Article 9: Income from “slot charter” is exempt as income from “operation of ships”

DIT vs. Balaji Shipping UK Ltd (Bombay High Court)

The assessee, a UK company, engaged in the international transportation of goods by sea, entered into Slot Hire Agreements with Orient Express Lines Mauritius (“OEL”), under which OEL provided container slot spaces to the assessee on its ships. Availing the slot hire facility, the assessee arranged for the transportation of the goods from ports in India to their international destinations. The assessee claimed that the income from the “slot hire charges” was exempt under Article 9 of the India-UK DTAA. The AO rejected the claim on the ground that Article 9 dealt with “income from the operation of ships” and that slot hire charges were not covered. However, the CIT(A) and the Tribunal allowed the claim. On appeal by the department to the High Court, HELD dismissing the appeal: