{"id":3837,"date":"2011-11-03T04:57:44","date_gmt":"2011-11-03T04:57:44","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=3837"},"modified":"2011-11-03T04:57:44","modified_gmt":"2011-11-03T04:57:44","slug":"cit-vs-ms-bkiham-v-o-f-uttarakhand-high-court-fact-of-office-pe-under-article-52-irrelevant-if-there-is-no-construction-site-pe-under-article-53","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-ms-bkiham-v-o-f-uttarakhand-high-court-fact-of-office-pe-under-article-52-irrelevant-if-there-is-no-construction-site-pe-under-article-53\/","title":{"rendered":"CIT vs. M\/s BKI\/HAM v.o.f. (Uttarakhand High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (BKI_HAM_Project_Office_PE.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nFact of “Office PE” under Article 5(2) irrelevant if there is no “Construction Site PE” under Article 5(3)
\n<\/strong><\/p>\n

The assessee, a Netherlands company, obtained a contract for dredging a trench for which it opened an office at Mumbai<\/em>. The dredging activity was completed in two months<\/em>. The assessee claimed that whether it had a ‘permanent establishment<\/em>‘ (PE) in India or not had to be decided as per Article 5(3) of the DTAA which provided that a “building site<\/em>” or “construction project<\/em>” would be a PE only if continued for more than 6 months. However, the AO held that as the assessee had an office in Mumbai, it had an “office<\/em>” or a “place of management<\/em>” which constituted a PE under Article 5(2) of the DTAA. This was reversed by the CIT(A) & Tribunal. On appeal by the department, HELD dismissing the appeal: <\/p>\n

The assessee had a “site<\/em>” or “project<\/em>” in India. Under Article 5 (3) of the treaty, such a “site<\/em>” or “project<\/em>” is a PE only if it continues for a period of more than six months. As the assessee’s contract was completed in two months, there was no PE under Article 5(3)<\/strong>. The argument that the Mumbai office was a PE under Article 5(2) is not acceptable because while Article 5(2) is a general provision, Article 5 (3) is a specific provision which prevails over Article 5(2)<\/strong>.<\/p><\/blockquote>\n

\nNote<\/strong>: See the contrary view in Samsung Heavy Industries vs. ACIT<\/a><\/strong> (ITAT Delhi) that even if there was no “installation PE<\/em>” under Article 5(3), there was a “project office PE<\/em>” under Articles 5(1) & 5(2)\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The assessee had a “site<\/em>” or “project<\/em>” in India. Under Article 5 (3) of the treaty, such a “site<\/em>” or “project<\/em>” is a PE only if it continues for a period of more than six months. As the assessee’s contract was completed in two months, there was no PE under Article 5(3)<\/strong>. The argument that the Mumbai office was a PE under Article 5(2) is not acceptable because while Article 5(2) is a general provision, Article 5 (3) is a specific provision which prevails over Article 5(2)<\/strong>.<\/p>\n

Read more ›<\/a><\/div>\n

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