The Assessing Officer has added together my client's installation contract and the annual maintenance contract that followed it, crossed the treaty's duration threshold, found an installation permanent establishment and attributed 10 per cent of the receipts. Can he aggregate the two contracts?
No. The Kolkata Tribunal held that providing annual maintenance services after the project or site has been handed over to the customer is not carrying out installation activities for the purpose of constituting an installation permanent establishment, so that the Assessing Officer's cumulative consideration of the original installation contract and the subsequent maintenance contract was bad in law and the resulting attribution of 10 per cent of the receipts was erroneous. On the duration itself the Tribunal held that the count does not start from the date of signing the contract, and that on the completion certificate and site readiness report the entire transaction was less than six months, so there was no PE under Article 5(3) of the India-Netherlands DTAA.
Decided by the ITAT (Anikesh Banerjee, Judicial Member and Girish Agrawal, Accountant Member) on 2024-04-18, reported as I.T.A. No. 153/KOL/2022, Income Tax Appellate Tribunal, Kolkata 'C' Bench; assessment year 2018-19. The treaty construed is the Double Taxation Avoidance Agreement between INDIA and the NETHERLANDS — Article 5(3), the installation permanent establishment threshold — with attribution under Article 7.. It bears on section DTAA art 5, section DTAA art 5(3), section DTAA art 7, section 9(1)(i), section 90 of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
The construction or installation PE is decided by a stopwatch, and the whole dispute is usually about what goes on the clock. This order gives a practitioner three usable rulings on that. First, the start of the clock is not the date the contract was signed — the Tribunal drew that from Cal Dive Marine Construction (Mauritius) Ltd. — so a contract signed months before mobilisation does not begin the count. Second, post-completion annual maintenance does not count towards the installation period; it is a different activity performed after handover, and rolling a separate AMC into the installation contract to cross the threshold is impermissible. Third, the evidence that decides it is documentary: the completion certificate and the site readiness report were what the Tribunal relied on. Two cautions. The threshold is treaty-specific — Article 5(3) of the India-Netherlands treaty is a six-month test, whereas other Indian treaties use nine months or twelve months, and some deem a service PE on a days count instead; take the number from your own treaty. And the order also records day counts of 183 and 180 days alongside the six-month test, so the arithmetic in a given project has to be presented both ways. Finally, note that the attribution consequence followed automatically: with no installation PE, the 10 per cent attribution fell with it.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a company resident in the Netherlands, formerly named Holland Institute of Traffic Technology B.V., which supplied equipment and carried out installation, testing and maintenance work in India, and which claimed the benefit of the Double Taxation Avoidance Agreement between INDIA and the NETHERLANDS, whose Article 5(3) sets a six-month threshold for an installation permanent establishment. For assessment year 2018-19 three projects were in issue: the AAI (Delhi Phase-1) project, the AAI-5 project and the AMC-GOK project. The Assessing Officer held that the assessee had an installation permanent establishment in India, taking the duration as more than 183 days, and attributed 10 per cent of the receipts of the alleged installation PE to India. In arriving at the duration he considered the original installation contract together with a subsequent contract for the provision of annual maintenance services cumulatively. Before the Tribunal the assessee produced the completion certificate and the site readiness report for the work taken up in India, at pages 372 and 373 of its paper book, and relied on the Tribunal's own earlier order in its case under its former name, HITT Holland Institute of Traffic Technology B.V., on the Mumbai Tribunal's order in Kreuz Subsea Pte. Ltd. and on Cal Dive Marine Construction (Mauritius) Ltd. for the proposition that the date of signing the contract is not the start of the period.
The appeal was allowed. The appellate order was set aside and the additions by way of profit attribution for the AAI (Delhi Phase-1), AMC-GOK and AAI-5 projects were quashed, grounds 2, 3, 4, 5 and 8 being allowed. The Tribunal held that providing annual maintenance services after handing over the project or site to the customer would not amount to carrying out installation activities for the constitution of an installation PE, that the Assessing Officer's cumulative consideration of the original installation contract and the subsequent annual maintenance contract was bad in law, and that his attribution of 10 per cent of the receipts to the alleged installation PE for that project was erroneous; the calculation of the PE period for the AMC and ASMGCS work was below 180 days and the entire transaction was less than six months, so the transaction was declared a non-PE in India (para 10).
