Case Law Details

Case Name : Tiong Woon Project & Contracting (Pte) Ltd. Singapore, In re (Authority for Advance Rulings)
Appeal Number : A.A.R. No. 1602 of 2014
Date of Judgement/Order : 30/11/2015
Related Assessment Year :
Courts : Advance Rulings (72)

Brief of the Case

Authority for Advance Rulings held In the case of Tiong Woon Project & Contracting (Pte) Ltd. that the department has correctly provided a positive response that because the project was continued in India only for 178 days in a fiscal year, it will not be treated as a permanent establishment and the business profits will be taxable only in the country where the applicant is resident i.e. in Singapore as per Article 7.1 of India-Singapore DTAA.

Facts of the Case

The Applicant is engaged in the business of heavy lifting and erection and installation of heavy equipments such as boilers, coke drums, fractionators, generators, chimneys, etc., for large projects at the project sites. It is carrying out its activities in many countries in Asia. The Applicant imported two cranes viz., CC8800 and CC2600 into India in November 2007.

In the application, it is stated, the applicant completed their installation project, which is covered by Article 5.3 of the India-Singapore Treaty. In fact, the applicant relies on the earlier Ruling by this Authority in AAR No.975 of 2010 and particularly in para 6 therein. Accordingly, the applicant claims that the income amounts to business profits, in terms of Article 7 of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore. It is the claim of the applicant that they do not have any Permanent Establishment (PE) in India. It is, further, their claim that since this installation project continued for a period of less than 183 days in India, and it would not be taxable under Article 7 of the DTAA unless they have a PE in India.

Submission of Department

The project executed by the applicant in India for Brahmaputra continued only for 178 days in a fiscal year and as the duration of the project is less than 183 days in a fiscal year, Permanent Establishment of the applicant cannot be constituted in India for the FY 2012-13 as per the provisions of Article 5.3 of the India-Singapore DTAA. Hence, it is submitted that the business profits accruing or arising to the applicant by way of the execution of the project under reference is taxable only in the country where the applicant is a resident, as per Article 7.1 of India-Singapore DTAA.

Held by AAR’s

The department has correctly provided a positive response that because the project was continued in India only for 178 days in a fiscal year, it will not be treated as a permanent establishment and the business profits will be taxable only in the country where the applicant is resident i.e. in Singapore as per Article 7.1 of India-Singapore DTAA. Accordingly, application answered.

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Posted Under

Category : Income Tax (20858)
Type : Judiciary (8910)
Tags : AAR Rulings (127) CA Deepak Aggarwal (390)