TMI Blog2018 (8) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices provided post completion of installation actvities at the site of the customer, cannot lead to carrying out installation activities for the purpose of constitution of an Installation PE in India. Further, it was also held that the presence of an Indian Contractor to which the assessee has sub-contracted the whole AMC work on principal – to- principal basis , does not create any virtual presence of the assessee in India. It was held that since no business activities were carried out by the assessee in India, it is unreasonable to conclude that the assessee has any PE in India. With regard to the aspect of AMC services being considered as FTS, we hold that these services do not make available any technical know how or knowledge to the personnel of the customer as per Article 12(5) of the India-Netherlands DTAA. - I.T.A No. 2112/Kol/2017 - - - Dated:- 1-8-2018 - Shri Aby T Varkey, JM And Shri M.Balaganesh, AM For The Appellant : Shri Avisekh Kejriwal, AR For The Respondent : Shri G. Mallikarjuna, CIT DR ORDER Per M.Balaganesh, AM 1. This appeal is directed against the order of the Learned ACIT, International Taxation, Circle 1(1), Kolkat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice (PO) in India for the execution of this project in the year 2005. However, the PO never became operational and was not involved in any activity pertaining to this project. During the year under consideration, the assessee received payments for the following offshore supply of equipment / services / training and onshore supply of equipment /services :- Sl.No. Nature Receipts in INR 1 Off-shore supply of equipment 3,77,38,037 2 Off-shore provision of services 92,47,567 3 On-shore supply of equipment 40,75,095 4 On-shore provision of services 60,80,986 TOTAL 5,71,41,685 3.1. The Ground 2.1. raised by the assessee is with regard to the action of the ld AO in holding that an Installation PE of the assessee exists in India. Without prejudice to earlier ground, the assessee had raised Ground 2.3. with regard to the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty in the equipment has passed outside India and for which payment was received outside India. Further, the off shore services consisted of labour services of sizing of equipment, tuning and testing of the equipment etc which were performed on the equipment in Netherlands. Therefore, the alleged Installation PE could not have been involved in such offshore supply and services since these were carried on by the assessee directly from Netherlands. Hence the profits from such offshore supply of equipment and services cannot be attributed to the Installation PE of the assessee in India. In this regard, we would like to place reliance on the decision of the Hon ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Limited vs DIT reported in 288 ITR 408 (SC) wherein it was clearly stated that in case the PE of a foreign company is not involved in any transaction carried out in India or outside India, no part of income earned from such transactions can be attributed to the PE in India. The Hon ble Supreme Court held there has to be some activity through PE for attracting the taxing statute and , if income arises without any activity of PE, even under DTAA, taxation liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3.3. The facts of Asst Year 2014-15 are exactly similar to those of Asst Years 2012-13 and 2013-14 and there is no change in facts and hence in order to maintain judicial consistency, we would like to follow the same. Hence the Grounds 2.1., 2.2. 2.3. are disposed off accordingly. 4. ONGC VATMS - AMC Project The brief facts of this project are that the assessee was awarded a contract in 2006 by ONGC for supply, installation, testing and commissioning of Vessel and Air Traffic Management System (VATMS) along with the provision of maintenance services. This contract envisaged a warranty period of 1 year after handing over of the project site and provision of Annual Maintenance Services (AMC services) for 6 years post such warranty period. The assessee started providing AMC services in relation to the VATMS system for a total period of 6 years, commencing from 1st October 2008, just after the completion of main contract for supply, installation , testing and commissioning of VATMS system. Accordingly, the assessee provided only AMC services for the VATMS system installed by it in the earlier years. The activity was sub-contracted to a local independent contracto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und 3.2. raised by the assessee is with regard to failure of the ld AO to appreciate the fact that services were provided after the conclusion of the installation activity and maintenance services post installation activities cannot form an Installation PE. Without prejudice to earlier grounds, the assessee had raised Ground 3.3. with regard to the action of the ld AO in attributing 50% of gross consideration amount which is wrong and excessive. Without prejudice to earlier grounds, the assessee had raised Ground 3.4. with regard to the action of the ld AO in holding that AMC services are taxable as Fees for Technical Services (FTS). 4.4. We find that these grounds had been adjudicated by this tribunal in assessee s own case for the Asst Year 2011-12 in ITA No. 390/Kol/2015 dated 4.4.2018 wherein it was held that the maintenance actvities carried out by the assessee does not constitute any PE in India and accordingly, in the absence of any PE, no attribution of profits could be done in India. The relevant operative portion of the said order is reproduced hereunder:- 4.9. We have heard the rival submissions and perused the materials available on record. We find that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices provided post completion of installation activities at the site of customer, cannot lead to carrying out installation activities for the purpose of constitution of an Installation PE in india. Further it is held that presence of an Indian contractor to which the assessee has sub-contracted the whole AMC work on principalto- principal basis, does not create any virtual presence of the assessee in India. In view of the above decision, the Ground No. 4..3. and 4.4. raised by the assessee requires no adjudication. Accordingly, the Grounds 4.1 to 4.4. raised by the assessee are allowed. 4.5. The facts of Asst Years 2012-13 and 2013-14 are exactly similar to those of Asst Year 2011-12 and hence in order to maintain judicial consistency, we would like to follow the same. With regard to the aspect of AMC services being considered as FTS, we hold that these services do not make available any technical know how or knowledge to the personnel of the customer as per Article 12(5) of the India-Netherlands DTAA. Hence the Grounds 3.1., 3.2., 3.3. and 3.4. (for Asst Year 2012-13) and Grounds 3.1. and 3.2. (for Asst Year 2013-14) are disposed off accordingly. 4.3. During the ye ..... 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