TMI Blog2023 (5) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... , we hold that the assessee had no fixed place PE in India in terms of Article 5(1). Determine the duration test of nine months to construe installation PE in terms of Article 5(3)(a) of the Tax Treaty - AO must be given a fair opportunity to go through such additional evidences and conduct factual verification to ascertain assessee s claim of stoppage of work and demobilisation of personnel and equipments during monsoon period. Only when complete set of facts are brought on record, the legal proposition as laid down in the judicial precedents cited before us by the assessee can be applied. Though, we admit the additional evidences furnished by the assessee before us, however, considering the fact that they were not furnished before the departmental authorities, we deem it appropriate to restore the issue relating to existence of installation PE to the file of Assessing Officer for de novo adjudication after verifying all facts and materials brought on record or to be brought on record by the assessee including the additional evidences. While doing so, the Assessing Officer must apply duration test of nine months strictly abiding by the ratio laid down by Hon ble jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required to carry out design and engineering of platforms, material procurement in relation to platforms, fabrication of platforms and hook-up, testing and commissioning (HUC) of platforms. Before the Assessing Officer, the assessee claimed that in the relevant assessment years under consideration, the assessee along with Swiber had undertaken work relating to execution of wellhead platform contract. It was submitted that no activity in respect of HUC relating to process platform contracts was undertaken. It was submitted by the assessee, since, the assessee had no PE - either fixed place PE or installation PE, in India, the receipts from offshore activities such as procurement of materials and fabrication of platform, which were carried out outside India, are not taxable in India. The Assessing Officer, however, did not accept the claim of the assessee. Referring to the contract documents with ONGC and other materials, he observed that kick off date of the contract was 15.02.2010, whereon, the assessee has started its activity in India. Therefore, according to the Assessing Officer, in terms of Article 5(3) of India Malaysia Treaty, the assessee had installation PE as it had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it is carrying out its business. In support of this contention, he relied upon decision of Hon ble Supreme Court in the case of DIT vs. Samsung Heavy Industries Co. Ltd., (2020) 117 taxmann.com 870(SC). Proceeding further, he submitted, as per the Memorandum of Understanding entered between the consortium partners, specific work to be undertaken by each of the Consortium partner have been specifically earmarked. He submitted, while, the assessee was responsible for design, engineering, procurement of material, fabrication and HUC work, the other consortium partner was responsible for other works. He submitted, apart from HUC work, rest of the work was executed by the assessee outside India and assessee s employees visited India only for HUC work. Thus, he submitted, if at all, there is possibility of existence of installation PE of the assessee under Article 5 (3)(a). 5. He submitted, even, there is no installation PE in terms of Article 5(3)(a) of India Malaysia DTAA as the duration test of nine months activities is not satisfied. He submitted that duration test under Article 5(3)(a) is activity specific hence, it will get satisfied only in respect of specific activity, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention to clause 2.2.2 and 2.3.2 of the contract. He submitted, as per the aforesaid clauses, the activities cannot be carried on the project site post the onset of monsoon hence, same would require demobilization of the contractor from the project site. Therefore, for a period of seven months from May to November, the assessee did not have access to the construction site and had demobilised its barges. To demonstrate the aforesaid factual position, ld. Counsel sought permission of the Bench to submit additional evidences through application dated 20.05.2019. In this context, he wanted to furnish the monthly progress reports and certificate of completion issued by ONGC. Thus, he submitted, there cannot be any installation PE under Article 5(3)(a) of India Malaysia DTAA as the duration of the activity was for less than nine months. 6. Learned departmental representative strongly relied upon the observations of the Assessing Officer and ld. Commissioner (Appeals). Further, he submitted, before the departmental authorities, the assessee had not furnished any documentary evidence to demonstrate that the conditions of Article 5(3)(a) of India Malaysia DTAA are satisfied. He submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to PE in terms of Article 5(1) and 5(2) of the Treaty, it is to be noted that the assessee had no fixed place of business, through which it carries on its business wholly or partly in India. Further, the assessee has no such place or establishment in India in terms of Article 5(2). The departmental authorities have alleged that the assessee had a project office in India, which has to be construed as PE. Whereas, the assessee has contested the aforesaid conclusion of the departmental authorities by contending that the project office is of other consortium partner, who is entrusted with onshore activity. The aforesaid claim of the assessee has not been controverted by the Revenue by bringing on record any cogent material. It is trite law, the burden is entirely on the Revenue to establish existence of fixed place PE. In the facts of the present appeal, the Revenue has failed to discharge such burden. Therefore, we hold that Revenue s stand that the assessee had a fixed place PE in India is not borne out on record. Accordingly, we hold that the assessee had no fixed place PE in India in terms of Article 5(1). 8. Next issue, which arises for consideration is, whether the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy and intensity at offshore site location that construction work cannot be scheduled with any assurance. Clause 2.3.2 defines weather conditions. As per the said clause, the contractor is liable to bear all costs and delays due to adverse weather conditions. Further, in case the contractee requests the contractor to demobilize during monsoon season instead of requesting the contractor to continue the work during monsoon season, the cost of such additional mobilization/demobilization shall be borne by the company. In other words, it means that if the stoppage of work during monsoon season is due to the request of ONGC, the assessee shall not be liable to bear any cost. Assessee has not brought on record any material before the departmental authorities to demonstrate whether the work was actually stopped during monsoon period and if stopped, whether on its own decision or at the request of ONGC. At the stage of Tribunal, the assessee has furnished additional evidences in support of its claim that during monsoon season, the personnel and equipments were demobilised and the work was stopped. Admittedly, these evidences were not before the departmental authorities. Hence, there is no f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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