LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

the true test, is in interconnection and independence - in addition to geographical proximity and co

Raj Kumar Makkad ,
  04 May 2010       Share Bookmark

Court :
TRIBUNAL
Brief :
Permanent Establishment (PE) under DTAA - Test of Interconnection and Interdependence - Assessee - company incorporated in, and tax resident of, Mauritius - Engaged in business of marine and general engineering and construction, executed three contracts - individually none of the contract's duration was nine months, the threshold limit, as applicable for construction of PE, under the India Mauritius tax treaty - But cumulatively, the said duration exceeded the limit - Whether in determining whether the Assessee had a PE in India, the duration of all contracts could be taken collectively? - Article 5, DTAA between India and Mauritius
Citation :
Assistant Director of Income Tax - International Taxation, Circle 2(2),Mumbai v. Valentine Maritime (Mauritius) Ltd, (Decided on 05.04.2010) MANU/IU/0103/2010

Held, the true test, is in interconnection and independence - in addition to geographical proximity and commercial nexus. There is no finding, nor even a suggestion, by any of the authorities below to the effect that the three contracts are inextricably interconnected, interdependent or can only be seen only as a coherent whole in conjunction with each other. As a matter of all the three contracts are for three different purposes- for charter of accommodation barge, for use of barge in domestic are and for replacement of decks. None of these contracts are such that these can be viewed as interconnected or interdependent. The CIT(A) was thus quite justified in holding that the duration of these projects cannot be aggregated for the purposes of ascertaining whether or not the permanent establishment of the Assessee can be said to have existed in India. It is an admitted position that unless the time spent on these different contracts is aggregated, the threshold limit of nine months, as laid down in Article 5(2)(i), cannot be satisfied. In view of these discussions, and bearing in mind entirety of the case, we hold that the CIT(A) was quite justified in holding that the Assessee did not have a permanent establishment in India.

 
"Loved reading this piece by Raj Kumar Makkad?
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"



Published in Taxation
Views : 1042




Comments





Latest Judgments


More »