Income deemed to accrue or arise in India, 10 October 2011

Income earned by the applicant non-resident from its activities of execution of four installations is not liable to tax in India as different periods of the contracts ought not to be aggregated to reckon the threshold of 183 days under Art 5.3 of the India-Singapore DTAA in a fiscal year since the projects are not carried out for the same principal and all projects are independent and there is no interconnection and interdependence amongst them — as held by AAR in Tiong Woon Project & Contracting Pte Limited , In Re

The duration test for the installation and assembly projects provided under Art 5.3 of the DTAA cannot be construed to be read for all the projects that do not pass the test of cohesiveness, interconnection and interdependence.

The execution of projects by the non-resident involving the setting up, fitting, placing, and positioning of the fabricated equipment at the site constitutes an installation or assembly project and the subsequent setting up of a subsidiary and the appointment of a contact person cannot be said to bring a PE into existence.

Decided on: 19 September 2011