2006 (3) TMI 121

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.... A. No.8751(Del) of 92 (assessment year 1989-90), whereby the Income-tax Appellate Tribunal has allowed the appeal filed by the assessee in part. Appeals Nos. 473 of 2001, 474 of 2001 and 475 of 2001 have been filed by the appellants against the common order dated May 3, 2000, passed by the Income-tax Appellate Tribunal, New Delhi (in short "the ITAT") in I. T. A. Nos. 2494 of Del of 93 (assessment years 1986-87, 1987-88 and 1988-89), 5612 of Del of 91 and 5467 of Del of 91 respectively (both assessment years 1987-88 and 1988-89), whereby the learned Income-tax Appellate Tribunal has dismissed the cross objections of the Revenue on the agreement of the parties that the issue involved in the present cross objections stand covered in favou....

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....ndian portion had commenced from December 9, 1986, at the off-shore location and tentative completion was scheduled by the end of March. The assessment for both the assessment years was completed on March 29, 1990, holding that the company was having a "permanent establishment" for both the assessment years and assessed income taking 2 per cent. on receipts in respect of outside India activities. Notice was issued for the assessment year 1986-87 on March 30, 1990, and assessment was completed on June 8, 1992 under the Double Taxation Avoidance Agreement. Aggrieved by the assessment orders, the assessee preferred appeals before the Commissioner of Income-tax (Appeals), Dehradun, who held that the assessee-company did have a "permanent est....

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....ding regarding permanent establishment in paragraph 44(B) of its judgment. On the question whether the assessee had a "permanent establishment" in India, article 5 of the CADT is being reproduced as under: "(1) For the purposes of this Convention, the term 'permanent establishment' means a fixed place of business through which the business of an enterprise is wholly or partly carried on. (2) The term 'permanent establishment' shall include especially (a) a place of management; (b) a branch; (c) an office; (d) a factory ; (e) a workshop; and (f) a mine, an oil or gas well, a quarry of any other place of extraction of natural resources. (3) The term 'permanent establishment' likewise encompasses a building site, a c....

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....nding that we are not sufficiently convinced to treat the income from Indian operations at Rs. nil for the assessment year 1988-89, specially where the assessee had failed even before the tax authorities to support its facts and figures and we have upheld the application to section 145. The Income-tax Appellate Tribunal was right in rejecting the argument of zero profit on the Indian operations and to accept the alternative argument holding that Instruction No. 1767 is after all a guideline and computation can be made under the relevant provisions of the Act read with the guidelines themselves. The Income-tax Appellate Tribunal after detailed discussions held that Instruction No. 1767 is after all a guideline and computation can be made ....