Two Imp Intl Tax Verdicts

Raytheon Ebasco Overseas Ltd vs. DCIT (ITAT Mumbai)

9(1)(vii)/ Article 12: “Startup services”, though technical in nature, are not assessable as “fees for technical services” u/s 9(1)(vii) if they do not involve any “construction, assembly mining or like projects”. The services are also not taxable under Article 12 as they do not “make available” technical knowledge

We are of the opinion that technical services or the start-up services, provided by the assessee, did not include any construction, assembly mining or like projects and therefore the payment received by it would not constitute FTS as per the provisions of the Act. Here, we would like to refer to the decision of the Hon’ble Madras High Court delivered in the case of Neyveli Lignite Corporation (243ITR459).In that case the assessee was engaged in the mining of lignite. It had entered in to an agreement with a Hungarian company for acquiring steam generating plant for more efficient running of its business. The AO held that income had accrued to Hungarian company in India and hence the Indian company was liable for deduction of tax. The Hon’ble court decided the issue in favour of the assessee and held that receipts could not be brought to tax in India, that the payments made by it were not taxable under the provisions of section 9 of the Act. (Ichikawajama-Harima Heavy Industries Ltd (288 ITR 408) referred)

Siem Offshore Crewing AS vs. ADIT (ITAT Delhi)

9/ 44BB: Income received by a non-resident under a time charter agreement accrues and arises in india even when the vessel and crew are outside the territorial waters of India. Such income is assessable on a presumptive basis u/s 44BB

Gross payments are intricately linked to the services/works rendered by the assessee and arise due to the execution of contract in India, under the terms and conditions of the contract between the assessee and Siem Offshore Inc. The vessel was hired by the contract and it was only for this purpose that the vessel and the crew were involved in the said contract. Thus, it is improper on the part of the assessee to offer to tax its revenues only on a pro-rata basis based upon the number of days the vessel was stationed within 200 nautical miles from the Indian shore line. As the contract for the provision of crew was a continuing contract, it cannot be said that revenues were not earned for the period the vessel was out of the territorial waters of India. Hence, the entire contract amount is to be considered for the purpose of calculating the gross receipts and all receipts received against the execution of the contract would come under the purview of gross receipts. Thus, gross amounts for the months of November 2007, December 2007 and January 2008 are to be included in the gross receipts