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2023 (8) TMI 957 - AT - Income TaxIncome taxable in India - Fixed place PE in India - project office in India - Addition u/Article 5 of India - Germany Double Taxation Avoidance Agreement (DTAA) - assessee is a non-resident corporate entity incorporated under the laws of Germany and a tax resident of Germany - whether the profits earned on offshore supply of 8 number of train sets to DMRC can be attributed to the alleged PE of the assessee India? - HELD THAT:- Essentially the contract is a divisible Contract. On a careful perusal of observations of learned DRP, it is observed that learned DRP has misconstrued the terms of the agreement between the DMRC and the Consortium partners as well as the terms of the Consortium Agreement. DRP has erroneously assumed that the activities under Cost Centre D are also performed by the assessee. Whereas, factually and in terms of the contract, such activities falling under Cost Centre D were not only performed by BTIL but the profits from such activities have been offered to tax by BTIL. Therefore, in our view, the receipts from offshore supply of rolling stock cannot be taxable in India as the transfer of title over the goods has taken place outside India. Whether BTIL constitutes a fixed place PE of the assessee in India? - As analyzing the facts and materials on record in the touchstone of the ratio laid down in the judicial precedents cited before us, we are of the view that none of the conditions of fixed place PE as enshrined under Article 5(1) of India – Germany tax treaty stand satisfied to construe BTIL as the PE of the assessee in India. Thus, in view of our aforesaid conclusion, we hold that the attribution of profit qua the receipts from offshore supplies to the alleged fixed place PE in the form of BTIL is unsustainable as, in our view, BTIL cannot be construed as PE of the assessee in India.
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