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2010 (12) TMI 948 - HC - Income TaxDTAA between India and Korea - whether the contract in question is not a composite one and, therefore, the assessee is not liable to pay tax in India in respect of offshore service? - Held that:- Mere existence of a PE could not constitute sufficient business connection to take the PE as a taxable entity more so, as the cl. (a) of Expln. 1 to s. 9(1)(i) of the Act emphasizes that only such part of the income as is attributable to the operations carried out in India could be taxed in India - In the instant case there was no operation qua the agreement for supply of equipment, which was carried but in India, and therefore, no income could be deemed to have accrued or arisen in India whether directly or indirectly or through any business connection in India - The title to the equipment supplied from outside India was transferred in favour of PGCIL outside India . In the instant case as in the case of Ishikawajma (2007 (1) TMI 91 - SUPREME COURT) would be said to have been successfully performed only after the satisfactory commissioning and erection of the plant and equipments. Since the PE was not at all involved in the transaction of the offshore supply of equipment, the existence of the PE [which as held in Ishikawajma (supra) is for the purpose of assessment of income of a nonresident under the DTAA], would be irrelevant in the instant case. Clause (a) of Expln. 1 to s. 9(1)(i) would not be attracted at all which provides that in the case of a business where all operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. In the instant case there was no operation qua the agreement for supply of equipment, which was carried but in India, and therefore, no income could be deemed to have accrued or arisen in India whether directly or indirectly or through any business connection in India - Decided in favor of the assessee
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