2019 (11) TMI 1760

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....ed and a tax resident of Cyprus. During the financial year 2007- 08, assessee was awarded a contract by Allseas Marine Contractors, S.A.(AMC) in relation to the development of the Dhirubhai 1 and Dhirubhai 3 gas fieldslocated offshore in the Krishna Godavari Basinof the East Coast of India. The work on the contract commenced in April 2008 and was completed in September, 2008 i.e. the activity of assessee continued for a period of six months. In the draft assessment order for AY 2008-09, Ld. AO held that the assessee had a PE in India. During the course of hearing, assessee was asked to explain as to why it should not be regarded to constitute a Permanent Establishment (PE) in India as per Article 5(2)(g) of India-Cyprus Tax Treaty following....

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....ssessee has been doing mere construction activity. They further submitted that the activity under the contract lasted for the period of less than 10 months and, therefore, under Article 5(2)(g) of Indo Cyprus DTAA, there exist no PE in India. Ld. AR submitted that the Ld. AO had taken the date of commencement of the activity of the assessee for the purpose of determining the existence of PE from the date of the visit of one of the employees, namely, Mr. HarryBeljaars in September, 2007 but such visit of Mr. Harry was only to collect data and information to bid for the contract with AMC and, therefore, cannot be reckoned for the purpose of determination of duration u/s 5(2)(g) of the DTAA. 5. According to the ld. AR, the assessee was awar....

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....e submissions in assessee's own case in respect of very same contract for the AY 2008-09, a coordinate bench of this Tribunal in ITA No.5759/Del/2011 and reached the following conclusions: "12. The ratio as culled out from the aforesaid judgment is that a building site or an assembly project can only be construed at fixed place of business only when an enterprise commences its activities at the project site. Any activity which may be related or incidental but was not carried out at the site in the source country would clearly not be construed as a PE. Albeit, preparatory work at the site itself can be counted for the purpose of determining of duration of PE. However, in the present case there is no such allegation or material on re....

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....o end. Here activity of the assessee qua the project as per the terms of contract had come to an end on or before 30th September, 2008 for the reason that; firstly, last sail out of barge/vessel was 25th September 2008 and Customs authorities have also certified the demobilization by this date; secondly, all the payments relating to contract work were received by the assessee much before the closing of September, 2008; thirdly, the completion certificate too mentions the date of completion as 30th September, 2008, though the formalities of final completion certificate may had exceed until November 2008, but the date mention for completion in the certificate is 30th September 2008 only; and lastly, there is nothing on record to suggest that ....