Case Law Details
Clifford Chance PTE Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that there is no provision regarding establishment of virtual service PE under India-Singapore DTAA and hence physical rendition of service in India is required under India-Singapore DTAA as per present service PE.
Facts- The assessee is engaged in providing legal advisory services to several international clients including in India. It is a tax resident of Singapore and has opted to be governed by the provisions of India-Singapore Double Taxation Avoidance Agreement. The assessee’s cases were selected for scrutiny under CASS.
Notably, the assessee entered into legal advisory contracts with the Indian clients. In AY 2020-21, part of the advisory services were rendered remotely outside India and while there were situations where employees of the assessee travelled to India for rendering services. In AY 2021-22, the services were rendered remotely from outside India and no employees had visited India for provision of services.
During the assessment proceedings, AO observed that the assessee had a gross total receipt of Rs. 15,55,45,693/- for the AY 202021 and Rs. 7,76,53,507/- for the AY 2021-22 from rendering services to Indian clients but the same have been claimed as exempt in its ITR by the assessee. The assessee was asked to show cause as to why the said receipts be not taxed on account of constitution of service Permanent Establishment of the assessee in India. The assessee filed detailed submissions before AO which were not found to be tenable. AO made addition of Rs. 15,55,45,693/- and Rs. 7,97,64,414/- respectively to the total income of the assessee on account of constitution of service PE of the assessee in India.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
