Charges received for Carrying out of Re-fabrication of Bushings Not Taxable under Indo-Singapore Treaty: ITAT Allows TDS Credit to Owens Corning

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has allowed the Tax Deducted at Source (TDS) credit to Owens Corning holding that the charges received for carrying out re-fabrication of bushing are not taxable under Indo-Singapore Treaty.

The assessee, Owens Corning (Singapore) Pvt. Ltd is a company incorporated in Singapore and a group concern of Owens Corning Group of Company, which is a leading manufacturer of glass. The assessee was a tax resident of Singapore and had Associated Enterprises (AEs) namely Owens Corning India Pvt. Ltd. (OCIPL) and Owens Corning Industries India Pvt. Ltd. (OCIIPL) as AEs was engaged in manufacturing of glass fibres in India.

The assessee filed the return of income as Nil. The assessee’s case was selected for scrutiny and assessment and an addition was made towards providing bushing and fabrication service to OCIPL

Sandeep Bhalla, on behalf of the assessee submitted that the Tribunal had already deleted the addition holding that the said receipt would not fall under the purview of ‘fee for technical services’ in assessee’s own case for previous years.

Kanupriya Damor, on behalf of the revenue stated that the same amounted to technical services which involved a particular design and specification suggested by licensors and the same was said to be mandatory. He further stated that the alloy services used in the bushings by metals such as platinum or rhodium was “made available” only by the “licensor”.

The Division Bench of Baskaran Br, (Accountant Member) & Kavitha Rajagopal, (Judicial Member) allowed the appeal and directed to grant credit for taxes paid by way of TDS for the fabrication charges received by the assessee.

The Bench further observed that, “Tribunal has held that the charges received by the assessee for carrying out 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 Indo Singapore tax treaty.”

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