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2012 (8) TMI 746 - AAR - Income TaxIndia Netherlands DTTA - contract for supply of machinery, spare and wearing parts and technical documentation - chargeable to tax u/s 195 of Income-tax Act, 1961 OR as per Article 12 para 5 read with para 6.(a) of the DTAA - Held that:- No dispute to the fact that the two contracts were entered into the same day and on going through them, it is clear that the contract was neither for sale of property simplicitor nor for erection and service connected therewith. It was really an indivisible contract for supply, erection, commissioning testing etc. of a project. The applicant and Grasim have chosen deliberately to split up the contract into two. The applicant, according to it, has taken advantage of the splitting up by adopting the stand that the consideration for supply is not chargeable to tax in India. The first contract was for "the supply of machinery, spare and wearing parts and technical documentation for the production of Autoclaved Aerated Concrete" and the applicant has agreed "to undertake the design, engineering, supply and delivery of machinery, spare and wearing parts and technical documentation forming part of the Project". This cannot be taken to be a contract for "the sale of property" - rule on the question formulated that the transaction in question generates fees for technical services in the hands of the applicant and it does not come under the exception in paragraph 6(a) of Article 12 of the DTAC and that it is chargeable to tax in India - against assessee.
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