Service permanent establishment under the India-UK tax treaty requires reasoned treaty-based adjudication, not mere reliance on voluntary tax disclosure.

The assessee's return and notes were required to be read as a whole, and the voluntary offer of income did not amount to acceptance of a service permanent establishment for the relevant period under Article 5(2)(k) of the India-UK Tax Treaty. The Tribunal noted that the assessee specifically claimed the 90-day threshold for November 2008 to March 2009 was not exceeded, and that the lower authorities had not dealt with the treaty conditions in a reasoned manner. The finding of a permanent establishment for that period was set aside, and the matter was remanded to the Assessing Officer for fresh adjudication by a speaking order after considering the assessee's contentions.

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Issues: Whether the assessee had a service permanent establishment in India under Article 5(2)(k) of the India-UK Tax Treaty during the period November 2008 to March 2009, and whether the related taxability issues should be adjudicated afresh.

Analysis: The assessee had stated in the return and accompanying notes that the income was offered to tax in India only because of the position taken in earlier years and that, for the period November 2008 to March 2009, the threshold of 90 days under Article 5(2)(k)(i) was not exceeded. The lower authorities proceeded largely on the footing that the voluntary offer of income showed acceptance of a permanent establishment for the whole year, but did not deal with the assessee's specific claim on the treaty conditions in a reasoned manner. The Tribunal found that the return and notes had to be read as a whole, that the assessee had not accepted a permanent establishment for the relevant period, and that the claims under Article 5(2)(k)(i) and Article 5(2)(k)(ii) required proper adjudication on the material and submissions already placed on record.

Conclusion: The finding of a permanent establishment for the relevant period was set aside, and the issue was remanded to the Assessing Officer for fresh adjudication by a speaking order after considering the assessee's contentions.

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