The Assessee contended that the overseas company did not carry out any dredging operations in India but only gave dredgers to the Assessee Company in India on a time charter basis, for which it charged a fixed fee/remuneration irrespective of the actual usage of such vessel. The Revenue argued that the foreign company had a business connection in India as the dredgers were continuously operating in Indian territorial waters. The Hon’ble Tribunal held that the foreign company did not have a business connection or permanent establishment in India. That the foreign company only provided dredgers on a lease basis without engaging in any active business operations in India. Further that the operational staff and the captain worked under the supervision and control of the Assessee, and the payments were for the use of equipment, not for any business activity conducted by the foreign company in India. (AY 2003 to 2010-11)
Jaisu Shipping Co. v. ADDI (2024) 111 ITR 601 (Rajkot)(Trib.)
S. 9(1)(i): Income deemed to accrue or arise in India-Business connection-Operational staff and the Vessel and the captain of the vessel who originally belonged to the non-resident company and who had been sent to work under the complete control and supervision of the Assessee did not constitute a business connection for the non-resident in India-Article 5 of the OECD Model Convention.