Dismissing the appeal of the revenue the Tribunal held that; expenses incurred for the purpose of PE are to be allowed, there is no restriction on allowability of such expenses. Tribunal also held that, if employee has spent only a part of their time in India and his staying in India was much less than period of 180 days and even if the employees were sent by the US AE, then also in terms of article 15 of India US DTAA, the employees could not be taxed in India, because they have stayed in India for a period of less than 183 days. Accordingly the Tribunal held that disallowance cannot be made by invoking the provision of S. 40(a)(i) cannot be made. (AY. 1998-99)
Dy. CIT (IT) v. Unocol Bharat Ltd. (2018) 171 DTR 329 / 196 TTJ 646 / 68 ITR 24 ( SN)/ 99 taxmann.com 158 (Delhi) (Trib.)
S. 40(a)(i) : Amounts not deductible – Deduction at source -Non-resident – Business possibilities in the field of energy sector – Expenses incurred for the purpose of PE are to be allowed- DTAA-India -USA -Mauritius [ S. 9(1)(i),195 Art. 5, 7, 15]