TaxTMI 
TaxTMI 
2017 (5) TMI 1320
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.... company incorporated in Abu Dhabi, UAE, established in 1996 to cater to oil and gas construction industry. The assessee has undertaken following projects in India during the year under consideration. Sr. No. Party Nature of services Revenues received in USD Remarks Taxability Duration of period. 1. Arcadia Shipping Ltd. Charter Hire of Tug Boat Smit Sumatera (For ONGC Project) 4,00,500 Amount offered to tax is NIL Since the period of contract was less than 9 months, the income has not been offered to tax under Article 7 of the DTAA 4th March 2008 to 22^nd May, 2008. 2. Reliance Ports & Terminals Ltd. Precommissioning of Crude single point mooring and subsea pipelines 3,69,67,682 Amount offered to tax is NIL Since the period of contract was less than 9 months, the income has not been offered to tax under Article 7 of the DTAA. 16th January, 2008 to 14th June, 2008. 3. Leigthton Contractors (India) Pvt. Ltd Charter Hire of R250 and VMLI (For ONGC project) 38,39,162 Amount offered to tax is NIL. Since the period of contract was less than 9 months, the income has not been offered to tax under Article 7 of....
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....es for a period of more than nine months." 5. On a plain reading of this Article, it is very clear that what the treaty requires is that the site or project should continue for more than 9 months. In this case, as discussed above, as the project started on the day when the contract / agreement was signed and continued till 11/6/2009, hence it has continued for more than 9 months which clearly establishes a P.E. in India hence the income of the assessee company from this project is taxable in India. 6. For calculating the duration of the project, the project duration is being taken from the date when the actual work started. However, it may also be added here that even for negotiation and other works the employees of the assessee company must have visited India in connection with this project. That duration would however also be counted for duration of the project. 7. Moreover, the employees of the assessee company were also deputed for work under the service contract. The assessee has filed the details of barge entering India but such details regarding deployment of employees has not been provided. 8. In view of the aforesaid discussion, it is held that the assessee com....
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....the contract was signed on 16.07.2008 but the project commenced from 09.11.2008 only because the barge entered India only on 09.11.2008. Copy of the agreement has been produced. As per the agreement, nature of services are towage and assistance to Regina-250 and VML - 1 from Abu Dhabi to India and 50% of the amount is payable on signing of the agreement and initial departure period is 07.11.2008 +/- 21 days. From the above, it is evident that the towage equipment is deputed on 09.11.2008 as per the agreement and the entry document of barge. Therefore, unless barge starts its journey, it cannot be said that services as per agreement has commenced. A service cannot be said to be commence merely on signing of the agreement unless actual work towards the services begins. Therefore, it is hereby held that services of the Leighton project commenced on 09.11.2008 and continued till 11.06.2009. 4.3 The appellant has also given details of various projects during assessment years 2008-09 and 2010-11 both and details of Leighton project are as under:- A.Y. Party Nature of service Project duration No. of months / days 2008-09 Leighton Contracts (India) Pv....
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....t, learned Counsel conceded that the same may be taxed u/s 44BB. However, as regards other two contracts, learned Counsel submitted that assessee did not have a PE for execution of these works as the period of the stay was less than the period of nine months. He submitted that the two works were totally unconnected, hence he submitted that combined period cannot be taken for the purpose of determination of PE. For this purpose, learned DR referred to the decision of Mumbai Bench in the case of ACIT (International Taxation) v. Valentine Maritime (Mauritius) Ltd. [130 TTJ 417]. He further placed reliance upon the decision of ITAT Mumbai Bench in the case of Kreuz Subsea Pte. Ltd. v DCIT [172 TTJ 291]. Further, the learned Counsel submitted that the Assessing Officer has placed reliance upon Article 5(2)(h), hence he submitted that a different Article of the DTAA should not be applied for making the disallowance. 8. Upon careful consideration, we note that learned Counsel of the assessee has conceded that for the services rendered to Arcadia Shipping Limited, the same needs to be taxed u/s 44BB of the Income-tax Act. Hence, as regards the issue of taxability u/s 44BB of the service....