The Tribunal took the completion certificate and the site readiness report as the starting point for fixing when the work in India was taken up, and relied on its own earlier order in the assessee's case under its former name and on the Mumbai Tribunal's order in Kreuz Subsea Pte. Ltd.; drawing on Cal Dive Marine Construction (Mauritius) Ltd., it held that the date of signing of the contract cannot be the start of the period. On that basis the calculation for the AMC and ASMGCS work came to below 180 days. It then addressed the aggregation point, holding that annual maintenance services rendered after the project or site had been handed over to the customer are not installation activities, so that the Assessing Officer could not add the maintenance contract to the installation contract to make up the duration, and that the 10 per cent attribution built on that aggregation was erroneous. The entire transaction being less than six months, the Tribunal declared it a non-PE in India (para 10).
The entire transaction was less than six months. So, in our considered view, we are bound to declare this transaction as a non-PE in India.
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Handle my notice → Ask a CA on WhatsAppNo. The Kolkata Tribunal held that providing annual maintenance services after the project or site has been handed over to the customer is not carrying out installation activities for the purpose of constituting an installation permanent establishment, so that the Assessing Officer's cumulative consideration of the original installation contract and the subsequent maintenance contract was bad in law and the resulting attribution of 10 per cent of the receipts was erroneous. On the duration itself the Tribunal held that the count does not start from the date of signing the contract, and that on the completion certificate and site readiness report the entire transaction was less than six months, so there was no PE under Article 5(3) of the India-Netherlands DTAA. This was decided by the ITAT (Anikesh Banerjee, Judicial Member and Girish Agrawal, Accountant Member) and bears on section DTAA art 5, section DTAA art 5(3), section DTAA art 7, section 9(1)(i), section 90 of the Income Tax Act 1961. It is reported as I.T.A. No. 153/KOL/2022, Income Tax Appellate Tribunal, Kolkata 'C' Bench; assessment year 2018-19. The treaty construed is the Double Taxation Avoidance Agreement between INDIA and the NETHERLANDS — Article 5(3), the installation permanent establishment threshold — with attribution under Article 7.. The construction or installation PE is decided by a stopwatch, and the whole dispute is usually about what goes on the clock. This order gives a practitioner three usable rulings on that. First, the start of the clock is not the date the contract was signed — the Tribunal drew that from Cal Dive Marine Construction (Mauritius) Ltd. — so a contract signed months before mobilisation does not begin the count. Second, post-completion annual maintenance does not count towards the installation period; it is a different activity performed after handover, and rolling a separate AMC into the installation contract to cross the threshold is impermissible. Third, the evidence that decides it is documentary: the completion certificate and the site readiness report were what the Tribunal relied on. Two cautions. The threshold is treaty-specific — Article 5(3) of the India-Netherlands treaty is a six-month test, whereas other Indian treaties use nine months or twelve months, and some deem a service PE on a days count instead; take the number from your own treaty. And the order also records day counts of 183 and 180 days alongside the six-month test, so the arithmetic in a given project has to be presented both ways. Finally, note that the attribution consequence followed automatically: with no installation PE, the 10 per cent attribution fell with it. If it applies to you, the first step is this: Get the site readiness report and the completion certificate for each project into the record; they were the documents that decided this case.
