Receipt towards re-fabrication of bushing not taxable under Article 12 of Indo-Singapore tax treaty

Owens Corning (Singapore) Pvt. Ltd. Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that charges received for carrying out of re-fabrication of bushing doesn’t tantamount to ‘make available of technical knowledge, experience, skill, know-how or process’ and hence cannot be taxed under Article 12 of Indo-Singapore tax treaty.

Facts- The assesssee is a company incorporated in Singapore and a group 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.

Conclusion- 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’.

Held that the Tribunal has held that the charges received by the assessee for carrying out of re-fabrication of the bushings does not tantamount to “make available of technical knowledge, experience, skill, know-how or process”. The Tribunal has also held that as there is no transfer of technology involved in the said process, it cannot be taxed under Article 12 of the Indo­Singapore tax treaty.

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