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2019 (4) TMI 1288 - AT - Income TaxPermanent Establishment (‘PE’) in India - equipment PE - Fixed place of business in India - income accrued in India - UAE DTAA - Assessee is a tax resident of UAE, and is eligible to avail benefits if any, under the India UAE DTAA - HELD THAT:- There is no dispute that, assessee’s equipments as well as Personnel, were stationed on the vessel of Main Contractor, for carrying out grouting. It is also an admitted fact that equipment is the main place of business to assessee. Further, on analysis of the Clause 7.4 of agreement between assessee and Dolphin, relevant to assessment year 2008- 09, provides free of charge, food and accommodation to the personnel on-board of offshore vessel. It cannot be denied that the ‘vessel’, on which equipments were placed and personnel was stationed, as fixed place of business through which business is carried on by assesse. Thus in our view ingredients required under Article 5(1) of DTAA stands satisfied. Assessee placed heavy reliance on the order passed by Coordinate bench in its own case for assessment year 2007-08. We very carefully perused the same to follow the view taken therein, however we fail to do so in view of the fact that existence of a fixed place PE has been decided in that case holding that ‘equipment’ cannot be held as fixed place of business. This observation of the Coordinate bench in assessee’s own case is not in accordance with decision of Hon’ble Supreme Court in case of Formula One World Championship Ltd vs CIT (International Taxation) [2017 (4) TMI 1109 - SUPREME COURT OF INDIA] We therefore, hold that assessee has PE in the form of equipment as fixed place of business in India as per Article 5(1) of India-UAE Treaty and income earned by assessee from contracts are taxable in India. Addition made by AO towards offshore supplies as chargeable to tax in India - deduction u/s 44BB - HELD THAT:- We have already held here in above that assessee has PE in India, offshore supplies are to be directly attributable to activities of PE in India through business connection in India in terms of section 9 (1) (i) of the Act. The alternate plea raised by assessee regarding applicability of special provision of section 44 BB. From the records placed before us, we do not see this issue has neither been dealt with/analysed by Ld.AO/DRP, nor has Ld.Counsel brought out before us as to whether contracts entered into by assessee which are inextricably connected with prospecting or production of Mineral Oil. Accordingly we set aside this issue to Ld.AO for determining applicability of sec.44BB having regards to ratio laid down by Hon’ble Supreme Court in case of ONGC Gas Corpn. Ltd. vs. CIT [2015 (7) TMI 91 - SUPREME COURT] . In the event the contracts are inextricably connected with prospecting or production of Mineral Oil, benefit must be granted to assessee under section 44 BB of the Act. Interest levied under section 234B - HELD THAT:- Respectfully following the decision of Hon’ble Delhi High Court in case of Sedco Forex International Drilling Co. Ltd vs. DCIT [2003 (10) TMI 40 - UTTARANCHAL HIGH COURT] , we are inclined to delete the interest levied under section 234B of the Act.
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