2022 (11) TMI 831 - HC - Income Tax
PE in India - employees visiting India prior to the date of contract - scope of Article 5(2)(g) of India Cyprus Treaty - As per ITAT threshold period of twelve months has not been exceeded in present case and consequently no Permanent Establishment (‘PE’) can be said to have been established in accordance with Article 5(2)(g) of India Cyprus Treaty on the basis of the dates mentioned in the contract - whether ITAT has erred in not appreciating that Article 5(2)(g) of the India Cyprus Treaty refers to PE as construction, assembly or installation project or supervisory activities in connection therewith where such activities continue for a period of more than twelve months? - HELD THAT:- This Court in the case of National Petroleum Construction Company Vs. Director of Income Tax (International Taxation) [2016 (2) TMI 47 - DELHI HIGH COURT] has analysed a similar clause being Article 5(2)(h) of the India UAE DTAA and held essence of a PE under Article 5(2)(h) is a building site or a construction or assembly project and the activities of an enterprise relating thereto in the source country - duration of a permanent establishment would commence with the performance of business activities in connection with the building site or assembly project.
This Court is of the view that no material has been placed before us to impugn the Tribunal’s finding that work had commenced at the site only on or after 4th January, 2008. It is settled law that preparatory work like travelling for obtaining tender/contract cannot be deemed to be the starting point of the contract. Consequently, this Court finds no perversity in the findings of fact rendered by the Tribunal. Accordingly, no substantial question of law arises for consideration in the present appeals and the same are dismissed.