Assessee, a non-resident company engaged in legal advisory services, provided legal advisory services to Indian clients partly through two employees who visited India and were present for 120 days. Assessing Officer held that the assessee had a service PE in India owing to the physical presence of its employees in India as the aggregate duration of provision of services by the assessee exceeded 90 days. Tribunal held that actual performance of services in India by employees physically present in the country is necessary to constitute a service PE and since the assessee had only rendered services to its clients for 44 days, excluding vacation, business development days and common days, it did not meet 90 days criteria to constitute a service PE in India. Since Article 5(6)(a) of India-Singapore DTAA contemplates that an enterprise shall be deemed to have a permanent establishment in contracting state through its employees or other personnel only if activities within contracting state continue for a period aggregating to 90 days in any fiscal year and since assessee had only rendered services to its clients for 44 days, excluding vacation, business development days and common days spent by its employees in India, it did not meet 90 days criteria to constitute a service permanent establishment in India.\u00a0 High Court affirmed the order of the Tribunal. Court also held that Article 5(6) of the DTAA only contemplates rendering of services by employees present within the country; the concept of virtual service PE does not find mention in the DTAA and, thus, cannot be read into DTAA. Assessee, a non-resident company engaged in legal advisory services, provided legal advisory services to Indian clients, but no employee visited India, and services to Indian clients were rendered from outside India. Assessing Officer issued a draft assessment order proposing to tax a certain sum, alleging a virtual service PE. Tribunal rejected the revenue\u2019s allegation of a virtual service PE in the absence of such a concept in the DTAA. Court held that since the concept of a virtual service permanent establishment is not mentioned anywhere in the DTAA, in the absence of any such provision, the contention of the revenue that a virtual service permanent establishment of the assessee had been established was not accepted. Order of Tribunal affirmed. \u00a0(AY. 2020-21)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 9(1)(i) : Income deemed to accrue or arise in India-Business connection-Permanent establishment-Service PE-Legal advisory services-Indian clients-44 days, excluding vacation-It did not meet 90 days criteria to constitute a service PE in India during the relevant year-Article 5(6) of the India, Singapore DTAA only contemplates rendering of services by employees present within country, concept of virtual service PE does not find mention in DTAA, thus cannot be read in to DTAA-DTAA-India-Singapore. [Art. 5(6)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-64083","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-gFB","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/64083","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=64083"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/64083\/revisions"}],"predecessor-version":[{"id":64084,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/64083\/revisions\/64084"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=64083"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=64083"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=64083"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}