TIONG WOON PROJECT AND CONTRACTING PVT. LIMITED Vs. K.R. VASUDEVAN, ADDITIONAL DIRECTOR OF INCOME TAX

JUDGEMENT

(1.) APPLICANT is a company formed in Singapore. It has secured following four work orders:

(2.) APPLICANT submits that these four projects are independent of each other and secured through independent work orders. These are installation projects and executed using its two cranes which were imported from Singapore in November, 2007. To carry out the installation work, four to five key personnel from Singapore are deployed along with the local manpower. Prior to the present installation projects, the cranes were used for executing installation projects for Toyo Engineering India Ltd., Panipat, India. It is eligible for Treaty benefits. Applicant is of the view that as these are installation projects, these can be considered to have a Permanent Establishment only if each of these four installation projects continues for a period of more than 183 days individually in any previous year in terms of Article 5.3 of the Double Taxation Avoidance Agreement with Singapore (DTAA). As the income from the execution of these projects is in the nature of business profits, it would be taxable in India as per Article 7.1 of the DTAA only if it has a Permanent Establishment in India. No amount can be said to be payable as a fee for technical services in view of Explanation 2 to Section 9(1)(vii). In the event the income accruing to the applicant is taxable in India, the rate of deduction of Income -tax would be 2% plus surcharge.

(3.) THE applicant submits that the scope of these installation projects comprise of erection and installation of certain heavy equipments at the site of the customers. The equipments to be installed are fabricated and provided by the customers at the installation sites. The work orders for each of these projects refer to erection of equipments and would constitute installation and assembly projects.