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TMI Blog2014 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... n as OY Sisu Auto AB) ('Sisu Auto' or the Appellant'), a company incorporated in Finland had executed a contract with Nhava Sheva Port Trust ('NSPT') for the supply of tractors and trailers. The total scope of works as per the contract included manufacture, transportation and delivery of equipment to NSPT. During the year under consideration, the appellant earned income from supply of tractors from outside India and inland transportation within India. Under the Main Contract, Sisu Auto was required to supply 38 tractors and related spares) to NSPT for a consideration of Finnish Marks (FM) (13761598. The tractors supplied to NSPT were manufactured in Finland by the appellant and transported to India. Further, the appellant had engaged M/s Usha Sales Services Consultants (Usha Sales) for rendering certain specific services in India. * Usha Sales was present in all meetings between NSPT and Sisu Auto; * Tractors dispatched to Indian port were cleared by Usha Sales and customs duty insurance and freight was paid by Usha Sales; * Usha Sales represented Sisu Auto for the tax refund due to Sisu Auto from the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before the CIT(A), the assessee agitated the view taken by the AO. The CIT(A) held, "... that for supply of 36 tractors, which were manufactured outside India (Finland) and transported to India, the Usha Sales and Services Consultants Pvt Ltd. is an agent of independent status. He has further held that in view of the provisions of the India Finland treaty the activities not attributable to the PE cannot be subject to tax in India, therefore the AO erred in levying 1% deemed profit on Rs. 45970598/- being the amount payable to the Appellant for work done outside India amounting to Rs. 459706/-. So far as supply of 136 trailers is concerned for which sub contract was given by the Appellant to Braith Waite, the ld. CIT(A) held that the AO is correct in holding that the assessee company maintain PE within the meaning of sub clause (bb) of Clause 9 of Paragraph 1 of Article 2 of DTAA and observed that the words 'construction', 'installation' or 'assembly project' have to be given a wide meaning. The CIT(A) also directed the AO to recompute the income of the assessee company in accordance with the provisions of the treaty between India and Finland in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndependent agent satisfies the conditions laid down in para 5. It is submitted that Usha Sales an independent legal entity operating in ordinary course of its business and its activities are not devoted wholly and almost wholly on behalf of the appellant. The CIT(A) in his order has accepted that Usha Sales is the agent of various other principals and the assessee is just one of them. 3.14 It is further submitted that as per the main contract the tractors supplied to NSPT were assembled / manufactured in Finland and transported to India. Accordingly, no assembly activities in relation to supply of tractors were carried out in India. Further, for the purpose of supply of trailers to NSPT, the appellant has entered into a sub contract with Braith Waite for manufacture of trailers in India. Therefore, the AC's contention that the appellant had an installation PE is relevant only for the portion of the main contract relating to supply of trailers. The AO has stated in the order that the appellant has installation/assembly a PE in India under the new treaty. It is submitted that the appellant does not have a PE in India under Article 5(3)(a) and 5(3)(b) of the new treaty". 10. The CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 5(3)(a) & 5(3)(b) is reproduced herein under: (a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six month. (b) a building site, a construction, assembly or installation project or supervisory activity being incidental to the sale of machinery or equipment, where such site, project or activity continues for a period of exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery or equipment. 4.3 The contention of the appellant that it did not carry out any operation in India in relation to the supply of trailers is not correct. The appellant had entered into a sub contract with Braith Waite for manufacturing the trailers, which were later supplied by Braith Waite to NSPT. Thus, it may be noted that assembly work is carried out by the appellant in India through Braith Waite. Even, the Hon'ble ITAT in the appellant's own case order dated 15/10/200 1 and M.A. No. 159/M/09 arising out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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