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TMI Blog2023 (5) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... it includes fixed place of business, through which, the business of the enterprise is wholly or partly carried on. Thus, the fixed place of profession is akin to fixed place of business. Therefore, assessee s contention in this regard are rejected. Whether the assessee had a PE in India ? - On a perusal of the agreement between the parties, it is observed that the contractee is to provide office space with some other facilities to the employees of the assessee in India to carry out their activities. Such premises and facilities have been given free of charge. However, the question, which arises, is, whether access given to the assessee of the office premises of the contractee would constitute service PE or for that matter any other PE. The facts on record do not reveal that the space and facilities provided to the assessee by DAMEPL can be construed to be a fixed place of business from where the assessee carries on its business wholly or partly. In the facts of the present appeal, the Revenue has failed to establish through corroborative evidence that the assessee is having control over the premise. Admittedly, it is the DAMEPL, which is having control over the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding engineering and project management consultancy services for the airport line of Delhi Metro. The assessee participated in the tender and was successful. Accordingly, the work was entrusted to the assessee by executing a contract on 19.05.2008. After execution of contract, the assessee commenced it work. In the year under consideration, the assessee received an amount of Rs.28,51,54,304/- from DAMEPL. The assessee treated the aforesaid receipts as Fee for Technical Services (FTS) within the meaning of section 9(1)(vii) of the Act, and in the return of income filed for the impugned assessment year on 28.07.2011, offered it to tax on gross basis by applying the rate of 10% in terms with section 115A of the Act. In course of assessment proceeding, the Assessing Officer called upon the assessee to furnish the contract with DAMEPL, the nature of work executed and various other details, including the details of personnel, who visited India in connection with the contract. After verifying the terms of the contract as well as various other details furnished by the assessee, the Assessing Officer noticed that, in total, 24 employee had visited India during the relevant year. Out of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer observed that the assessee has been provided space with various other facilities by DAMEPL. Further, he observed that the assessee has entered into a separate agreement for secondment of its employee to the office of DAMEPL in order to complete the consultancy project undertaken by it. However, salaries of the seconded employees were paid by the assessee. Referring to various terms of the secondment agreement, the Assessing Officer observed that the assessee has employed two teams of employees, viz., offshore and onshore, who were responsible for consultancy project undertaken by the assessee and role of both the teams have been specified in the agreement. Thus, on the aforesaid factual analysis, the Assessing Officer observed that it is not a case of simple consultancy but a case of consultancy service effectively connected to the business presence of the assessee in India. The Assessing Officer observed that from the nature of work executed by the assessee and the number of days spent by the employees in India, it cannot be said that the services are independent in nature. Hence, shall be categorized as FTS. Thereafter, referring to certain judicial precedents the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submitted, the principal test to ascertain, as to whether an enterprise has a fixed place of business or not is that place of business or premise has to be at the disposal of the enterprise. He submitted, a particular place would be treated to be at the disposal of the enterprise when the enterprise had right to use the said place and has a control thereupon. He submitted, the burden is entirely on the Revenue to establish the aforesaid facts. In this context, he relied upon a decision of the Hon ble Supreme Court in case of ADIT Vs. M/s. E-Fund IT Solutions Inc. [2018] 13 SCC 294. He also relied upon a decision of the Hon ble Supreme Court in case of Formula One World Championship Ltd. Vs. CIT, [2017] 15 SCC 602. Thus, he submitted, since, the assessee was not conducting any business in India through a fixed place of business, there cannot be any PE of the assessee in India. Thus, he submitted, in absence of a PE or fixed place of profession in India, the provision of section 44DA of the Act would not be applicable. Without prejudice to the aforesaid submission, learned counsel submitted, in case, it is held that section 44DA of the Act is applicable, the entire expenditure inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. At this stage, it is necessary to look into the provisions of section 44DA of the Act, which read as under: Special provision for computing income by way of royalties, etc., in case of nonresidents. 44DA. (1) The income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by a non-resident (not being a company) or a foreign company with Government or the Indian concern after the 31st day of March, 2003, where such non-resident (not being a company) or a foreign company carries on business in India through a permanent establishment situated therein, or performs professional services from a fixed place of profession situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed place of profession, as the case may be, shall be computed under the head Profits and gains of business or profession in accordance with the provisions of this Act : Provided that no deduction shall be allowed, (i) in respect of any expenditure or allowance which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, it will not come within the purview of the definition of PE under section 92F(iiia) of the Act. 12. In our view, the aforesaid contention of the assessee is farfetched, hence, not acceptable. The expression fixed place of profession is used in the context of a non-resident, which is not a foreign company. Though, the expression fixed place of profession has not been defined specifically under the provisions of the Act, however, the term Permanent Establishment used in section 44DA, in turn, refers to the definition of Permanent Establishment under section 92F(iiia) of the Act. As per definition of PE under section 92F(iiia), it includes fixed place of business, through which, the business of the enterprise is wholly or partly carried on. Thus, the fixed place of profession is akin to fixed place of business. Therefore, assessee s contention in this regard are rejected. 13. However, the crux of the matter is whether the assessee had a PE in India. The departmental authorities have concluded the existence of PE based on the fact that the employees of the assessee have visited India and they have been provided space in the premises of DAMEPL. On a perusal of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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