e., ITA No. 3602/Del/2023, IT(IT)A. No. 542/Del/2025 & ITA. No. 3601/Del/2023 are preferred by the assessee against the orders of the AO for A.Ys. 2021-22 and 2022-23. 2. ITA No. 3602/Del/2023 & ITA No. 3601/Del/2023, are against t

The order continues below.

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