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TMI Blog2023 (8) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 as well as Article 12 of the Double Taxation Avoidance Agreement entered between India and Singapore ("India-Singapore Tax Treaty"). 1.2 The Appellant submits that considering the facts and circumstances of the 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 provisions of the India-Singapore Tax Treaty. The stand taken by the AO/DRP in this regard is erroneous, misconceived and not in accordance with the law. 1.3 The Appellant submits that the AO be directed to delete the addition of Rs. 15,75,67,856 so made and to re-compute its total income accordingly. 2.0 Re: Taxing income from fees for technical service at the rate specified under the Act: 2.1 Without prejudice, The AO erred in charging tax at the rate of 10% plus surcharge and health and education cess under section 115A of the Act on income from fees for technical services of Rs. 15,75,67,856. 2.2 The Appellant submits that considering the facts and circumstances of the case and the law prevailing on the subject, as per section 90(2) of the Act, the income from fees for technical s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings" made of precious metals such as platinum, and rhodium. The 'Bushings' are electrically heated crucibles containing numerous tiny holes (orifices) through which the molten glass is converted into very fine glass filaments at a very high speed and cooled simultaneously. Further due to the process involved, the orifices of the bushings get enlarged affecting the required diameter/texture of the filaments, thereby leading to glass leakage. The average life of the bushing is around 250 days approx. however premature failures are common in the manufacturing process/operation. Therefore the bushings are required to be furbished/fabricated periodically (ideally after 250 days).Hence Owens Corning India Pvt. Ltd (OCIPL) (hereinafter to be read as OCIPL) sends the bushings by air to 'Owens Corning (Singapore) Pte Ltd for fabrication. 4. In the process of re-fabrication, the existing bushing is melted, additional alloy is added to the extent required to form altogether a new bushing of desired specification etc. Hence the bushings sent to OCIPL lose their individuality/originality or distinctiveness after every re fabrication. OC Singapore inter alia carries out the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bushings received from the applicant. The company OCIPL pays Owens Corning Inc lease rentals in terms of the MLA (MASTER LEASE AGREEMENT) for additional alloy used in the fabrication process. No amount is charged by Owens Corning Inc to Owens Corning Singapore Pte Ltd for Alloy used in fabrication process. According to Owens Corning Singapore, the fabrication charges were offered as FTS by them up to AY 2011-12 (FY 2010-11). However in A.Y 2015-16 they have not offered the same for taxation stating that these fabrication charges received are not taxable in India since the company does not have any Permanent Establishment or Business Connection in India. Also these charges are not for any equipment and hence cannot be said to be Royalty in terms of Article 12(3) of the DTAA between India and Singapore. The assessee further states that the same cannot be classified as 'Fees for technical services' for the following reasons.(a) the assessee has not granted any right, property or information to any Indian company in terms of Para 3 or Article 12 and hence the fees received do not fall within the definition of fees for included services as per Article 12(4)(a) of the DTAA. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2022 at Page 8 Para 13 to20 read as under: "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 ITAT in appeals mentioned (supra). 14. For sake of further clarity and as we are also agreed and following these orders, the relevant extract of the order arisen out of ITA No. 2049/Mum/2016 dated 06.07.2022, we are reproducing here-in-below: "10. There is no dispute that the assessee is entitled to the benefits of the IndoSingapore tax treaty, that the assessee does not have any permanent establishment in India, and that, accordingly, income earned by the assessee cannot be taxed as business profits under article 7 of the Indo Singapore tax treaty/ There is also no, and cannot be any, dispute that once the provisions of the applicable tax treaty are more beneficial to the assessee, the provisions of the Indian Income Tax Act, 1961 cannot be pressed into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gements, 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 case. The alloy lease transaction that the Indian affiliate had with the OC-US, by invoking Article 9, is sought to be treated as a transaction with the assessee, but then, given the limited scope and role of Article 9, such an exercise is simply impermissible. It would amount to practically rewriting article 12(4) by supplementing the expression "for which a payment described in paragraph 3 is received" with the words by "the enterprise or by any of its associated enterprises anywhere in the world". Neither can we read into the treaty what is not written there, nor would it make any sense anyway. Such an approach is too farfetched and is neither supported by a plain reading of the treaty provision or by any logical rationale, nor by any commentary or even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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