Treaty definition of fees for technical services controlled taxability of fabrication charges where facts remained unchanged.

Fabrication charges received from an Indian associated enterprise were examined for taxability as fees for technical services under section 9(1)(vii) and Article 12 of the India-Singapore DTAA. The earlier coordinate-bench view in the assessee's own case held that the receipts did not satisfy the treaty definition of fees for technical services, and no change in facts or law was shown for the year under review. Applying the narrower treaty test and following the recurring prior decision, the receipts were treated as not taxable as FTS, and the addition was deleted.

---

---

Issues: Whether fabrication charges received by the assessee from its Indian associated enterprise 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 DTAA.

Analysis: The fabrication receipts were held in earlier years, in the assessee's own case, not to fall within the treaty definition of fees for technical services. The decisive consideration was that the services did not satisfy the treaty conditions for FTS, and the Revenue could not show any change in facts or law for the year under consideration. The matter was treated as recurring, and the earlier coordinate-bench view was followed.

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

Ratio Decidendi: Where a treaty contains a narrower definition of fees for technical services, and the factual matrix remains unchanged, the taxability of the receipt must be tested under the treaty terms and the earlier binding view in the assessee's own case may be followed.

---