Permanent establishment must be tested on year-specific contracts and work allocation before attributing offshore supply income.

Existence of a permanent establishment in India and attribution of income from offshore supplies must be determined from the relevant contracts and the allocation of work for the year concerned, not merely by relying on findings from earlier assessment years. Because the complete contract documents were not examined, the factual foundation for deciding PE existence and taxability was incomplete. The matter was therefore remanded for fresh adjudication after consideration of the relevant contracts and connected materials, with a reasonable opportunity of hearing to the assessee. The appeals were thus disposed of without a merits determination.

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Issues: Whether the question of existence of a permanent establishment in India and attribution of income from offshore supplies could be decided on the basis of prior year findings without examining the relevant contracts and scope of work for the years under appeal.

Analysis: The impugned assessments and appellate orders proceeded mainly on findings recorded in earlier assessment years. The contract structure and allocation of work among consortium members, however, were material to determine whether the assessee had any permanent establishment in India for the years in question. Since complete contracts were not examined, the factual basis necessary for deciding the issue was incomplete. The assessee was therefore to be afforded an opportunity to place the relevant contracts and materials before the assessing authority.

Conclusion: The matter was remanded for fresh adjudication after examination of the relevant contracts and connected materials, with reasonable opportunity of hearing to the assessee.

Final Conclusion: The appeals were disposed of without a merits determination, and the taxability dispute was sent back for reconsideration on a proper factual foundation.

Ratio Decidendi: Existence of a permanent establishment must be determined on the basis of the relevant contractual terms and allocation of work for the year concerned, and cannot rest solely on findings from prior assessment years when the factual matrix is not the same.

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