Conditions to satisfied to treat an activity as PE

[kotreshmg]

I would like to know conditions to be satisfied to treat one as a PE in India.  The background is as under:

I have a contract with a US Company for installation and commissioning of machine in India.  The Engineers hav arrived and now being put up in a residential accomodation.  Whether the residential accomodation wherein they may perform the contract, be treat as a PE of the US company.  No contract is entered in India with the engineers.  They have no right to contract with any one.  All that they have to do is to perform the predefined task and pack off.  They will be India for more 182 days.

[suraj.agrawal]

Dear Kotreshmg,

As per status given in your mail, i would like to inform you that Installation and commissioning of machine in India by US company will be regarded as a deemed PE as per clause (K) of Article 5 of Indo-USA DTAA in India otherwise also ignoring the condition of residential accomodation provided to the employee of the US company.

The relevant text of Clause K - Article 5 - Permanent Establishment

(k)  a building site or construction, installation or assem­bly project or supervisory activities in connection therewith, where such site, project or activities (together with other such sites, projects or activities, if any) continue for a period of more than 120 days in any twelve-month period ;

In your case, the employee of US company will be in India for more than 182 days for installation work, it will regarded as deemed PE of US company.

(please also see Clause L of the said Article 5)

Please feel free to discuss further

Regards,

CA. Suraj Agrawal

[brett_lee38]

i also endorse the view of CA Suraj Aggarwal