TaxTMI 
TaxTMI 
2018 (8) TMI 270
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....rates in the specialized market for traffic control, navigation and port management systems. The assessee has entered into contracts with Oil and Natural Gas Corporation of India (ONGC) . Director General of Lighthouse and Lightships (DGLL) and Airports Authority of India (AAI) for supply of equipment and services. During the year under consideration, the assessee received payments in respect of performance of services and supply of equipment under the following contracts in India :- a) Establishment of Vessel Traffic Service (VTS) system in the Gulf of Kuchchh (GOK Project) b) Contract to provide Annual Maintenance of the Vessel and Air Traffic Management System (VATMS) system for ONGC (ONGC VATMS - AMC Project). The transactions of the assessee are covered under the Double Taxation Avoidance Agreement (DTAA) between India and Netherlands. 3. Gulf of Kuchch (GOK) Project The assessee had entered into a consortium agreement with Telecommunications Consultants India Limited (in short TCIL) and Dalmia & Company Limited , with TCIL acting as the consortium leader. This consortium was awarded a contract for establishment of Vessel Traffic Service (VTS) system in the Gulf....
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....rendered by the assessee, would have to be considered for taxing the onshore receipts at 10%. This view has been consistently taken by this tribunal for the Asst Year 2011- 12 in ITA No. 390/Kol/2015 dated 4.4.2018 in assessee's own case. The relevant operative portion of the order passed by this tribunal for the Asst Years 2012-13 and 2014-15 is reproduced hereunder:- 3.3. We find that these grounds had been adjudicated by this tribunal in assessee's own case for the Asst Year 2011-12 in ITA No. 390/Kol/2015 dated 4.4.2018 wherein it was held that the assessee herein constituted Installation PE in India. Further it was held that no attribution can be done on receipts from Offshore supply of equipment and Offshore provision of services. Only the profits attributed to the activities carried out in India shall be taxable and accordingly, only the onshore supply of equipment and onshore services rendered by the assessee, would have to be considered for taxing the onshore receipts at 10%. The relevant operative portion of the said order is reproduced hereunder:- 3.2. We have heard the rival submissions. ............ 'Permanent Establishment' to include - ....
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.... the goods as well as the payment, were carried on outside the Indian soil. In this case, the AAR placed reliance on the judgement of the Hon'ble Supreme Court in the case of Ishakiwajima Harima supra. 3.2.4. We find that the Co-ordinate Bench of Mumbai Tribunal in the case of Atomstroy Export vs DDIT reported in (2017) 80 taxmann.com 178 (Mumbai ITAT) held as under:- 15. Therefore, after analyzing the various case laws, statutory provisions, DTAA provisions and contractual terms and respectfully following judgment of Hon'ble Supreme Court in Ishikawajma-Harima Heavy Industries Ltd., (supra) we are inclined to hold that Offshore Supply contracts were 'carried and concluded' outside India and hence no income therefrom deemed to accrue or arise in India as per Section 9(1) and DTAA provisions and accordingly, not chargeable to tax. The receipts thereof do not form part of receipts for the purpose of computational provisions of Section 44BBB. Explanation 4 could not overcome the limitation imposed by Explanation 1(a) to Section 9(1)(i) and hence, the impugned income do not form part of business receipts for computation of income u/s 44BBB of the Act. . ....
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.... further relied on the fact that a subcontractor had carried out AMC work in India on behalf of the assessee and therefore the assessee had a virtual presence in India for execution of the project. Aggrieved, the assessee is in appeal before us. 4.2. We have heard the rival submissions and perused the materials available on record. We find that this tribunal had considered the same issue in assessee's own case for the Asst Years 2010-11 , 2011-12 , 2012-13 and 2013-14 and had held that the AMC services provided post completion of installation actvities at the site of the customer, cannot lead to carrying out installation activities for the purpose of constitution of an Installation PE in India. Further, it was also held that the presence of an Indian Contractor to which the assessee has sub-contracted the whole AMC work on principal - to- principal basis , does not create any virtual presence of the assessee in India. It was held that since no business activities were carried out by the assessee in India, it is unreasonable to conclude that the assessee has any PE in India. The relevant operative portion of the order passed by this tribunal in assessee's own case for the Asst Ye....
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....cepted and handedover to the customer in the year 2007 and no installation activity was carried out in India during the subject year, it cannot be held that the Assessee had an 'Installation PE' in India in the subject year. As far as the conclusion of the revenue that the independent contractor of the Assessee in India created a virtual presence of the Assessee in India so as to create an installation PE, given that the entire onshore maintenance contract has been performed by an independent local contractor in India, it cannot be said that the business of the Assessee has been carried out by the presence of the local contractor in India, so as to create its PE in India. The examination of whether a PE exists needs to be determined based on the activities of the foreign enterprise in India. Since no activities have been carried out by the Assessee in India with respect of such maintenance activity, it is unreasonable to conclude that the business of the Assessee was carried out in India through such subcontractor, to constitute its PE in India. We therefore hold that receipts in the form of AMC fees from ONGC on VATMS cannot be brought to tax in India as business income. I....