| Question And Answer | |
|---|---|
| Subject: | whether installation PE commences from the date of kick off meeting ? |
| Category: | Income-Tax |
| Querist: | Sumeet khurana |
| Answered by: | Advocate Aditya Ajgonkar |
| Tags: | construction PE, Permanent Establishment |
| Date: | May 15, 2021 |
Relevant tax treaty provides for 6 months duration for construction PE.
Foreign company has undertaken a supply and installation project in India. After executing contract a kick off meeting was held to discuss the specifications of equipment to be supplied and installed.
Q1 – whether installation PE commences from the date of kick off meeting ?
After supply of one lot of equipment the installation had to be stopped as remaining supplies got delayed due to unavoidable reasons like shortage of material etc. After supply of remaining materials the installation resumed.
Q2 – whether interim period during which installation was pauses be counted for computation of 6 months period of construction PE ?
The answer to whether the installation PE and whether the period shall commence from the date of the kick-off meeting or not shall depend upon the facts and circumstances of each case and the specific DTAA governing the transaction between the residents of the tax jurisdictions in question. Also, whether the period during which the installation was paused or not shall be included shall depend upon the words contained in the treaty require aggregation or not or are silent upon the same for the purpose of calculating the 6 months duration . These questions cannot be answered specifically without going through the contract as well as the DTAA minutely. As this question has been answered for educational purposes, you are requested to obtain proper legal advice based upon the facts and circumstances of your case by a tax professional of your choice.