Case Law Details
An order dated 15th February 2012 passed by the Authority for Advance Rulings (‘AAR’) (Income Tax) in AA No. 936 of 2010 has been challenged in this writ petition filed by Technip Singapore Pte Ltd. (formerly known as Global Industries Asia Pacific Pte. Ltd.), a company incorporated in Singapore. The Petitioner, a resident of Singapore, is admittedly entitled to the benefit of India-Singapore Double Tax Avoidance Agreement (hereinafter „DTAA‟).
Background facts
The Petitioner states that it is a leading solutions provider of offshore construction, engineering, project management and support services to the oil and gas industry worldwide. The Income Tax Officer (International Taxation) Dehradun is stated to be the Assessing Officer („AO‟) as far as the Petitioner is concerned.
By a letter dated 12th June 2008 Indian Oil Corporation Ltd („IOCL‟) invited tenders for the “Residual Offshore Construction work” at Paradip. The letter explained that IOCL was “setting up offshore crude oil receiving facility having Single Point Mooring (SPM) terminal about 20 Kms. off the coast of Paradip port in the east coast of India.” The said facility would enable unloading the crude oil from the Very Large Crude Carriers (VLCCs) “to meet the crude oil requirement of its Refineries located in the eastern part of India.” The work involved installation of IOCL supplied SPM including anchor chains, floating and subsea hoses.
The question is whether the mobilisation/demobilisation charges which constituted 68% of the total consideration could be treated as royalty within the meaning of Section 9 (1) (vi) of the Act read with Article 12 (3) (b) of the DTAA and whether the installation charges could be treated as FTS within the meaning of Explanation 2 below Section 9 (1) (vii) of the Act read with Article 12 (4) (a) of the DTAA?
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