Case Law Details
Recently Mumbai Income Tax Appellate Tribunal in the case of Valentine Maritime Mauritius Ltd. (Taxpayer), [2010-TIOL-195-ITAT-MUM] held that the number of days relating to each of the contracts cannot be aggregated to determine the ‘duration test’, as the activities carried out therein are not inextricably interconnected or interdependent and do not form a coherent whole in conjunction with each other.
The ‘duration test’ would need to be applied independently for each contract executed, for determining a PE. In view of the fact that under each of the contracts, the time duration did not exceed the threshold of nine months, the same was held not to constitute a PE under the Tax Treaty.
Background and facts of the case
The Taxpayer is a company incorporated in Mauritius, possessing a Mauritius tax residency certificate and is eligible for the Tax Treaty benefits. The Taxpayer is engaged in the business of marine and general engineering and construction. During the relevant tax year, the Taxpayer executed the following contracts in India:
