9911796707
TMI Blog2023 (4) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... oup concern of Owens Corning Group of Company, which is a leading manufacturers of glass. The assessee is a tax resident of Singapore and has Associated Enterprises (AEs) namely Owens Corning India Pvt. Ltd. ("OCIPL") and Owens Corning Industries India Pvt. Ltd. ("OCIIPL") as AEs engaged in manufacturing of glass fibres in India. The assessee files its return of income dated 28.11.2019 declaring total income at Nil. The assessee's case was selected for scrutiny and assessment order dated 29.06.2020 was passed by making an addition of the impugned amount of Rs.18,96,94,367/- towards providing bushing and fabrication service to OCIPL pursuant to the direction of learned DRP. The assessee is in appeal before us challenging the impugned addition. 5. It is observed that for the purpose of manufacturing of glass fibres, OCIPL uses bushings made of precious metals such as platinum and rhodium. While undergoing this process, the bushings go through a high temperature wherein the average life of the bushings reduces to 250 days approximately. Hence, these bushings are required to be furbished or fabricated after the said time. This re-fabrication is done by the assessee company by adding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacturing contract/works contract. The learned DRP has also concluded that the said services are ancillary and subsidiary to the right to use the patented alloys and the technology involved for re-fabrication as per the "Technology License Agreement" entered into between OC NL Invest Cooperative U.A. (Licensors) and Owens Corning (India) Pvt. Ltd. dated 27.01.2011 as per which non-transferable license to make, use and sell glass products in the Glass Melting Furnace under the License Patents, Licensor Know-how and Improvements to the Indian AE was granted by the said agreement. The learned DRP further held that the assessee has failed to produce any invoices issued by the AEs for "Alloy Services" rendered for fabrication of bushings as per Sub-clause 2 of Clause H of Article VI pertaining to "Technical Services" of the DTAA. The learned DRP rejected the objection raised by the assessee. 6. The learned Authorised Representative (AR) stated that the Co-ordinate Bench in assessee's case for AYs 2012-13, 2016-17 and 2017-18 in ITA No.2049/MUM/2016 and AYs 2015-16 and 2018-19 in ITA No.6529/MUM/2018 and ITA No.460/MUM/2020 has dealt with this issue pertaining to the fabrication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r information for which payment in the nature of "Royalty" has been received. The assessee has denied that the said services does not involve any of the application or enjoyment of the property which warrants royalty payments. As this issue is recurring in nature and has been dealt with extensively by the Tribunal, it is necessary to rely on the said decisions which has held that the fabrication charges is not in the nature of 'fee for technical services'. The relevant extract of the decision rendered by the Tribunal in ITA No.2049/MUM/2016, ITA No.5731/MUM/2019 and ITA No.742/MUM/2021 is cited here under for ease of reference: "10. There is no dispute that the assessee is entitled to the benefits of the Indo-Singapore 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 service Therefore, as things stand now, everything hinges on the application of the provisions of article 12, dealing with fees for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra- AE relationship vis-a-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 far-fetched and is neither supported by a plain reading of the treaty provision or by any logical rationale, nor by any commentary or even academic literature. The OC US and the assessee, a Singapore-based entity, are distinct entities and, they have distinct legal existences. The mere ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
