TaxTMI 
TaxTMI 
2015 (7) TMI 113
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....f India Singapore DTAA; ii) The Ld. Assessing Officer has erred in applying provision of Article 5(6) instead of applying specific provision of Article 5(3), applicable in the case of assessee ; and iii) The Ld. Assessing Officer has failed to appreciate that the assessee did not have PE in India under Article 5(3) as duration of each of its project in India was less than the threshold of 183 days, during the relevant fiscal year. 2. Briefly stated, the facts of the case qua the issue raised are that, assessee is a company incorporated in and is a tax resident of Singapore. It is mainly engaged in the business of integrated subsea installation service providing company. It has also filed tax residency certificate before the AO to claim benefit under the India Singapore DTAA. During the previous year relevant to A.Y. 2010-11, the assessee had under taken installation and construction activity in respect of the following projects in India in pursuance of contract:- a) Contract with Allseas; b) Contract with Swiber-BG Hydra Project; c) Contract with Swiber-BG Gaslift Project; The presence of assessee in India during the relevant previous year for the aforesaid ins....
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....accordingly the 10% of the gross Revenue of Rs. 128,92,53,378/- should be taxed. Against the said draft assessment order, the assessee filed objections before the DRP. 4. The DRP, examined the project wise details and the days of presence of the assessee in India and noted that in so far as contract with Allseas, duration of employees working in India varies from 3 days to 101 days and overall 113 personnel's were deployed by the assessee in India for carrying out the work. As regards, contract with Swiber BG Gaslift Project and contract with Swiber BG Hydra Project, the duration of the employees in India varied from 7 days to 93 days and 5 days to 54 days and also for second trip 5 to 22 days, respectively. Thereafter, the DRP noted that as per Article 5(6), if the stay of employees of the personnel of the assessee is more than 90 days the same would constitute a Service PE in India and thus the income of the assessee would become taxable in India. The DRP examined all the 3 contracts vis-à-vis the provision of Article 5(6) and came to the conclusion that all the projects constitute a Service PE in India. One of the other argument of the assessee before the DRP was that,....
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....calculated and reckoned from date of signing of the contract, he submitted that such a view cannot be upheld, because what is relevant is the date on which the preparatory work for the installation activity had commenced. At the time of signing of the contract, the parties have only agreed to carry out the work. The date from when actual work has commenced, is the date which should be considered for counting the days. In support of this contention, he relied upon following decisions:- i) Sumitomo Corporation Vs DCIT reported in (2008) 114 ITD 61 and ADIT Vs. Valentine Maritime (Mauritius) Ltd. Reported in (2011) 45 SOT 34 ii) Cal Dive Marine Construction (Mauritius) Ltd. (2009) 315 ITR 334 (AAR) 6. On the other hand, Ld. CIT DR, Shri S.D. Srivastava strongly relied upon the order of the DRP and submitted that the assessee for the purpose of installation carried out host of services which falls within the ambit of 'furnishing services' as stipulated in para 6 of Article 5. If Article 5(6) is taken into consideration then the threshold period as mentioned therein have clearly crosses in the case of the assessee. If the Service PE is not established Under Article 5(3), then i....
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....ork shall include. i) Sea bed Surveys and installation of transponders on sea bed ii) Jacket mud mat survey with respect to sea bed post installation iii) Monitoring of flood and vent vales subsea during installation and upending of structure iv) Demolitions of grout lines and reach rod post structure installation v) Removal and demolition of working platform on completion of installation vi) Removal of subsea installation slings and rigging C) Contract with Swiber-BG Gaslift Swiber entered into contract with Kreuz vide subcontract number 2009 018/OCS/KSS/BG-PGL for the performance for offshore transportation and installation of pipelines and risers for the Panna Gas Lift Project. Execution of construction and installation of riser clamps, risers and spools shall be undertaken by Subcontractor from barge Swiber Supporter (work vessel), free issued by Contractor. Subsea Installation Scope of work shall include: i) Installation of Risers ii) Installation of Grout Bag or Mattress Crossings iii) Installation of Riser Clamps iv) Installation of spool spice connectors From perusal of the aforesaid activities, it is apparent that essence of all th....
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....d to in paragraphs 4 and 5 of this Article and technical services as defined in Article 12, within a Contracting State through employees or other personnel, but only if: (a) activities of that nature continue within that Contracting State for a period or periods aggregating more than 90 days in any fiscal year; or (b) activities are performed for a related enterprise (within the meaning of Article 9 of this Agreement) for a period or periods aggregating more than 30 days in any fiscal year." Article 5(3) is a specific provision dealing with 'Service PE', on account of construction, installation or assembly project. if it continues for a period of more than 183 days in any fiscal year. The installation activity includes erection/setting up machine, equipments and testing and commissioning of such machines and equipments. Installation also relates to a construction of a project. Article 5(6) whereas envisages that, if an enterprise is "furnishing services" in the contracting state through its employees for a period of 90 days or more, then it is deemed to have Service PE, except for the services referred to in para 4 and 5. The threshold period under this para is 90 days and....
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.... final assessment order has mentioned that it has crossed 183 days as the contract was signed on 01.08.2009 and the project was completed on 12.02.2010. In this regard the observation of the AO is that, date of signing of the contract has to be reckoned for calculating the number of days. Such an observation of the Ld. AO cannot be upheld, because at the time of the signing of the contract no actual activity for the installation purpose had yet started. The date of signing of contract merely signifies that the parties have agreed to terms and conditions for carrying out the work. The actual date should be reckoned from the preparatory activities letting to the performance of the contract of the core business activity i.e. the installation activity in the present case. In support of this proposition, the reliance placed by the learned senior counsel in the case of Cal Dive Marine Construction (supra) is clearly applicable wherein, the Authority had held that date of signing of contract cannot be treated as the starting point. Thus, the threshold of the time limit as calculated by the AO from the date of signing of agreement cannot be accepted. Accordingly, in the case of Swiber BG H....