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TMI Blog2024 (9) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... 020-21, i.e., total 93 days/which is less than the threshold of 183 days as envisaged by Article 5(5) of India and Singapore DTAA. 3. That on the facts and circumstances of the case, the Ld. AO has failed to appreciate the interplay between Article 5(1) and Article 5(5) of the Agreement for avoidance of Double Taxation between India and Singapore. 4. That on the facts and circumstances of the case, the Ld. AO has failed to appreciate the ruling of Hon'ble ITAT in case of Nordic Maritime Pte. Ltd. (ITA. No.1865/DEL/2019) wherein it was held that a general clause of a DTAA (Article 5(1)) cannot override the specific clause (Article 5(5). That the Appellant reserves its right and prays to the Hon'ble Tribunal to permit the Appellant to add, alter, amend, vary or substitute any of the aforesaid ground(s) of Appeal before or at the time of hearing of the present appeal." 3. Brief facts of the case are that, the Assessee Company is incorporated under law of Singapore. The assessee is a global provider of marine 2D and 3D seismic data acquisition for oil and gas industry. The assessee company is a market leader in the high-end 2D seismic services segment and also a leading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the assessee at Rs. 21,49,63,900/- as against NIL income filed by the assessee. Aggrieved by the final assessment order passed dated 13/09/2023, the assessee preferred the present Appeal on the Grounds mentioned above. 6. The Ld. Counsel for the assessee submitted that the Ld. A.O. erred in assuming that the assessee has PE in India under General Clause 1 of Article 5 of the India-Singapore DTAA and further failed to acknowledge the fact that the services under the Indian Contract were carried only for a period of 35 days in Financial Year 2019-20 and 58 days during Financial Year 2020-21 i.e. total 93 days which is less than threshold of 183 days. Thus, the assessee does not constitute PE in India in view of specific Article 5(5) of DTAA between India and Singapore. The A.O. committed error in only relying on Article 5(1) of DTAA and the order impugned passed by the A.O. contrary to order of the Tribunal in the case of Nordic Maritime Pte. Ltd. In ITA No. 1865/Del/2019 wherein it was specifically held that a General Clause of TDAA (Article 5(1) cannot over ride the specific Clause i.e. Article 5(5), thus, the Ld. Counsel for the assessee sought for allowing the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence Article 5 of India-Singapore DTAA is produced as under:- "Article 5 of India-Singapore DTAA": 1. "For the purpose of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of the enterprise is wholly or partly carried on. 2. The term "permanent establishment" includes especially: 3. (a) A place of management; (b) A branch; (c) An office (d) A factory (e) A workshop; (f) A mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (g) A warehouse in relation to a person providing storage facilities for others; (h) A farm plantation or other place where agriculture, forestry, plantation or related activities are carried on; (i) Premises used as a sales outlet or for soliciting and receiving order; (g) An installation or structure used for the exploration or exploitation of natural resources but only if so used for a period of more than 120 days in any fiscal year. A building site or construction, installation or assembly project constitutes a permanent establishment only if it continues for a period of more than 183 days in any fiscal year, 4. An enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business solely for the purpose of advertising, for the supply of information, for scientific research o for similar activities which have a preparation However, the provisions of sub-paragraphs (a) to (e) shall not I applicable where the enterprise maintains any other fixed place business in the other Contracting State through which the business of the enterprise is wholly or partly carried on. 8. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State that enierpri.se shall be deemed to have permanent establishment in the first-mentioned. State, if- (a) he has and habitually exercises in that State authority to conclude contracts on behalf of the enterprise; unless his activities are limited to the purchase of goods or merchandise for the enterprise; (b) he has no such authority, but habitually maintains in the first-mentioned State a stock goods or merchandise from which he regular delivers goods or merchandise on behalf of the enterprise; or (c) He habitually secures orders in the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of business like office, branch, etc. and second type is agency PE. The third type of PE is for construction and installation sites; supervisory or carrying out assembly project on a site, or services or facilities in connection with the exploration, exploitation or extraction of mineral oils etc., which are specific activity based PE generally with a threshold period, which here in this case is 183 days. Article 5(1) contains the general rule for permanent establishment that it must be a fixed place business at the disposal of the enterprise through which the business enterprise carries on its business. Article 5(2) contains illustrative list of places of business which prima facie constitute PE, provided it satisfies the requirement of Article 5(1). Article 5(3) to 5(5) contains special rule for construction and installation site or services or facilities in connection with the exploration, exploitation or extraction of mineral oils etc. and it is a limitation on the general provision of Article 5(1). Once activities as defined para 5 or 3 are attracted, the minimum period test has to be applied" and being specific activity based article, it will prevail over general rule of Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appellate Tribunal has also recorded in its finding that we are not sufficiently convinced to treat the income from Indian operations at Rs. Nil for the assessment year 1988-89, specially where the assessee had failed even before the tax authorities to support its facts and figures and we have upheld the application to section 145. The Income-tax Appellate Tribunal was right in rejecting the argument of zero profit on the Indian operations and to accept the alternative argument holding that Instruction No. 1767 is after all a guideline and computation can be made under the relevant provisions of the Act read with the guidelines themselves. The Income-tax Appellate Tribunal after detailed discussions held that Instruction No. 1767 is after all a guideline and computation can be made under the relevant provisions of the Act read with the guidelines themselves and further held that it would be fair and reasonable if profits from Indian operations are worked out by applying a rate of 3 per cent. With the agreement of learned counsel for the parties, the Income-tax Appellate Tribunal has rightly held that a specific provision would override a general provision. All the issues in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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