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Assessee Maersk Tankers Singapore Pte. Ltd. (MTS) is a company incorporated in Singapore and engaged in the business of ship owning & operating, chartering and related business. Its agent Inchcape Shipping Services Pvt. Ltd. during the year under consideration has filed provisional return u/s. 172(3) of Income Tax Act for 12 vessels in respect of 16 voyages undertaken during F.Y. 2016-17. The assessing officer has granted no objection certificate for port clearance of the vessels in all the 16 cases. As per proviso of section 172(3), the final return was furnished by the agent in each case, however the combined order was passed in these cases since similar issues were involved in these voyages. On perusal of the return filed for the above mentioned vessels, the assessing officer observed that the Maersk Tankers Singapore Pvt. Ltd. PTE Ltd. Singapore was the beneficiary and the agent has declared freight income totaling US $ 15,51,33,540/-.The assessing officer was of the view that Article 24 of the DTAT between India and Singapore is applicable since shipping income has been directly remitted to Singapore.

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Sec. 172 of Income Tax act, 1961 – Non Resident – An order under section 172(4) is also covered by the scheme of section 144C.

Facts: AO was of the view that Article 24 of DTAA between India and Singapore is applicable since shipping income has been directly remitted to Singapore. Assessee has stated that shipping income is liable to tax in Singapore, subject to conditions prescribed under sections 13A to 13F of the Singapore Income Tax Act. AO has stated that the shipping income for voyages performed by the following vessels were not qualified for tax exemption in India under the provisions of DTAA between India and Singapore, therefore relief claimed by the assessee under DTAA between India and Singapore was withdrawn even through the shipping receipts were remitted directly to Singapore. Aggrieved assessee has filed appeal before CIT(A) and raised the issue in appeal that without first issuing a draft of the assessment order as is required u/s. 144C, the assessing officer cannot pass a final order u/s. 172(4) therefore, the assessment made in the case of assessee is bad in law. CIT(A) dismissed the appeal of assessee. Being aggrieved, assessee went on appeal before Tribunal.

Held, that AO ought to have first forwarded a draft assessment order under section 172(4) before passing the final assessment order under section 174(4) holding that the reference to sections 153 and 153B appearing in section 144(C)(4) and 144C(15) as illustrative rather than exhaustive and in effect reference to sections 172(4A) to be read in these provisions as well. There was no dispute about the applicability of the provision of section 144C, however, the dispute in the case of assessee was pertained to the issue of applicability the scheme of section 144 to the order passed under section 172(4). We observe that in this case neither the AO has forwarded draft assessment order under the scheme of section 144C nor the assessee has opted under the provision of section 172(7) for assessment to be made in accordance with other provision of this Act. An order under section 172(4) is also covered by the scheme of section 144C. Respectfully following the decision of Co-ordinate Bench of the ITAT, matter was remitted to the file of AO for framing fresh assessment order u/s. 172(4) after following the path envisaged in section 144C. Therefore, the appeal of the assessee is allowed for statistical purposes – ISS SHIPPING INDIA (P.) LTD. [2020] 181 ITD 616 (ITAT-RAJKOT)