Article 7(1) of the DTAA between India and Netherlands provides for taxing profits of the enterprise in the other state only to the extent they are attributable to the PE in the other state, adopting “No Force of Attraction” principle. With the above broad principles in mind we will now consider the facts of the present case and the rival contentions
Extract of the ITAT Judgment
This is an appeal by the Assessee against the order of D.D.I.T.(IT)-1, Kolkata (also referred to as AO) passed u/s 143(3) of the Act r.w. s. 153(1) and section 144C(13) of the Income Tax Act, 1961 (Act) relating to A.Y.2010-11.
2. The Assessee is a subsidiary of HITT N.V. It is a company incorporated as per the laws of Netherland operating in the international market for safety, security and efficiency of nautical and air traffic. It operates in the specialized markets for traffic control, navigation and port management systems. The assessee had entered into contracts with Oil and Natural Gas Corporation of India (“ONGC”), Director General of Lighthouse and Lightships (“DGLL”) and Airports Authority of India (“AAI”) for rendering services and supply of equipments. The Assessee received payments in respect of performance of services and supply of equipment under the following contracts in India:
