TMI Blog2010 (5) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case and in law the CIT(A) erred in holding that the payments received by the assessee outside India could not be subject to tax under section 44BB(2) of the Income-tax Act, keeping in view the fact that the assessee had PE in India and erred in deleting the addition of Rs. 98,00,60,397. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) relying upon the findings of ITAT erred in holding that interest under section 234B was not chargeable in the case of non-resident assessee whose income are liable to deduction of tax at source under section 195 of the Act." 2. After hearing both the parties, we find that the assessee (Gough Projects-International (P.) Ltd.,) is a company incorporated under the laws of Western Australia and is engaged in the business of providing engineering and construction services to various oil and gas companies. The assessee company entered into a contract with BG Exploration and Production India Ltd., (for short BG ) vide agreement dated 5-11-2004 for carrying out engineering, procurement, installation and commissioning of three well head platforms and modifications to existing platforms and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried on (whether separately or together with other sites, projects or activities) for more than six months." According to the Assessing Officer, keeping the nature of the business of the assessee in view, the assessee would be covered by sub-article 2( f ) of Article 5 and, accordingly, he concluded that since the assessee was to install new platform and to upgrade existing platform associated in the field pipeline with gas or well in the panna Oil Field, therefore, the assessee has PE within the meaning of Article 5(2)( f ) of India-Australia DTAA. The Assessing Officer also observed that since the assessee was exclusively dealing with commissioning of platforms meant for oil wells, therefore, the assessee was definitely having a PE keeping in view the nature of work which related to oil wells. In this background, the Assessing Officer subjected to income of the assessee at the rate of 10 per cent in terms of section 44B8(2) of the Act. 4. Before the CIT(A), it was mainly contended that the assessee was mainly required to do the following : "Three four legged jackets and topside platforms (PH, PJ and STD) in water depths ranging from 23m to 52m. uFour infield pipelines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2005. It is now well settled in law that the term permanent establishment (PE) means a fixed place of business through which the business of the enterprise is wholly or partly carried on. In this connection, Article 5(1) to 5(4) of the Australia - India double tax treaty reads as follows : 1. For the purposes of this agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term "permanent establishment" shall include especially : ( a )a place of management. ( b )a branch; ( c )an office; ( d )a factory; ( e )a workshop; ( f )a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; ( g )a warehouse in relation to a person providing storage facilities for others; ( h )a firm, plantation of other place where agricultural, pastoral, forestry or plantation activities are carried on; ( i )premises used as a sales outlet or for receiving or soliciting orders; ( j )an installation or structure , or plant or equipment, used for the exploration for or exploitation of natural resources; ( k )a building site or construction, ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract with BG relates to installation and commissioning of three well head platform and modifications of existing platforms, its case would be covered by Article 5(2)( k ) of India-Australia DTAA. Now, it is to be examined whether appellant had a PE during the assessment year under consideration. The article 5(2)( k ) which provides that an installation project shall be PE only if the site exists for more than six month. It is seen that the appellant has entered into contract for installation and assembly project with BG on 5th November, 2004. Thus, the six month period has not been completed during financial year, therefore, there is no PE existed in terms of article 5(2)( k ). Further, it is seen that during the A. Y under consideration, the work performed was limited to placing orders for offshore supply of steel and fabrication outside India. It is also seen that the first delivery of supply of steel was started on 30th April, 2005, therefore, the installation PE would commenced from the arrival of steel at the oil well site which falls in the next financial year. It is also seen that during the year the appellant has not set up any project site office in India in connection wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 months during the year. The assessee cannot be said to have PE in India. He strongly relied on the decisions which were relied on before the CIT (A). 8. We have considered the rival submissions carefully. Article 5 reads as under : "1. For the purposes of this agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term "permanent establishment" shall include especially : ( a )a place of management. ( b )a branch; ( c )an office; ( d )a factory; ( e )a workshop; ( f )a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; ( g )a warehouse in relation to a person providing storage facilities for others; ( h )a firm, plantation or other place where agricultural, pastoral, forestry or plantation activities are carried on; ( i )premises used as a sales outlet or for receiving or soliciting orders; ( j )an installation or structure, or plant or equipment, used for the exploration for or exploitation of natural resources; ( k )a building site or construction, installation or assembly project, or supervisory activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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