COMMISSIONER INLAND REVENUE, ZONE-IV, KARACHI vs A.P — 2024 SCMR 741 SUPREME-COURT

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COMMISSIONER INLAND REVENUE, ZONE-IV, KARACHI VS A.P. MOLLER MAERSK S. 107---Convention between the Islamic Republic of Pakistan and the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Art. 8---Convention between the Kingdom of Belgium and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Art. 8---Income arising from container detention charges ("CDC"), container service charges ("CSC") and terminal handling charges ("THC")---Such income falls within the category of "profits from the operation of ships in international traffic" in the context of double taxation conventions concluded between Pakistan and Denmark, as well as between Pakistan and Belgium. Citation Name: 2024 SCMR 741 SUPREME-COURTBookmark this Case COMMISSIONER INLAND REVENUE, ZONE-IV, KARACHI VS A.P. MOLLER MAERSK S.107---Treaties for the avoidance of double taxation, interpretation of---Scope---International tax treaties, conventions or agreements, given their unique nature, require a distinct interpretive approach compared to the one used while interpreting domestic legislation---These agreements being international treaties are governed by the rules of interpretation outlined in the Vienna Convention on the Law of Treaties---Tax treaties differ from domestic tax laws in language, application, and purpose---These treaties are relieving in nature and seek to avoid double taxation, while domestic tax law imposes tax in specific situations---Tax treaties require a broad purposive interpretation, and their interpretation may be more liberal than domestic law---Treaty interpretation is a separate subject from statutory interpretation, accentuating the need to interpret tax treaties independently of domestic law---Role of a State in a bilateral agreement is more of implementing the terms of such agreement rather than that of interpreting the same and that too in a unilateral manner---Given that the primary purpose of tax treaties is to avoid and relieve double taxation through equitable and acceptable distribution of tax claims between the countries, it is important that the provisions of these treaties are interpreted in a common and workable manner, taking into account international tax language, legal decisions of other countries, model treaties, along with their commentaries, developed by the Organization for Economic Cooperation and Development ("OECD") and the United Nations ("UN"), and scholarly academic works where appropriate.

COMMISSIONER INLAND REVENUE, ZONE-IV, KARACHI vs A.P — 2024 SCMR 741 SUPREME-COURT

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