TMI Blog2016 (3) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... ces that were of consultancy nature and therefore same are governed by the provisions of Article 12 of the DTAA. In our opinion, for computing continuous stay for PE purpose actual stay of employees has to be considered and not the entire contract period. We find that the assessee had deputed one of its employee Dr. Dittrich to India and he had not stayed in India for more than 180 days. The assessee had informed the AO that Dr. Dittrich had visited India in pursuance of the agreements entered into with NLC and MNBCEL. It is also a fact the in two of the contracts no supervisory charges were booked by the assessee for the year under appeal, that the assessee had offered its income under the head FTS in its return. Article 12(4)deals wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961(Act) PER BENCH: Challenging the order dated 16. 01. 2006 of the CIT(A)-V, Mumbai the Assessee and the Assessing Officer (AO) have filed the above cross appeals for the year under appeal. During the course of hearing, the Authorised Representative(AR)did not press ground no. 2dealing with interest levied u/s. 234D of the Act as well as the Additional ground. Hence, both the grounds stand dismissed, as not pressed. 2. Assessee-company is registered in Germany and its core business activities include consulting services in the fields of exploration, mining and extraction. It filed its return of income on 10. 01. 2003, declaring income of ₹ 1, 13, 92, 198/-. The Assessing Officer(AO)completed the assessment on 23. 02. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evaluation of rectification procedure. He further held that the assessee had a PE in India as per Article 5(2)(i)of the DTAA between India and Germany, that it had offered the income received from Indian parties under the head Fees for Technical Services(FTS)as per the provisions of Article 12 of the Tax-treaty, that as per Article 12(5)the receipts in question were governed by Article 7 of the Treaty, that provisions of Article 7(3)provided that such receipts were to be taxed as per the various provisions of domestic law, that section 44D of the Act dealt with such receipts, that as per section 115A the fees for technical services received by the assessee from GIPCL was to be taxed @ 30% and the fees received from the remaining two partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide consultancy services of mine IA for checking of structural design, that the agreement with MNBECL was for finalising design problems evaluation of the rectification procedure, that the assessee had rendered supervisory services to the three Indian companies throughout the duration of the contract. Finally, the FAA upheld the order of the AO. 5. Before us, the Authorised Representative(AR) stated that supervisory activities carried out by the assessee lasted for less than six months period, that in two of the contracts no supervisory charges were booked, that only one employee had visited India, that he stayed in India for 64 days only, that activities carried out by the assessee were to be taxed @ 10%, that the services provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had rendered services in India for more than 6 months continuously, it has to be held that it had PE in India. Therefore, it would be useful to find out as what services were rendered by the assessee in India. We find that the assessee had issued 10 invoices(page no. 49-58 of the Paper book)to three Indian parties, that only one invoice was issued to GIPCL, two to NLC and balance seven to MNBECL. A close scrutiny of the invoices prove that the assessee had rendered services that were of consultancy nature and therefore same are governed by the provisions of Article 12 of the DTAA. In our opinion, for computing continuous stay for PE purpose actual stay of employees has to be considered and not the entire contract period. We would like to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting State, shall not be attributed to that permanent establishment. . So, even if it is assumed that the assessee had PE in India for the year under consideration, it will not be governed by Article 7 of the tax treaty. We have gone through the order of Birla Corporation Ltd. (supra). We find that the issue in that matter was about installation and commissioning of projects and it did not deal with the issue before us. So, in our opinion the decision is of no help to adjudicate the issue. In these circumstances, reversing the order of the FAA, we hold that the payments received by the assessee from GIPCL, NLC and MNBECL have to be taxed @10% and that the provisions of section 115A would not be applicable. Effective ground of appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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