Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | double taxation India-Korea Agreement Tax/Taxation |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Tax/Taxation – India-Korea Agreement for avoidance of double taxation of income and the prevention of fiscal evasion (DTAA) – Arts.5, 7 – Project Office whether a Permanent Establishment (PE) in India – Taxability of income – ONGC awarded turnkey contract to a consortium comprising of respondent-assessee, incorporated in South Korea for carrying out work w.r.t the Vasai East Development Project – Assessee set up a Project Office in Mumbai – For the relevant assessment year, assessee’s return of income showed nil profit alleging loss w.r.t activities carried out in India – Assessment Order attributed 25% of the revenues allegedly earned outside India as the income of assessee exigible to tax – ITAT though set aside this finding, but remitted the matter to ascertain profits attributable to the Mumbai project office – Appeal filed by assessee, allowed by High Court – Held: For applicability of Art.5(1), DTAA to fixed place PEs under double taxation avoidance treaties, it should be an establishment “through which the business of an enterprise” is wholly or partly carried on – Profits of the foreign enterprise are taxable only where it carries on its core business through a PE – It is only so much of its profits that may be taxed in the other State as is attributable to that PE – In the present case, no PE was set up within the meaning of Art.5(1), DTAA, as the Mumbai Project Office cannot be said to be a fixed place of business through which the core business of the assessee was wholly or partly carried on – Said Office would fall within Art.5(4)(e), DTAA, as it was solely an auxiliary office, meant to act as a liaison office between the assessee and ONGC. Tax/Taxation – Double taxation avoidance treaty – Project Office whether a Permanent Establishment (PE) in India – Onus to prove – Held: Finding of ITAT thatas accounts are in the hands of assessee, the mere mode of maintaining accounts alone cannot determine the character of permanent establishment, is perverse and hence set aside – Equally, the finding that the onus is on assessee and not on the tax authorities to first show that the project office at Mumbai is a PE is in the teeth of the judgment in Asst. Director of Income Tax, New Delhi v. E-Funds IT Solution Inc. reported as [2017] 10 SCR 157. |
Judge | Hon'ble Mr. Justice R.F. Nariman |
Neutral Citation | 2020 INSC 460 |
Petitioner | Director Of Income Tax-ii (international Taxation) New Delhi & Anr. |
Respondent | M/s. Samsung Heavy Industries Co. Ltd. |
SCR | [2020] 6 S.C.R. 486 |
Judgement Date | 2020-07-22 |
Case Number | 12183 |
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