Booz & Company (ME) FZ-LLC Vs DDIT (International Taxation) (ITAT Mumbai)
AAR Ruling Cannot Be Sole Basis to Hold Existence of Permanent Establishment; No Service PE Created as Employees Worked Less Than Nine Months in India; Fees From Indian AE Not Taxable Due to Absence of Fixed Place PE in India; ITAT Rejects Taxability of Consultancy Receipts Since Indian Entity Was Only Service Recipient; Foreign Consultancy Income Held Non-Taxable as DTAA Conditions for PE Were Not Met; ITAT Says PE Determination Requires Independent Examination of Facts and DTAA Provisions; No Dedicated Office Space in India Means No Fixed Place PE.
The Mumbai ITAT allowed the appeal filed by the assessee for Assessment Year 2011-12 and held that the fees received from its Indian associated enterprise were not taxable in India in the absence of a Permanent Establishment (PE) under the India-UAE Double Taxation Avoidance Agreement (DTAA). The assessee, a UAE-based company engaged in management and technical consultancy services, had provided technical and professional personnel to its Indian associated enterprise, Booz & Company India Private Limited, and received fees of ₹112.83 lakhs. The assessee treated the receipts as business income under the India-UAE DTAA and claimed that the same were not taxable in India since it did not have a PE in India.
