Supervisory work is not installation project activity, so no treaty permanent establishment arose in India.

Mere supervisory and technical assistance at an Indian customer's site did not amount to carrying on an installation project for treaty permanent establishment purposes. The Tribunal read the relevant treaty language, including the six-month building site or construction/installation threshold, and found no material difference between the 1985 and 1960 wording on this point. Because the Indian concern carried out the actual erection and installation, supervision alone was not treated as installation and could not be stretched into a permanent establishment in India. The related profits were therefore not taxable in India on that basis.

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Issues: Whether the assessee's supervisory services at the Indian customer's site constituted a permanent establishment in India under the treaty, so as to make the related profits taxable in India.

Analysis: The relevant treaty provisions treated a building site or construction or installation project as a permanent establishment only if it lasted more than six months. The core question was whether the assessee's role in supervising erection and installation by the Indian concern amounted to carrying on an installation project itself. The Tribunal compared the 1985 and 1960 treaty language and found no material change in substance on this point. It accepted that the assessee merely rendered supervisory and technical assistance while the actual erection and installation were undertaken by the Indian concern. On those facts, supervision was held not to be the same as installation, and the treaty provision could not be stretched to cover mere supervisory work as a permanent establishment.

Conclusion: The assessee did not have a permanent establishment in India on account of the supervisory services, and the issue was decided in favour of the assessee.

Ratio Decidendi: Mere supervision of an installation project by a non-resident does not, by itself, constitute carrying on the installation project so as to create a permanent establishment under the treaty.

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