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2013 (10) TMI 753 - AT - Income TaxWhether the assessee had Permanent Establishment in India – Assessee claim that installation activity continued for a period of less than 9 months, therefore, there is no installation PE in India - Assessee calculated the period starting from date of entry into India of barges – Held that:- As per Article 5 of the relevant DTAA, PE includes (h) a building site or construction or assembly project or supervisory activities in connection therewith but only where such site project or activity continues for a period of more than nine months - Assessee's plea is that PE existed only after barges landed in India is not correct - PE existed since the notification of award as the site was available to the assessee since then, for surveys at various stages of work progress – Assessee has installation of PE in India. Whether the contract is divisible – Held that:- Contract may be construed as an umbrella contract yet is a divisible contract since under the same contract, the consideration for various activities have been stated separately – Further, as per the terms and conditions of the contract, it is revealed that it is the discretion of ONGC to take only the platform erected by the assessee in Abu Dhabi, as it has a right to terminate on its own volition, without having installation thereof. The assessee in such an event, will not be entitled for any amount towards installation and commissioning but will be entitled for the contract price properly attributable to the erection of fabricated platform actually carried out by the assessee in accordance with the contract i.e. the pricing schedule (Schedule C) and milestone payment formula. Erection and fabrication can not be attributable to PE in India – Held that:- Reliance has been placed upon the judgment in the case of Ishikawajma-Harima Heavy Industries Ltd. vs DIT reported in [2007 (1) TMI 91 - SUPREME COURT]- Erection and fabrication cannot said to be attributable to PE in India. All the activities prior to installation and commissioning are carried out in UAE and thus having regard to Article 7 of the DTAA, no income can be attributed to the PE in India - Profits can be attributed to the PE in India only in respect of installation and commissioning activities. The profits attributable to the supplies i.e. erection and fabrication of the platforms cannot be brought to tax in India. Applicability of provision of Section 44BB – Held that:- assessee is not in the business of providing services, neither any plant or machinery has been supplied on hire basis. The assessee is under the contract engaged in successful installation of off-shore platform. This activity cannot be characterized as facility provided by the assessee. Thus, business activity of the assessee does not fall within the meaning of section 44BB. Chargeability of interest u/s. 234B, 234C & 234D - Section 234B of the Act is attracted where in any financial year an assessee is liable to pay advance tax under sec. 208 and he has failed to pay such tax or where the advance tax paid by the assessee under sec. 210 is less than 90% of the assessed tax. Similarly, section 234C is attracted wherein in any financial year, an assessee is liable to pay advance tax under section 208 and he failed to pay such tax or the advance tax paid by the assessee and its current income on or before the specified dates is less than the specified percentage of the tax due on returned income – Held that:- Entire income is subject to tax at source under section 195 of the Act. The payer has also taken certificate from the Assessing Officer under section. 195(2) of the Act and thus, there was no liability to pay the advance tax under section 208 of the Act and in the absence of any liability, Sec. 234B and 234C and also consequentially section 234D could not be applied – Decided in favor of Assessee.
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