Permanent establishment not found in India; offshore supply income remained non-taxable on the facts found.

No permanent establishment in India was established because the project office opened only on 01.02.2011 and, before that date, there was no branch office, sales office, factory site or other fixed place of business. Occasional visits for negotiation, signing or site inspection did not create a fixed place PE, the applicable DTAA contained no service PE clause, and the installation PE threshold was not met. As the assessee had also offered supervisory income attributable to the project office, the offshore supply of equipment and chemicals on FOB terms, with acceptance testing outside India, remained outside Indian tax net on the facts found. The Revenue's challenge failed.

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Issues: Whether the assessee had a permanent establishment in India, including a fixed place PE, service PE or installation PE, so as to render the offshore supply income taxable in India.

Analysis: The dispute turned on the factual finding recorded by the DRP that the project office was opened only on 01.02.2011 and that, prior to that date, there was no branch office, sales office, factory site or other fixed place of business in India. The DRP also found that the assessee had offered supervisory income attributable to the project office, that the supply of equipment and chemicals was on FOB basis, and that acceptance testing was to be carried out outside India. It further held that occasional visits for negotiation, signing or site inspection did not establish a fixed place PE, that the applicable DTAA contained no service PE clause, and that the threshold for installation PE was not satisfied.

Conclusion: No permanent establishment in India was established. The offshore supply income was not taxable in India on the facts found, and the Revenue's challenge failed.

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