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2017 (10) TMI 307 - AT - Income TaxRevenue receipts from charterer hire of AHTS for exploration and exploitation by ONGC in offshore areas of operation in India - taxable in the hands of the assessee in India or not under Article 7 of the Treaty by holding that the assessee has a PE in India within the meaning of Article 5(2) of India Dutch and India UK DTAA - P.E. in India - Held that:- Here in this case vessel given on hire by the assessee company to ONGC, for ONGC's operation will not qualify for a 'place of management' for the assessee as contemplated in Article 5(2)(a), because such a leasing/hiring has to be through fixed place of business. The vessel here in this case cannot be reckoned either as 'fixed place of business' or 'a place cf management'. We have already discussed in detail above that firstly, personnel do not belong to the assessee and secondly, in any case the personnel are under the control and directions of ONGC and qua the assessee these personnel do not have any wide responsibility in participation of the decisions of hiring, therefore, it cannot be held that the activity of the lessor/assessee is done by these personnel or it constitute an entrepreneurial activity which can be reckoned as PE. Thus, in our conclusion, firstly, the hiring of AHTS vessel of assessee by ONGC for its operation in India does not qualify to make vessel a place of management for the assessee in India; secondly, the Crew and Master of the vessel does not belong to the assessee as settled by the Hon'ble High Court in assessee's own case; and lastly, in any case Master and Crew of the vessel do not have power to make significant decision over the assessee, because they are under control and directive of ONGC as per the agreement discussed above. It cannot he held that assessee has some kind of.PB, because the assessee vessel cannot be reckoned as installation or structure used for exploration and exploitation of national resources as it is being done by the ONGC. The ONGC has only hired the vessel from assessee for carrying out exploration of oil and natural gases and therefore, under this clause aiso it cannot be held that the assessee's vessel/ AHTS constitute a PE in India. Thus, in our view there exists no PE of assessee in India and therefore, the revenue from ONGC cannot be taxed in India in terms of Article 7 of DTAA. On this ground alone the assessee gets relief from taxation. - Decided in favour of assessee.
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