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TMI Blog2025 (3) TMI 867X 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. 15,42,75,210 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. 15,42,75,210. 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 te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee under Article 12(3) of the India-Singapore DTAA. The assessee also explained that it had a fabrication plant in which under the process, the existing bushing is melted and additional alloy is added to the extent required to form a new bushing. In the said fabrication process, no technical knowledge, experience, skill, know-how or process is passed on to the payer and no technology is made available to (OCIPL). The assessee further submitted that the issue of treating receipt towards fabrication of bushings as fees for technical services u/s 9(1)(vii) of the Act as well as Article 12(4)(a) of India- Singapore DTAA is recurring issue and the same has been covered by the orders of ITAT for A.Y. 2012-13, A.Y. 2016-17 and A.Y. 2017-18 in assessee's own case wherein ITAT held that the receipt towards fabrication of bushings cannot be treated as fees for technical services under Article 12(4)(a) of India-Singapore DTAA. However, the AO has not agreed with the submission of the assessee. The assessing officer was of the view that assessee company was provided with the expired bushings and refabricated the bushings with the necessary alloys with the technology of Owens Corning Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of appellate proceedings before us, the ld. Counsel has submitted the copies of orders of ITAT as discussed above wherein it is held that receipt towards fabrication of bushings cannot be treated as fees for technical services under Article 12(4)(a) of India-Singapore DTAA as no royalty as per Article 12(3) of India-Singapore DTAA was received by the assessee. With the assistance of ld. Representative, we have perused the decision of ITAT, Mumbai in the case of the assessee itself for the A.Y. 2015-16 vide ITA No. 6529/M/2018 dated 26.12.2022 the relevant extract of the decision is reproduced 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 5. Since the issue is squarely covered by the earlier decision of ITAT as referred in the finding of the ITAT. Therefore, following the decision of ITAT, ground no. 1 of appeal of the assessee is allowed. 6. Since, we have allowed ground no. 1 of the assessee, therefore, ground no. 2 of the assessee become academic and infructuous. Accordingly, the same is dismissed. 7. Ground no. 3 regarding levy of interest u/s 234A and 234B is consequential which does not require any adjudication therefore, the same is dismissed. 8. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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