Date of Order: 22nd June 2023
Appellant: DCIT, Circle-2(2)(2), International Taxation, New Delhi
Respondent: National Petroleum Construction Company, Noida
The DCIT appealed against the CIT(A)-43, New Delhi’s decision which found that National Petroleum Construction Company did not have a permanent establishment (PE) in India as defined under the India-UAE Double Taxation Avoidance Agreement (DTAA) for the assessment years 2018-19 and 2019-20. The issues contested included the characterization of the company’s project office in India and whether its activities were preparatory and auxiliary, thereby not constituting a PE under the DTAA.
The Tribunal reviewed similar cases and precedents involving the company, where it was consistently found in favor of the respondent by various judicial bodies, including the High Court. The Tribunal observed that the project office’s activities did not fulfill the criteria for constituting a fixed place of business PE, an installation PE, or a dependent agent PE as defined in the DTAA. The appeal also covered disputes regarding the taxability of income and the attribution of profits to alleged PEs, as well as the categorization of income from interest as either effectively connected with the PE or as passive income under different articles of the DTAA.
Concluding, the Tribunal upheld the CIT(A)’s rulings, agreeing that the project office’s activities were preparatory and auxiliary and that the company did not have a PE in India. This decision was aligned with previous judgments for earlier assessment years where similar facts and legal arguments were presented. The Tribunal’s decision further reinforces the principles and interpretations of the DTAA provisions concerning the determination of a PE and its impact on taxation rights between the two countries.
Outcome: The Tribunal dismissed the revenue’s appeals, affirming that the company did not have a Permanent Establishment in India and that the assessed profits were not taxable under Indian law as per the DTAA.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform