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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 ..... en decided in favour of the Assessee in the case of M/s Narodic Maritime Ptd. Ltd.[ 2020 (1) TMI 1697 - ITAT DELHI] 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 Article 5(1). If such activity based PE are to seen from the general rule perspective only then there is no requirement of such clauses in the treaty and threshold period. In that case there would be fixed place PE and agency PE. Even though the specific activity based PE can have a fixed place through which it carries out the activities, but prescribed threshold or minimum period has to be read into and such time period thus puts a limitation on the general rule of Article 5(1). Article 5(3) is an exception to Article 5(1) and 5(2) and would prevail notwithstanding Article 5(1) and 5(2). Since, the former is a specific provision. In the present case, admittedly, the services were carried out as per the contract between the assessee and Vedanta Ltd. 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 being less than threshold of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 provider of niche 3D and source vessel solutions. During the year under consideration, Vedanta Limited awarded a contract to Seabird in India. Vedanta has been awarded 41 blocks across 13 states of India for undertaking petroleum operations, including exploration, appraisal and development of hydrocarbons under the Hydrocarbon Exploration Licensing Policy (HELP) and Open Acreage Licensing Policy (OALP) pursuant to Revenue Sharing Contract with respect to each block. The assessee had entered into a contract with Vedanta Limited) The assessee received revenues amounting to INR 214,96,39,019/- during the previous FY 2020-21 from the contract with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old 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 Appeal deleting the addition. 7. Per contra, the Ld. Departmental Representative submitted that as per Article 5(1) of India Singapore DTAA, the assessee has a fixed place of business in India in the form of vessel and equipment through which it is carrying on its business wholly and partly and there is no condition in Article 5(1) for number of days being spent in India. Further submitted that irrespective of the number of days spend in India, the assessee had fixed place of business in India in the form of vessel and equipment therefore, the A.O. has rightly treated that the assessee has PE in India as per General Clause 1 of Article 5 of India-Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it carries on supervisory activities in that Contracting State for a period of more than 183 days in any fiscal year in connection with a, building site or construction, installation or assembly project which is being undertaken in that Contracting State. 5. Notwithstanding the provisions of paragraphs 3 and 4, and. enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in that Contracting State for a period of more than 183 day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 mentioned State, wholly or almost wholly for the enterprises itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that enterprise 9. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status provided, that such persons are acting in the ordinary course of their business. However, when the activities of such, an agent are devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other enterprises controlling, controlled b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Article 5(1). If such activity based PE are to seen from the general rule perspective only then there is no requirement of such clauses in the treaty and threshold period. In that case there would be fixed place PE and agency PE. Even though the specific activity based PE can have a fixed place through which it carries out the activities, but prescribed threshold or minimum period has to be read into and such time period thus puts a limitation on the general rule of Article 5(1). Hon ble Uttarakhand High Court in the case of DIT vs. Hyundai Heavy Industries Co. Ltd. in ITA No.30/2011 have dealt the similar issue wherein, the Hon ble Court relying upon (2007) 163 taxman 378 (Uttarakhand), held that division bench of this court upheld the findings of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appeal are concluded by a finding of fact. 7 Thus, in our opinion, no substantial question of law arises to be answered in these appeals (emphasis supplied). The finding recorded by the Income Tax Appellate Tribunal in the orders passed in the aforesaid three years, was that Article 5 (3) is an exception to Articles 5 (1) 5 (2), and would prevail notwithstanding Article 5 (1) 5 (2), since the former was a specific provision. This conclusion of the Tribunal has not been negated by the Division Bench of this Court in the aforesaid judgment. While Sri H.M. Bhatia, learned Senior Standing Counsel for Income-tax, may be justified in his submission that the Division Bench has not, independently, analyzed the scope of Article 5 of the DTAAA, and has not recorded its o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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