Rajendra Nayak Ganesh Pai The Kolkata Income Tax Appellate Tribunal (ITAT) in the case of Van Oord Atlanta B.V. v Asstt Director of IT (2007) 112 TTJ (Kol) 229 recently examined the question of existence of a permanent establishment (PE) in India. Van Oord Atlanta BV (BV co) was a company incorporated in the Netherlands. BV co had undertaken a sub-contract for dredging to be executed in India. As a result of this sub-contract, BV co had a project office and a dredger in India for a period of 153 days. Once the project was completed, the dredger sailed out of India, but BV co maintained a bank account and books of accounts in India, even after this period. BV co claimed that maintenance of a bank account and books of accounts could not be termed as "business carried on" from a "fixed place of business". The issue before the ITAT was, whether the mere activity of maintenance of a bank account and books of accounts, could create a PE for the BV co in India as per article 5 of the India - Netherlands double taxation avoidance agreement (DTAA). BV co was a resident of the Netherlands within the meaning of article 4 of the treaty and was eligible for the DTAA benefits.
March 01 2008
