9911796707
TMI Blog2022 (12) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... its that considering the facts and circumstances of its case and the law prevailing on the subject the fabrication charges received by it are not 'fees for technical services' either under the Income-tax Act, 1961 or under the India-Singapore Double Tax Avoidance Agreement ['DTAA'] and the stand taken by the Assessing Officer / Dispute Resolution Panel in this regard is misconceived, illegal, erroneous and incorrect. 1:3 The Appellant submits that the Assessing Officer be directed to delete the addition of Rs. 9, 11, 78,540/- so made and to re-compute its total income and the tax thereon accordingly. Without prejudice to the foregoing: 2:0 Re: Incorrect tax rate applied 2:1 The Assessing Officer has erred in taxing the alleged fees for technical service at the 25% instead of 10% in terms of Article 12(2) of the India-Singapore DTAA. 2:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the amount received by the Appellant even if taxable as 'fees for technical service' ought to be taxed at the rate of 10% in terms of Article 12(2) of the India- Singapore DTAA and the stand taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer in this regard is misconceived, incorrect, erroneous and illegal. 3. The Appellant submits that the Assessing Officer be directed to delete the interest under section 234B so levied on it and to re-compute its tax liability accordingly. Re: Unexplained tax demand 1. The Assessing Officer has erred in demanding additional tax of Rs. 2, 60,299/-. 2. The Appellant submits that the aforesaid excess tax demand is unexplained, and the stand taken by the Assessing Officer in this regard is misconceived, incorrect, erroneous and illegal. 3. The Appellant submits that the Assessing Officer be directed to delete excessive tax demand and to re-compute its tax liability accordingly. Re: General 1. The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal." 3. Brief facts of the case are that assessee is a company formed and incorporated in Singapore and a group concern of Owens Corning Group of Companies, a leading manufacturer of glass. M/s Owens Corning India Pvt. Ltd. (for short 'OCIPL') and M/s. Owens Corning Industries India Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the re-fabrication process, additional alloys viz Rhodium and Platinum are used. 5. The above said additional alloys belong to M/s "Owens Corning Inc (OC-US, a tax resident of United States of America) and is made available to Owens Corning Singapore as and when required. Owens Corning Singapore receives the alloys required to from M/s Owens Corning Inc, in the form of ingots, powder form, etc for the re-fabrication process described above as 'additional raw material' without any payment having been made by the receiving party. 6. These alloys, as per the MLA dated 1 April 2007 entered into between Owens Corning Inc and OCIPL, quantify to 100 kgs and 25 kgs of platinum and rhodium respectively. The MLA states that OCIPL had delivered to Owens Corning Inc these stated alloys in the manner said hereunder: 8 bushings having design no. R20- 2372-TT47B and 2 bushings Design no. R20-2469-TT7. These 10 bushings received from OC Inc were deployed by OCIPL in the manufacturing process during the F.Y. 2006-07 and after every 250 days were sent for re-fabrication and have as such lost their original identity. 7. Upto July 2010, OCIPL sent the bushings to OC Inc for fabricat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to Owens Corning Industries India Pvt. Ltd and hence does not fall within the definition of fees for included services' as per Article 12(4)(b) of the DTAA." 11. The Assessing Officer (AO) and Dispute Resolution Panel (DRP) were not agreed with the contentions of assessee and treated assessee's receipts as FTS as per Article-12(4)(a) of the DTAA between India and Singapore. Consequently taxed the same under section 9(1)(vii) of the I.T. Act read with Article-12(4)(a) of the DTAA between India and Singapore. 12. Against this order assessee preferred an appeal before us. We have gone through the order of the AO, directions of the DRP and objections/submissions taken by assessee before various authorities below. We have gone through the process as explained by assessee through illustration also. 13. Without going into further details, as we have gone through the order of ITAT, Mumbai in assessee's own case vide ITA No. 2050/Mum/2016, ITA No. 2049/Mum/2016, ITA No. 5731/Mum/2019 and ITA No. 742/Mum/2021 for AYs 2011-12, 2012-13, 2016-17 and 2017-18 respectively. The issue under consideration has dealt with in detail dealing with the contentions of assessee and Department by I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer and the DRP is that since the alloys are provided by the OCUS, which is an associated enterprise under article 9, one has to proceed on the basis that the alloys are provided by the assessee, and as the services are "ancillary and subsidiary to the application or enjoyment of the right, property or information" for which payment is made to OC-US, these services are taxable as fees for technical services. 11. As far as the role of Article 9 is concerned, it comes into play when "conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises" and remains confined to bringing those profit for taxes which, but for such arrangements, an enterprise in the respective tax jurisprudence would have made. The scope of Article 9 thus is to neutralize the impact of intra- AE relationship vis-à-vis the profits made in dealings with such an AE. Beyond this limited scope, the application of Article 9 cannot restructure the transaction itself. That is, however, precisely what the revenue authorities seek to accomplish by invoking Article 9 in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee from the refurbishing of the bushes is concerned, it is not taxable in India as the provisions of Article 12(3) cannot be invoked in this case, and that, so far as the provisions of Article 12(4)(a) are concerned, these provisions cannot be invoked as the assessee has not rendered these services in connection with the services "for which a payment described in paragraph 3 is received" by the assessee. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee, and delete the impugned addition of Rs 4,84,44,048. The assessee gets the relief accordingly." 15. In view of these discussions and respectfully following the order of the ITAT, Mumbai in assessee's own case and also bearing in mind the entirety of the case, we allow Ground No.1 raised by assessee. 16. As the Ground No.1 which is a core issue in this appeal is allowed. Ground No. 2 & 3 became academic and infructuous. 17. Ground No. 2 & 3 are thus, dismissed as infructuous. 18. In the result, appeal of assessee is allowed. ITA No. 460/Mum/2022 (A.Y. 2018-19) 19. As regards ITA No. 460/Mum/2022 (A.Y. 2018-19) as the facts and issue invol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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