Dependent agent permanent establishment not made out; treaty protection sustained and Revenue's low-tax-effect appeal failed.

The Revenue's appeal was treated as not maintainable because the disputed tax effect was below the CBDT's revised monetary limit of Rs. 50 lakh, and no exception to the circular applied. On the substantive treaty issue, a Mauritius shipping company was found to have no fixed place of business in India and no dependent agent permanent establishment under Article 5 of the India-Mauritius Tax Treaty, because the Indian agents acted independently, carried on business for multiple principals, and were not exclusive. In the absence of a permanent establishment, the income was not taxable in India under the treaty, and treaty protection was upheld.

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Issues: (i) Whether the Revenue's appeal was not maintainable in view of the monetary limit prescribed by CBDT Circular No. 17/2019 dated 08.08.2019. (ii) Whether the assessee, a Mauritius tax resident engaged in shipping business, had a permanent establishment in India under Article 5 of the India-Mauritius Tax Treaty through a fixed place of business or dependent agents, so as to render its income taxable in India.

Issue (i): Whether the Revenue's appeal was not maintainable in view of the monetary limit prescribed by CBDT Circular No. 17/2019 dated 08.08.2019.

Analysis: The disputed tax effect in the Revenue's appeal was below the revised monetary limit of Rs. 50 lakh. The circular applied to pending appeals as well, and no exception to the monetary limit was shown to apply.

Conclusion: The Revenue's appeal for the relevant assessment year was not maintainable and was liable to be dismissed.

Issue (ii): Whether the assessee, a Mauritius tax resident engaged in shipping business, had a permanent establishment in India under Article 5 of the India-Mauritius Tax Treaty through a fixed place of business or dependent agents, so as to render its income taxable in India.

Analysis: The assessee had no fixed place of business in India and no material showed that its core business was carried on in India through a place at its disposal. The Indian agents were found to be independent entities carrying on business with multiple principals in the ordinary course of their activities, and their services to the assessee were not exclusive. On those facts, the exception for independent agents applied, and no dependent agent permanent establishment was made out. In the absence of a permanent establishment, the income could not be brought to tax in India under the treaty.

Conclusion: The assessee did not have a permanent establishment in India and was entitled to treaty protection; the Revenue's challenge failed.

Final Conclusion: The appeal and the connected cross objection were dismissed, and the assessee's treaty position was upheld.

Ratio Decidendi: An agent will not constitute a dependent agent permanent establishment when it acts independently and in the ordinary course of its business for multiple principals, and a treaty benefit cannot be denied in the absence of a permanent establishment.

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