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Bellsea Ltd. V. ADIT ( Delhi)(Trib),www.itatonline.org

S. 9(1)(i):Income deemed to accrue or arise in India – Business connection -The duration of 12 months specified to constitute a PE is activity specific qua the site, construction, assembly or installation project. Preparatory work for tendering of contract cannot be included in the period. The activity qua the project comes to an end when the work gets completed and the responsibility of the contractor with respect to that activity comes to end. Onus is heavily upon the revenue to establish that that assessee’s activity had crossed the threshold period of 12 months- Accordingly no income of the assessee on the contract executed by assessee in India can be held to be taxable in terms of Article 7- DTAA-India –Cyprus [ Art .5,7 ]

Tribunal held that , The duration of 12 months specified to constitute a PE is activity specific qua the site, construction, assembly or installation project. Preparatory work for tendering of contract cannot be included in the period. The activity qua the project comes to an end when the work gets completed and the responsibility of the contractor with respect to that activity comes to end. Onus is heavily upon the revenue to establish that that assessee’s activity had crossed the threshold period of 12 months.  Tribunal held that on facts threshold period of 12 moths have not exceeded and consequently no PE can be said to have been established in Article 5(2)(g). Accordingly  no income of the assessee on the contract executed by assessee in India can be held to be taxable in terms of Article 7. Grounds raised by the assessee is allowed .     ( ITA No.5759/Del/2011, dt. 06.07.2018)(AY. 2008-09)

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