TaxTMI 
TaxTMI 
2023 (5) TMI 740
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.... by the departmental authorities, or under section 115A read with section 9(1)(vii) of the Act as per assessee. 3. Briefly the facts relating to the issue in dispute are, the assessee is a non-resident corporate entity having its headquarter in Hong Kong and is a tax resident of Hong Kong. As stated by the Assessing Officer, the assessee is engaged in the business of providing engineering and project management consultancy services. The DAMEPL floated a global tender for providing engineering and project management consultancy services for the airport line of Delhi Metro. The assessee participated in the tender and was successful. Accordingly, the work was entrusted to the assessee by executing a contract on 19.05.2008. After execution of contract, the assessee commenced it work. In the year under consideration, the assessee received an amount of Rs.28,51,54,304/- from DAMEPL. The assessee treated the aforesaid receipts as Fee for Technical Services (FTS) within the meaning of section 9(1)(vii) of the Act, and in the return of income filed for the impugned assessment year on 28.07.2011, offered it to tax on gross basis by applying the rate of 10% in terms with section 115A of th....
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..... Rather, he observed, the expression "business connection" will have a wider connotation as compared to the concept of PE. He observed, the time spent by the employees of a non-resilient entity in execution of any project/contract plays a very significant role in determination of PE/business connection. He observed that in case of the assessee, the employees have stayed in India for a period of more than 183 days. Referring to certain clauses in the contract with DAMEPL, the Assessing Officer observed that the assessee has been provided space with various other facilities by DAMEPL. Further, he observed that the assessee has entered into a separate agreement for secondment of its employee to the office of DAMEPL in order to complete the consultancy project undertaken by it. However, salaries of the seconded employees were paid by the assessee. Referring to various terms of the secondment agreement, the Assessing Officer observed that the assessee has employed two teams of employees, viz., offshore and onshore, who were responsible for consultancy project undertaken by the assessee and role of both the teams have been specified in the agreement. Thus, on the aforesaid factual analy....
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....d professional services', as per section 44DA of the Act are different. Therefore, to come within the purview of section 44DA of the Act, so far as professional services are concerned, it must be provided from a fixed place of profession situated in India. He submitted, the expression 'fixed place of profession' has not been defined in the statute. Thus, he submitted, since the assessee has no fixed place of profession in India, section 44DA is not attracted. Without prejudice, he submitted, the principal test to ascertain, as to whether an enterprise has a fixed place of business or not is that place of business or premise has to be at the disposal of the enterprise. He submitted, a particular place would be treated to be at the disposal of the enterprise when the enterprise had right to use the said place and has a control thereupon. He submitted, the burden is entirely on the Revenue to establish the aforesaid facts. In this context, he relied upon a decision of the Hon'ble Supreme Court in case of ADIT Vs. M/s. E-Fund IT Solutions Inc. [2018] 13 SCC 294. He also relied upon a decision of the Hon'ble Supreme Court in case of Formula One World Championship Ltd. Vs. CIT, [2017] 15....
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....ecord. Undisputedly, the assessee has received certain consideration from DAMEPL for rendition of engineering and project management consultancy services. Since, there is no DTAA between India and Hong Kong, the assessee, being tax resident of Hong Kong, has treated the receipts from DAMEPL as FTS in terms with the provisions contained under the domestic law and offered it to tax under section 115A of the Act. Whereas, the Revenue has assessed the income under section 44DA of the Act. At this stage, it is necessary to look into the provisions of section 44DA of the Act, which read as under: "Special provision for computing income by way of royalties, etc., in case of nonresidents. 44DA. (1) The income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by a non-resident (not being a company) or a foreign company with Government or the Indian concern after the 31st day of March, 2003, where such non-resident (not being a company) or a foreign company carries on business in India through a permanent establishment situated therein, or performs professional services from a fixed place of prof....
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....llment of the aforesaid additions, the receipts of the assessee shall be computed under the head 'profit and gains from business or profession' in terms with the provisions contained therein. 11. The first contention of the assessee is that since professional services rendered by the assessee are not through any fixed place of profession, the receipts are not taxable under section 44DA of the Act. In this context, learned counsel has submitted, the expression 'fixed place of profession' has not been defined under the statute, hence, it will not come within the purview of the definition of PE under section 92F(iiia) of the Act. 12. In our view, the aforesaid contention of the assessee is farfetched, hence, not acceptable. The expression 'fixed place of profession' is used in the context of a non-resident, which is not a foreign company. Though, the expression 'fixed place of profession' has not been defined specifically under the provisions of the Act, however, the term 'Permanent Establishment' used in section 44DA, in turn, refers to the definition of 'Permanent Establishment' under section 92F(iiia) of the Act. As per definition of PE under section 92F(iiia), it includes fi....