Existence of place PE - Hongkong entity - no DTAA year - Taxability of fee for technical consultancy services as business income

Facts:

Assessee a Hkg entity offered project fee for technical consultancy services (FTS) to Delhi Airport Metro and offered it to tax under section 115A as FTS. On investigation it was found out that 21 of the 24 personnel spent more than 183 days in India and accordingly the AO held that the said provision of FTS triggered a place PE for the assessee in India under section 44DA and thus taxed the entire FTS as business profits after allowing the seconded employee costs as expenditure. DRP upheld the views of the AO. On appeal by the assessee -

Held in favour of the assessee that there was no place PE which was said to exist for the assessee as revenue has not established such an existence. The FTS was held to be taxable on presumptive basis under section 115A.

Ed. Note: Decision pertains to pre-DTAA year of Hong Kong with taxability being examined in a limited manner under the Income tax act only. It is to be noted that only the DTAA has clauses on Project PE and not the act.

Case: MTR Corpn. Ltd. v. DCIT 2023 TaxPub(DT) 3069 (Del-Trib)