Home Case Index All Cases Income Tax Income Tax + AAR Income Tax - 2012 (2) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (2) TMI 260 - AAR - Income TaxDTAA with Singapore Singapore company entered into contract with IOCL for residual offshore construction work and Installation of SPM - contract with L&T Ltd for installation and construction services for Single Point Mooring (SPM) - applicant contending non-existence of PE in India and presence in India for less than 180 days taxability of revenue - 'FTS' or 'Royalty' applicability of Section 44BB in respect of the contract with L&T - Held that:- In case of Ishikawajima-Harima Heavy Industries Ltd.(2007 - TMI - 3467 - Supreme Court) it is specified that where consideration of each portion of the contract is separately specified, it can be separated from the whole. Since payment in respect of contract with IOCL specifies separately consideration for mobilization and demobilization falling under the definition of royalty under Article 12.3(b) of the DTAA , consideration for actual installation falling under the definition of FTS as per Article 12.4(a) of the DTAA, and the rest relating to pre and post execution work and drawing/design documentation. Therefore, part of consideration is in nature of FTS and part of consideration is in nature of royalty u/s 9(1)(vii) & (vi) of the Act and under Article 12 of DTAA In respect of contract with L&T it is noted that services and facilities being rendered by the applicant go beyond installation and include pre-installation services, post-installation services, procurement and transportation and sub-contract is effective as of 23.04.2008 and obligations under the contract continued to exist even after the vessels left the shores of India. The applicant's plea of counting the duration of services from 3.12.2008 when the applicant's vessels were mobilized to India till 19.05.2009 when the vessels left the shores of India is untenable and unacceptable. Hence the applicant has a PE in India in terms of Article 5.5 of the DTAA and falls within the ambit of Section 44BB of the Act. The consideration received by the applicant for mobilization and demobilization is taxable in India u/s 44BB of the Act.
|