Installation projects and permanent establishment under the Singapore DTAA: independent contracts could not be aggregated, so income was not taxable in India.

Installation activities involving ground preparation, crane movement, load testing, holding equipment after erection, and setting, fitting, placing and positioning fabricated equipment at site were treated as installation or assembly projects, not supervisory services or services under the residuary provision. The resulting income was characterised as business profits under Article 7.1 of the Singapore DTAA and was taxable in India only if a permanent establishment existed. The four projects were independent, with no interconnection, interdependence or cohesiveness, so their periods could not be aggregated for the 183-day test under Article 5.3. A wholly owned subsidiary and the reference to a contact person were insufficient to create a permanent establishment; the income was therefore not taxable in India.

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Issues: Whether the income from the execution of four installation projects in India was taxable in India and whether the duration of the contracts could be aggregated to constitute a permanent establishment under Article 5.3 of the DTAA with Singapore.

Analysis: The scope of work under the contracts required ground preparation, movement of cranes, load movement testing, holding of equipment after erection, and setting up, fitting, placing, and positioning of fabricated equipment at site. These activities were held to constitute installation or assembly projects and not supervisory services or furnishing of services under the residuary provision. The income from such projects was business profits under Article 7.1, but taxable in India only if a permanent establishment existed. The projects were found to be independent, with no interconnection, interdependence, or cohesiveness, and therefore the periods of the contracts could not be aggregated for the 183-day test under Article 5.3. The wholly owned subsidiary and the mention of a contact person were held insufficient to constitute a permanent establishment.

Conclusion: The applicant did not have a permanent establishment in India under Article 5.3, and the income from the four projects was not taxable in India.

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