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TMI Blog2008 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... NT Mr Justice. P.V. Reddi (Chairman) Mr. A. Sinha (Member) Mr. Rao Ranvijay Singh (Member) A.A.R. No. 750 of 2007 Name address of the applicant Worley Parsons Services Pty. Ltd., Level 7, 116 Miller Street, North Sydney NSW 2060 Australia. Commissioner concerned Director of Income-tax (International Taxation)-II New Delhi. Present for the Department Mr. S.K. Ojha, DIT (IT)-II. Mr. Sanjeev Sharma, Addl. DIT (Int. Tax) Present for the Applicant Mr. Pawan Kumar, FCA Mr. Sandeep Puri, CA Mr. Ravi Sharma, Advocate R U L I N G (By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indering efficient execution of project. o Monitoring of contractor logistics for line pipe, manufacturing, coating and laying. o Generation of MIS reports for the project including S-Curves. o Providing all inputs/performing all project monitoring activities as desired by the GAIL Management/Project Group from time to time for timely completion of the project. o Providing all necessary inputs/feedback related to accelerated completion of future pipeline projects. o Participate in Top Level project Review Monthly Meetings at Noida/Delhi/Site. o Monitor progress of project and provide fortnightly status reports to GAIL. o Interact with contractors relating to the execution of the work.' o Obtain timely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned to it was performed in India and the employees of the applicant were present in India for 165 days during the year 2003-2004. The learned Authorized Representative for the applicant has fairly stated in the course of hearing that nearly 90 to 95% of the work related to the contract was performed in India. The applicant submits that the applicant had and must be deemed to have a 'permanent establishment' within the meaning of article 5(2)(k) of the DTAA between India and Australia. The applicant contends that the payments received by it are not in the nature of 'Royalty' under article 12 of DTAA*. According to the applicant, the receipts attributable to the said PE are taxable in India as business profits in accordance with the Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ……….. the rendering of any services (including those of technical or other personnel) which make available technical knowledge, experience, skill, know-how or processes or consist of the development and transfer of a technical plan or design; but that term does not include payments or credit relating to services mentioned in sub-paragraphs (d) and (g) that are made; x x x x x x x x x x x x x 5. The relevant clause is clause (g). It has no application in the present case inasmuch as no technical knowledge, experience, skill or know-how is 'made available' to GAIL on account of rendering the services. Mere rendering of services is not sufficient to attract clause (g), but those services should r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blishment; or sales within that other Contracting State of goods or merchandise of the same or a similar kind as those sold, or other business activities of the same or a similar kind as those carried on, through that permanent establishment". 7. Article 7(7) clarifies that where the profits include items of income which are dealt with separately in other articles of this Agreement, then the provisions of those articles shall not be affected by the provisions of this Article. We have already noticed that the fees or payment received by the applicant for carrying out the responsibilities under the contract does not fall within the scope of Article 12 as the services are not of such a nature as contemplated by Article 12(3)(g). There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant stated that "the activities under the GAIL contract were predominantly carried on in India for more than six months during the financial year 2003-04. The employees of the applicant were also present in India for 165 days. The details of visits and stay of the employees in connection with this contract are also furnished by the applicant. Hence, the applicant's unrebutted case that it had permanent establishment for the purpose of carrying out the contractual obligations has to be accepted. There was some debate on the point whether the applicant's PE is also covered by clause(c) of article 5.3. There is no need to delve into that aspect. 9. In the light of above discussion, the questions are answered as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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