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2009 (1) TMI 302 - AT - Income TaxDouble Taxation Relief - 'PE' in India arising out of carrying out of supervisory activities - Scope of PE, under cl. (i) of art. 5(2) - DTAA between India and Germany . The stand of the Revenue is that all the sites under different contracts should be taken together while determining the existence of PE while the stand of the assessee is that each contract should be considered separately and independently. Whether different sites on which work is carried on by the assessee can be considered together in determining the scope of PE? - HELD THAT:- In computing the minimum period of 6 months, various sites cannot be considered together particularly when different contracts had no effective interconnection with each other. In the present case, the assessee had entered into various contracts with various parties in respect of various independent projects located at different places. Hence, the lower authorities were not justified in considering the various sites together while computing the minimum period of six months prescribed in art. 5(2)(i) of the DTAA. Whether on the facts of the case, it can be said that the minimum period of six months commences from the date when the project or building site itself commenced? - HELD THAT:- The minimum period would commence from the date of supply of the plant and machinery itself. Even in such case, the period of construction of building cannot be taken into consideration since contract of construction of building is separate and independent contract. Thus, the date of commencement of the threshold limit of six months would depend on the facts of each case considering the terms of contract. It is held that if the supervisory activity is carried out under a separate and independent contract then the minimum period of six months would commence only when such activity itself had commenced and not from the date of the project. Whether the intervening period caused on account of various factors should be excluded while computing the minimum period of six months? - HELD THAT:- It is the settled legal proposition that when the language of the treaty is not clear then one can look into. the commentaries on the subject in dispute - an activity once commenced continues till its completion. Accordingly, the intervening period cannot be excluded. Whether the period under art. 5 should be calculated with reference to each year? - HELD THAT:- The minimum period of six months is to be counted from the date when activity starts till the date when the contract is completed irrespective of the year/years to which such period relates - the learned CIT(A) was not justified in computing the period of six months with reference to each assessment year. The orders of the learned CIT(A) for both the years are modified and the matter is restored to the file of the AO for fresh adjudication in accordance with our findings given above as well as on the basis of material which may be placed before him by the assessee - matter restored.
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