Information under article 28 of DTAA cannot be disclosed on the basis of un-signed transfer requests of Indian national to a Swiss Bank to transfer money to overseas bank accounts of two foreign companies.
The Indian tax authority seized documents from an Indian national which were believed to indicate the existence of undeclared income deposited in a company’s bank accounts in Singapore. Pursuant to Article 28 (1) of the India-Singapore DTAA, the Indian tax authority sent a request for information to its Singapore counterpart (the Comptroller of Income-tax). In support of the request, the Indian tax authority relied on unsigned transfer instructions allegedly issued by the Indian national as evidence that the Indian national remitted monies to the Singapore Company’s bank accounts. The Comptroller filed an application in the High Court u/s 105J of the Singapore Income-tax Act for an order requiring the bank to produce the company’s bank records.
HELD dismissing the application:
Article 28(1) of the Agreement as amended by the Second Protocol provides that “the Contracting States shall exchange such information as is forseeeably relevant for carrying out the provisions of [the Agreement] or to the administration or enforcement of the domestic laws concerning taxes… imposed on behalf of the Contracting States …” [emphasis added]. Section 105J(1) of the ITA imposes two other conditions:
The conditions referred to in [s 105J(2) of the ITA] are as follows:
(a) the making of the order is justified in the circumstances of the case; and
(b) it is not contrary to the public interest for a copy of the document to be produced or that access to the information be given.
Those three conditions must be satisfied before the High Court will grant an order under s 105J(2) of the ITA for access to the information requested or for a copy of the document containing the information requested to be given.
In the light of the fact that the requirement of foreseeable relevance was not met, I need not deal with the other two requirements of whether granting the application was justified in the circumstances of the case and not contrary to the public interest. However, for the sake of completeness, I will say that even if a tenuous connection between the Indian national and Company X and Company Y could have been shown such that the requirement of foreseeable relevance was satisfied, I am of the view that consideration as to whether the application was justified is a process that envisages more evidence than presently adduced. This should include evidence of the use of the Accounts for the purposes complained of in India. The third element of public interest (concerning national security) does not arise in this case. It was not alleged that the information sought would involve “national security interests, or sensitive information held in the vital interests” of Singapore (Singapore Parliamentary Debates, Official Report (19 October 2009) vol 86 at col 1620).
Source- Comptroller of Income Tax v. AZP High Court of Singapore(originating summongs no. 320 of 2012) Dated- May 23, 2012