9911796707
TMI Blog2023 (8) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... s144C(13) of the Income Tax Act, 1961 ( the Act ) in pursuance to the directions of Ld. Dispute Resolution Panel ( DRP ) u/s 144C(5) of the Act dated 28.11.2022. 2. The assessee has raised following grounds of appeal:- 1.0 Re: Treating fabrication charges received as 'fees for technical services': 1.1 The Assessing Officer (AO)! Dispute Resolution Panel (DRP) has erred in taxing the fabrication charges received by the Appellant of Rs. 15,75,67,856 during the year under consideration by treating the same as 'fees for technical services' in terms of section 9(1)(vii) of the Income-tax Act, 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 Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s through e-proceedings. The AO found that there are receipts on account of fabrication charges of Rs. 15,75,67,856/- from its Indian Associate Enterprises namely OCIPL as non-taxable. The assessee has claimed the income as exempted as the assessee has neither any Permanent Establishment ( PE ) in India as per Article 5 of India-Singapore Treaty nor any business connection in India. The Assessing Officer (AO) found in the earlier years, the income was treated as FTS and was taxed. The assessee has filed the details/information vide letter dated 07.03.2022 referred at Para 2.2 of the order. Whereas for the manufacturing process of glass fibres, the assessee uses Bushings 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 prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Owens Corning Singapore Pte Ltd' for fabrication since the alloy shop for fabrication of bushings was set up in Singapore in the month of July 2010 and Owens Corning Inc merely billed OCIPL for providing the alloys viz Rhodium and Platinum as may be necessary for fabrication to Singapore. Since fabrication is the primary business of Owens Corning Singapore Pte Ltd no separate agreement has been entered into by it with the applicant for the fabrication. Only invoices were raised for fabrication charges in the normal course of business. There is no agreement between Owens Corning Inc and Owens Corning Singapore for supply of material for fabrication or re-fabrication of 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, where against the addition made by the AO, treating it as FTS. On appeal the Hon ble Tribunal has granted the relief and placed copy of the orders of Hon ble Tribunal. Per Contra, the Ld.DR supported the orders of the lower authorities. 8. We have heard the rival submissions and perused the material available on record. The sole grievance of the assessee that the order passed by the AO in pursuance of directions of DRP is bad in law Over-looking the factual aspects and the decisions of the Co-ordinate Bench of the Hon ble Tribunal. We find the similar issue was decided by this Hon ble Tribunal in ITA Nos.6529/Mum/2018 [AY 2015-16] and 460/Mum/2022 [AY 2018-19] order dated 26.12.2022 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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- -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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 involved is exactly the same, hence, what we decide in I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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