Permanent Establishment under tax treaty requires year-specific proof; no PE meant no profit attribution in India.

The existence of a Permanent Establishment under the India-Switzerland DTAA must be determined year by year on the facts of the relevant assessment year, and the Revenue bears the burden of proving it. As the assessee's unrebutted evidence showed that the earlier factual basis for a fixed place PE or dependent agent PE did not survive in the year under consideration, no PE was found to exist in India. Without a PE, no profit could be attributed under Article 7.

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Issues: Whether the assessee had a Permanent Establishment in India under Article 5 of the India-Switzerland DTAA, and if not, whether any profit could be attributed to such PE under Article 7.

Analysis: The factual position for the year under consideration was found to be identical to earlier assessment years in which the Tribunal had already examined the existence of a PE. The departmental authorities relied on past assessment history, but did not controvert the assessee's material showing that the earlier factual basis for PE did not survive in the relevant year. The issue of PE has to be determined year by year on the facts of the particular assessment year, and the Revenue bears the burden of establishing the existence of PE. Since the assessee's evidence remained unrebutted, no basis was found to infer either a fixed place PE or a dependent agent PE.

Conclusion: The assessee did not have a Permanent Establishment in India for the year under consideration, and therefore no profit was attributable to any such PE.

Ratio Decidendi: Existence of a Permanent Establishment under a tax treaty must be determined on the facts of the relevant year, and in the absence of rebuttal by the Revenue, no attribution of profits can be made to a non-existent PE.

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