Authority For Advance Rulings (Income Tax), New Delhi
Tiong Woon Contracting Pte Ltd., In Re
Justice V.S. Sirpurkar, Chairman
A.K. Tewary, Member (Revenue) And R.S. Shukla, Member (Law)
A.A.R. No. 1700 Of 2015
August 16, 2016
Justice V.S. Sirpurkar, Chairman – The applicant Tiong Woon Project & Contracting (Pte) Ltd. is a tax resident of Singapore. It has raised two questions which are as under:-
(i) Whether looking to the nature of activities carried on by the Applicant, which is a Singapore based company and a non-resident as per the provisions of Section 6(3) of the Income Tax Act, 1961, the Applicant can be held to have earned any income taxable in India from its activities renting out of its cranes for use in India, as per the provisions of Income Tax Act, 1961 ?
(ii) If the answer is affirmative, how the total income of the Applicant should be computed as per the provisions of the Income Tax Act, 1961 ?
2. The applicant contends that it is engaged in the business of (i) renting/leasing of heavy lifting cranes for use and (ii) providing erection and installation of heavy equipment like furnaces, boilers, coke drums, fractionators, chimneys, turbines, generators etc. in many countries in Asia.
3. The applicant further submits that it had rented out a crane ‘Demag CC 8800-1 (SSL)’ having a capacity to lift 1600 metric tons for a period of 7 months commencing from 17.02.2015, which is expected to end on 15.09.2015 to M/s. GR Engineering Private Limited. This renting is claimed to have been done by the applicant as per the terms contained in the Service Work Order No. P11/744-3400001617 dated 04.03.2014 and Amendment Service Order dated 03.06.2014. The applicant has given a break up of the total consideration of Rs. 19.45 crores. It is further pleaded that this crane was for the use at the Refinery of Bharat Petroleum Corporation Limited (BPCL for short) at its Integrated Refinery Expansion Project (IREP for short) site at its Kochi Refinery, which is engaged in refining of mineral oils. The applicant has also given a print out from the website of BPCL in support of his contention. It is then reminded that 3 applications of the applicant are pending for disposal in this Authority are (i) Erection and Installation of certain equipment of the customer at Guru Gobind Singh Sagar Refinery at Bathinda, Punjab during the period 25.2.2010 to 15.10.2010 for M/s. L&T Limited by using two Cranes; (ii) the second application relates to the erection and installation of certain equipment of the customer at Mangalore Refinery, Karnataka during the period 6.1.2011 to 31.01.2012 for M/s. Punj Lloyd Limited by using a crane imported in November, 2007; and (iii) the third relates to the erection and installation of certain equipment of the customer at M/s. Bramhaputra Craker & Polymer Limited, Lepetkata, Assam during the period 15.4.2012 to 9.10.2012 for M/s. Bramhaputra Craker & Polymer Limited by using two cranes imported in November, 2007. On this background, the above questions were asked.
4. The learned counsel before us made a statement that the 3rd Application i.e. M/s. Bramhaputra Craker & Polymer Limited already stands allowed holding that the consideration received is not taxable as the total period of the operation of the applicant is less than 183 days.
5. In the present application also, the claim of the applicant more particularly is that out of three years, in only one year, there is more than 183 days of working. On this basis, the applicant wanted to know his tax liability for the years where it has not exceeded 183 days. The Department has filed its reply on dated 11.1.2016. In short, the Department contends that the applicant has a Permanent Establishment (‘PE’) in India. It has taken a stand in the reply that the installation of project was carried out by the applicant for ‘G.R. Engineering Private Limited at BPCL, Kochi, Kerala commencing on 16.2.2015 and expected to end on 31.01.2016 constitutes a Permanent Establishment of the applicant in India in terms of Article 5 paragraph 3 of India-Singapore Double Tax Avoidance Agreement (DTAA) and hence, the business profits attributable to the said PE are the applicant’s income arising in India under Section 9(1)(i) of the Act and assessable as such in India in terms of Article 7 of the said DTAA for Assessment Years 2015-16 and 2016-17, which are the years where the applicant has not exceeded 183 days. The Department has also taken a stand that for the purpose of computing the business profits, Section 44BB of IT Act is applicable to the case of the applicant. Such business profits are taxable at the rate of 40%.
6. The learned counsel Shri K. Meenatchi Sundaram has very fairly submitted that he has no dispute with the inferences drawn by the Department. In that view, there would be no point in unnecessarily admitting this matter and keeping it pending. We, therefore, proceed to give the ruling on the basis of the contentions raised by the parties. Both the questions are, therefore, answered in terms of the conclusions drawn by the Revenue in their response dated 11.1.2016. The application is disposed of.
[Citation : 387 ITR 350]