Installation permanent establishment turns on cumulative presence counting; no withholding obligation arises if the treaty threshold is not crossed.

An installation permanent establishment under Article 5(2)(k) of the India-USA DTAA depends on whether the personnel's presence in India exceeds the treaty threshold of more than 120 days in any twelve-month period. The article states that the actual stay must be computed cumulatively, without double counting the same period of presence, and that the dates of payment do not by themselves determine when the installation project begins or ends. On the stated facts, the employee visits did not cross the threshold, so no installation PE arose in India and no obligation to deduct tax at source under Section 195 of the Income-tax Act, 1961 followed.

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Issues: Whether the foreign enterprise had an installation or construction permanent establishment in India under Article 5(2)(k) of the India-USA DTAA, and consequently whether the assessee was required to deduct tax at source under Section 195 of the Income-tax Act, 1961 on payments made to it.

Analysis: The three job work orders were for installation-related activities at the same premises and the relevant inquiry was whether the personnel's presence in India crossed the treaty threshold of more than 120 days in any twelve-month period. The duration had to be computed cumulatively for the actual stay of personnel, and multiple counting of the same period of presence was impermissible. On the record, the employee visits did not exceed the treaty threshold, and the payment dates themselves did not determine the commencement or completion of the installation project. Once the treaty threshold was not met, no installation permanent establishment arose in India.

Conclusion: No installation permanent establishment existed in India under Article 5(2)(k) of the India-USA DTAA, and the assessee was not required to deduct tax at source under Section 195 of the Income-tax Act, 1961.

Final Conclusion: The additions based on alleged failure to withhold tax could not be sustained, and the assessee succeeded on the core treaty and withholding issue.

Ratio Decidendi: For determining an installation permanent establishment under the applicable treaty threshold, the actual period of presence of personnel must be computed cumulatively without double counting, and where that threshold is not exceeded, no withholding obligation arises on the payer under Section 195 of the Income-tax Act, 1961.

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