Imax Theatre Services Ltd Vs ACIT (ITAT Delhi)
SC Principle Applied: ITAT Rejects PE Allegation Due to Mere Remote Access to Systems; ITAT Denies Service PE Claim as Foreign Company’s India Visits Stayed Below 90-Day Threshold; Remote Maintenance Services Not Enough for PE in India; ITAT Rejects Virtual PE Theory for Remote Services Under India-Canada DTAA; No Fixed Place PE Without Control Over Customer Premises.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, allowed the appeal filed by a Canadian tax resident engaged in providing maintenance services for IMAX Theatre Systems globally, including India. The dispute arose from the assessment order passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961, wherein the Assessing Officer (AO) alleged that the assessee had a Fixed Place Permanent Establishment (PE) and Service PE in India under the India-Canada Double Taxation Avoidance Agreement (DTAA). Based on this allegation, the AO attributed income from maintenance services and sale of glasses and related goods to the alleged PE and applied a profit rate under Rule 10 of the Income Tax Rules. The Dispute Resolution Panel (DRP) upheld the existence of Fixed Place PE and Supervisory PE but reduced the profit attribution rate from 25% to 12.5%.
