The main legal point established in the judgment is the interpretation and application of tax deduction at source provisions under Section 195 and Section 40(a)(i) of the Income Tax Act in light of the Double Taxation Avoidance Agreement between India and Singapore, as well as the retrospective amendment to Section 195(1) of the Income Tax Act.

Challenging the interim order dated 23.4.2013 in M.P.No.2/2013 in W.P.No.11360/2013, under which, the interim stay of the operation of the order of assessment in PAN AAAFA1037D dated 29.3.2013 relating to the assessment year 2010-2011, on the file of the respondent, was granted subject to the condition that without prejudice to rights of either parties, the writ petitioner/assessee shall pay 30% of the impugned demand within a period of four weeks from the date of receipt of copy of that order with default clause, this Writ Appeal is filed by the writ petitioner.

2. It is submitted by the respective learned Counsel appearing for the parties, that since arguments in the writ appeal also pertain to the merits of the writ petition, the writ petition itself may be taken up for disposal and taking into consideration the same, the writ petition itself is taken up for disposal along with this writ appeal.

3. The facts of the case as culled out from the materials placed before this Court in the form of affidavit, counter and typed-set of documents, are as follows:

(a) The appellant/writ petitioner was originally a partnership firm and later on, became a private limited company and it is engaged in the business of transportation of coal from Paradip Port to Chennai Port through ships, for the various ongoing projects of Andhra Pradesh Power Generation Corporation. The appellant for the said purpose, entered into an agreement with M/s. Jaldhi Overseas Private Limited (in short "JOPL"), Singapore, on 7.9.2009, for transportation of coal and the validity of the agreement was for a period of five years, commencing from September 2008 to August 2013.

(b) According to the appellant, JOPL is a Singapore tax resident shipping company and in terms of the above said agreement, it agreed to provide suitable ships to the appellant for transportation of coal between the above said two Indian Ports. The agreement further provides that the appellant is to make periodic freight payments to JOPL in US Dollar, for transportation of coal on tonnage basis and the rates have been agreed upon in terms of Clause 30 of the above said agreement.

(c) It is the specific case of the appellant that JOPL is a company registered in Singapore and is assessed to income tax at Singapore only. It is also evidenced by the fact that it has been issued with the Certificate of Tax Residence and Certificate of Incorporation by the concerned authority at Singapore and that it is not having any permanent establishment in India to carry out the operations.

(d) The appellant would further contend that there is an agreement between India and Singapore with regard to the avoidance of double taxation and as per the perms of the said agreement, the profits earned by JOPL, are subject matter of assessment only in Singapore and not in India and consequently, there is no obligation on the part of the appellant to deduct any tax at source in terms of Section 195 of the Income Tax Act.

(e) The appellant also contended that it has filed an application dated 22.5.2009, under Section 195(2) of the Income Tax Act, stating among other things, that in terms of Article 7 of the Double Taxation Avoidance Agreement (in short "DTAA") between India and Singapore, the freight payable to JOPL, is not taxable in India and therefore, there is no necessity to deduct tax at source and hence, prayed for issuance of nil deduction of tax at source.

(f) The Assessing Officer, namely the Income Tax Officer-I(2), (International Taxation), Chennai 34, has passed an order dated 31.8.2009, holding that in terms of Section 44B of the Income Tax Act, the nature of works undertaken by JOPL, is chargeable to tax under the head "Profits and Gains of Business or Profession". Insofar as the stand of the appellant that in accordance with Double Taxation Avoidance Agreement, the appellant need not deduct tax at source, the Assessing Officer found that the assessee's contract is for a period of five years and if the activ