Permanent establishment requirement under section 44BB: offshore supply receipts were not taxable absent proof of business presence in India.

Offshore supply receipts were held not taxable on a presumptive basis under section 44BB because the Revenue failed to prove a fixed place or deemed permanent establishment in India. The Tribunal noted that the facts for the year were materially identical to the earlier year decided in the assessee's favour, and no fresh material had been brought to establish a permanent establishment. Applying the coordinate bench decision in the assessee's own case, it held that in the absence of a permanent establishment in India, section 44BB could not be used to bring the offshore supply receipts to tax, and the addition was deleted.

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Issues: Whether the assessee had a fixed place permanent establishment or deemed permanent establishment in India so as to bring the offshore supply receipts to tax under section 44BB of the Income-tax Act, 1961.

Analysis: The Tribunal found that the facts for the year under appeal were materially identical to the earlier assessment year already decided in the assessee's favour. It noted that the Revenue had failed to bring any fresh material to establish the existence of a permanent establishment in India, and that the burden to prove such existence lay on the Revenue. Following the coordinate bench decision in the assessee's own case, the Tribunal held that offshore supply receipts could not be subjected to presumptive taxation under section 44BB in the absence of a permanent establishment in India.

Conclusion: The assessee did not have a permanent establishment in India, and the addition made by applying section 44BB on offshore supply receipts was deleted in favour of the assessee.

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