Construction PE clause determines Existence of PE in case of engineering, procurement, commissioning services provider in oil fields Construction

Court: Mumbai bench of the Income Tax Appellate Tribunal

Citation: DDIT Vs. Clough Projects International Pvt. Ltd. (2010-TII-55-ITAT-MUM-INTL)

Brief: Mumbai bench of the Income-tax Appellate Tribunal held that carrying out engineering, procurement, installation and commissioning services in oil fields was in the nature of an installation project.

Therefore, for determining the existence of Permanent Establishment (PE) of the taxpayer in India, the construction PE clause (See Note- 1)  of the India-Australia tax treaty (the tax treaty) is relevant and not the clause which deals with oil gas or gas well(See Note-2).

Further, since the installation projects were not carried on for more than six months, the construction PE clause of the tax treaty is not attracted.

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