Technip Singapore Pte Ltd. v. Director of Income Tax (2016), W.P.(C)-7416/2012 (Delhi High Court)

The taxpayer was a Singapore company which installed a marine crude oil receiving facility over a 41-day period for Indian Oil Corporation Ltd (“IOCL‟) at a contract price of U.S.$18.6 million. Although the facility belonged to IOCL, its installation required the taxpayer to use its own barges containing specialized equipment, with 68% of the contract price allocated to this use (referred to as the “the mobilisation/demobilisation charges.”)

The definition of “royalties” in Art. 12.3(b) of the Singapore-India Double Taxation Avoidance Agreement (DTAA) included payments for the use of or the right to use any “industrial, commercial or scientific equipment.” In rejecting a submission on behalf of the Director of Taxation that the mobilisation/demobilisation charges were royalties, Dr Muralidhar J stated (at paras. 24, 36):

...IOCL did not have dominion or control over the equipment.

There is a difference between the use of the equipment by the Petitioner ‘for’ IOCL and the use of the equipment ‘by’ IOCL. Since the equipment was used for rendering services to IOCL, it could not be converted to a contract of hiring of equipment by IOCL.

The taxpayer was a Singapore company which installed a marine crude oil receiving facility for an Indian company ("IOCL") at a contract price of U.S.$18.6 million. Dr Muralidhar J found that the taxpayer did not have a permanent establishment in India under the Singapore-India Double Taxation Avoidance Agreement, stating (at para. 27):

Under Article 5(3) the Petitioner can be said to have a PE in India only if the installation or construction activity is carried on in India for a period exceeding 183 days in any fiscal year. The Petitioner was … present in India… for 41 days during 2008-09 for rendering the contract of service to IOCL.