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2016 (10) TMI 426 - AT - Income TaxPermanent Establishment (PE) in India - DTAA between India and the Swiss Confederation - Held that:- In the present case, the business of the assessee has been conducted from the address of project coordinator, Mr. V. Subramanian and all correspondences relating to prospecting of client, participation in bids, correspondence with customers, signing of contract document, execution of the project and closure of the project etc. were initiated or routed through the business address of the company as above. Mr. V. Subramanian is the Power of Attorney holder from the company for all the projects, as the assessee was non-resident. To constitute a PE, the business must be located at a single place for a reasonable length of time. The activity need not be permanent, endless or without interruptions. It may not be out of place to mention that functions performed by Sri V. Subramanian or the Indian subsidiary could not be classified as preparatory or auxiliary in character. The facts strongly indicate towards Sri V. Subramanian constituting a dependent agent / PE for reasons brought on record by the AO and as discussed in foregoing paragraphs. There were no presence of a number of principals who exercised legal and or economic control over the agent Sri V. Subramanian. The principal i.e. the assessee has failed to demonstrate this aspect when confronted by the AO. The principal i.e. the assessee was relying on the special skills and knowledge of the agent Sri V. Subramanian the Managing Director of the Indian entity by the same name and rendering similar functions. Sri V. Subramanian was acting exclusively or almost exclusively for and on behalf of the assessee during the currency of the contracts in question. To that extent it was not in furtherance of his ordinary course of business. Finally the refuge taken of Article 5(2)(j) on the short period of contracts and the interregnum does not offer any solace to the assessee either. The assessee has not demonstrated it was a mere passing, transient or casual presence for its activity in India. In view of this, we confirm the order of the lower authorities This ground is therefore dismissed. Income computation - contention of the ld. AR is that the assessee is entitled to salestax, service-tax, customs duty paid on import - Held that:- In our opinion, due deduction to be given in respect of the above components proportionate to the Indian rupees component, if it is not already given. It is also brought to our notice that the AO passed the rectification proceedings vide order dated 27.9.2012. While passing the rectification order, he has not considered all the above components properly. Accordingly, we direct the Assessing Officer to give credit to the above components subject to the provisions of section 43B of the Income-tax Act, which is relating to the income in Indian rupees component. It is needless to say that the AO shall give opportunity to the assessee before passing consequential order. With this observation, this ground of appeal of appeal is partly allowed for statistical purposes.
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