Fabrication charges for refurbishment were not fees for technical services where no know-how was made available under the treaty.

Fabrication charges for refabrication or refurbishment of bushings were held not to constitute fees for technical services under section 9(1)(vii) of the Income-tax Act or Article 12 of the India-Singapore Tax Treaty because the activity was carried out at the assessee's Singapore plant and no technical knowledge, skill, know-how or process was made available to the payer. The Tribunal followed its earlier orders in the same assessee's case and held that the treaty conditions for taxation as technical services were not satisfied, so the related addition was deleted.

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Issues: Whether fabrication charges received for refabrication or refurbishment of bushings were taxable as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961 and Article 12 of the India-Singapore Tax Treaty.

Analysis: The payment was for fabrication activity carried out at the assessee's plant in Singapore and did not involve making available technical knowledge, experience, skill, know-how or process to the Indian payer. The issue was covered by earlier Tribunal orders in the assessee's own case, which held that such receipts do not fall within Article 12(4)(a). The Tribunal followed those decisions and held that the treaty provision could not be invoked to tax the receipt as fees for technical services.

Conclusion: The fabrication charges were not taxable as fees for technical services, and the addition was deleted in favour of the assessee.

Ratio Decidendi: Refabrication or refurbishment charges are not fees for technical services where no technical knowledge, skill, know-how or process is made available to the payer and the payment does not satisfy the treaty conditions for taxation as technical services.

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