TaxTMI 
TaxTMI 
2011 (10) TMI 27
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....is International B.V. and Hollansche Aanneming Maatschappij B.V. (BKI/HAM) incorporated under the laws of Netherlands on 24th November, 1993 with a limited liability. During the assessment year 1994-95, the assessee entered into a sub-contract for dredging and back filling works with Hyundai Heavy Industries in respect of the second Basin Hazira Trunk Pipeline Project. The contract comprised of dredging a trench for laying the pipeline and back filling of the trench after the pipeline had been laid. The dredging activities commenced in India w.e.f. 27th December, 1993 and was completed on 12th June, 1994. It may be noted here that the contract was spilled over two assessment years, i.e., 1994-95 and 1995-96 and that the entire duration of t....
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....e had a permanent establishment in India. 5. The assessee, being aggrieved by the assessment order under Section 148 of the Act, filed an appeal before the Commissioner of Income Tax (Appeals). The learned Commissioner by an order dated 4th February, 2002 allowed the appeal and held that no permanent establishment of the assessee existed in the year under consideration and, consequently, no part of the revenue was taxable in India. The Commissioner of Income Tax (Appeals) found that the contract was for less than 180 days and was spilled over two assessment years, i.e., for the assessment year 1994-95 and 1995-96. The appellate authority found that for the assessment year 1995-96, the assessee was taxed in India on the ground that it had....
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.... 7. The revenue, being aggrieved by the aforesaid order, filed an appeal before the Tribunal which was dismissed by an order dated 23rd June, 2006. The revenue, being aggrieved by the said order, filed the present appeal u/s 260 A of the Act which was admitted on the following substantial question of law:- "1. Whether the Hon'ble I.T.A.T. was legally correct in upholding the decision of CIT (A) on facts in his finding that the assessee did not have permanent establishment in India within the meaning of Article 5 of the DTAA between India and the Netherlands? 2. Whether the Hon'ble ITAT was legally correct in upholding the decision of CIT (A)-1, Dehradun on facts in his decision that no part of the revenue earned by the assesse....
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....elation to a persons providing storage facilities for others: (h) a premises used as a sales outlet; (i) an installation or structure used for exploration of natural resources provided that the activities continue for more than 183 days. (3) A building site or construction, installation or assembly project constitutes a permanent establishment only where such site or project continues for a period of more than six months." A perusal of Article 5 (1) of the treaty indicates that a "permanent establishment" means a fixed place of business through which the business of the enterprise is wholly or partly carried on. Article 5 (2) of the treaty includes a place of management, a branch, an office, a factory, a worksh....
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....ute a permanent establishment such site or project should continue for a period of more than six months. Such site or project, in our opinion, is provided under Article 5 (2) of the treaty and, therefore, the site or project provided under Article 5 (2) should continue for a period of more than six months in order to constitute a permanent establishment. Since a categorical finding of fact has been given by the appellate authority that the contract was for less than six months, it becomes absolutely clear that the assessee did not have a permanent establishment in India as per Article 5 (3) of the treaty. The court is of the opinion that Article 5 (3) provides a specific provision which covers the provision of Article 5 (2) of the treaty. T....