Special treaty PE rule prevails over general fixed-place test; revision fails where Assessing Officer made proper enquiries.

Revision under section 263 was unsustainable where the Assessing Officer had made specific enquiries, examined the contract and supporting records, and accepted the assessee's position under Article 5(5) of the India-Singapore treaty that services in India were rendered for 102 days, below the treaty threshold. The special treaty rule for services connected with mineral oil exploration, exploitation or extraction prevails over the general fixed-place permanent establishment rule in Article 5(1). Since the assessment was completed on a plausible view after due enquiry, it could not be treated as erroneous and prejudicial to the Revenue merely because the Commissioner preferred a different interpretation of the general provision.

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Issues: Whether the revisionary order under section 263 was sustainable where the Assessing Officer had made enquiries into the existence of a permanent establishment and accepted the assessee's stand under Article 5(5) of the India-Singapore treaty, and whether Article 5(1) could be invoked to treat the seismic vessel as a fixed place permanent establishment.

Analysis: The assessment record showed that the Assessing Officer had issued specific queries, examined the contract, called for the details of days spent in India, and considered documentary evidence before accepting that the services in India were rendered for 102 days, below the treaty threshold. The revisionary authority proceeded on the view that Article 5(1) had to be examined first and that the vessel constituted a fixed place of business. The treaty scheme distinguishes between the general rule of fixed place permanent establishment and the special activity-based rule in Article 5(5), which applies to services or facilities in connection with mineral oil exploration, exploitation, or extraction. A specific provision of that kind prevails over the general provision. Since the Assessing Officer had adopted a permissible view after due enquiry, the assessment could not be characterised as both erroneous and prejudicial to the interests of the Revenue merely because another view was possible.

Conclusion: The revision under section 263 was not sustainable and the assessee succeeded on this issue.

Ratio Decidendi: Where the Assessing Officer has made enquiries and taken a plausible view on a special treaty provision, revision cannot be sustained under section 263 merely because the Commissioner prefers a different interpretation of the general provision.

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