The assessee is a company resident in the Netherlands, formerly named Holland Institute of Traffic Technology B.V., which supplied equipment and carried out installation, testing and maintenance work in India, and which claimed the benefit of the Double Taxation Avoidance Agreement between INDIA and the NETHERLANDS, whose Article 5(3) sets a six-month threshold for an installation permanent establishment. For assessment year 2018-19 three projects were in issue: the AAI (Delhi Phase-1) project, the AAI-5 project and the AMC-GOK project. The Assessing Officer held that the assessee had an installation permanent establishment in India, taking the duration as more than 183 days, and attributed 10 per cent of the receipts of the alleged installation PE to India. In arriving at the duration he considered the original installation contract together with a subsequent contract for the provision of annual maintenance services cumulatively. Before the Tribunal the assessee produced the completion certificate and the site readiness report for the work taken up in India, at pages 372 and 373 of its paper book, and relied on the Tribunal's own earlier order in its case under its former name, HITT Holland Institute of Traffic Technology B.V., on the Mumbai Tribunal's order in Kreuz Subsea Pte. Ltd. and on Cal Dive Marine Construction (Mauritius) Ltd. for the proposition that the date of signing the contract is not the start of the period. The matter was decided on 2024-04-18 by the ITAT (Anikesh Banerjee, Judicial Member and Girish Agrawal, Accountant Member). On those facts the ITAT held as follows. The appeal was allowed. The appellate order was set aside and the additions by way of profit attribution for the AAI (Delhi Phase-1), AMC-GOK and AAI-5 projects were quashed, grounds 2, 3, 4, 5 and 8 being allowed. The Tribunal held that providing annual maintenance services after handing over the project or site to the customer would not amount to carrying out installation activities for the constitution of an installation PE, that the Assessing Officer's cumulative consideration of the original installation contract and the subsequent annual maintenance contract was bad in law, and that his attribution of 10 per cent of the receipts to the alleged installation PE for that project was erroneous; the calculation of the PE period for the AMC and ASMGCS work was below 180 days and the entire transaction was less than six months, so the transaction was declared a non-PE in India (para 10).
The Tribunal took the completion certificate and the site readiness report as the starting point for fixing when the work in India was taken up, and relied on its own earlier order in the assessee's case under its former name and on the Mumbai Tribunal's order in Kreuz Subsea Pte. Ltd.; drawing on Cal Dive Marine Construction (Mauritius) Ltd., it held that the date of signing of the contract cannot be the start of the period. On that basis the calculation for the AMC and ASMGCS work came to below 180 days. It then addressed the aggregation point, holding that annual maintenance services rendered after the project or site had been handed over to the customer are not installation activities, so that the Assessing Officer could not add the maintenance contract to the installation contract to make up the duration, and that the 10 per cent attribution built on that aggregation was erroneous. The entire transaction being less than six months, the Tribunal declared it a non-PE in India (para 10). In the words reproduced by the source cited on this page: "The entire transaction was less than six months. So, in our considered view, we are bound to declare this transaction as a non-PE in India." The decision followed or applied HITT Holland Institute of Traffic Technology B.V. (ITAT Kolkata) — the assessee's own case, followed; Kreuz Subsea Pte. Ltd. (ITAT Mumbai) — relied on; Cal Dive Marine Construction (Mauritius) Ltd. — relied on for the proposition that the date of signing of the contract is not the start of the period; J Ray McDermott Eastern Hemisphere Ltd. (ITAT Mumbai) — relied on for the proposition that aggregation of time on various contracts in India is not required, each contract being tested separately against the 180-day threshold.
It was decided by the ITAT on 2024-04-18 and is reported as I.T.A. No. 153/KOL/2022, Income Tax Appellate Tribunal, Kolkata 'C' Bench; assessment year 2018-19. The treaty construed is the Double Taxation Avoidance Agreement between INDIA and the NETHERLANDS — Article 5(3), the installation permanent establishment threshold — with attribution under Article 7.. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section DTAA art 5, section DTAA art 5(3), section DTAA art 7, section 9(1)(i), section 90, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed. The appellate order was set aside and the additions by way of profit attribution for the AAI (Delhi Phase-1), AMC-GOK and AAI-5 projects were quashed, grounds 2, 3, 4, 5 and 8 being allowed. The Tribunal held that providing annual maintenance services after handing over the project or site to the customer would not amount to carrying out installation activities for the constitution of an installation PE, that the Assessing Officer's cumulative consideration of the original installation contract and the subsequent annual maintenance contract was bad in law, and that his attribution of 10 per cent of the receipts to the alleged installation PE for that project was erroneous; the calculation of the PE period for the AMC and ASMGCS work was below 180 days and the entire transaction was less than six months, so the transaction was declared a non-PE in India (para 10). It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section DTAA art 5, section DTAA art 5(3), section DTAA art 7, section 9(1)(i), section 90 of the Income Tax Act 1961, and was decided by Anikesh Banerjee, Judicial Member and Girish Agrawal, Accountant Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Prepare a project-by-project day count with a start date fixed by mobilisation or site readiness, not by the date the contract was signed. Keep the annual maintenance contract physically and commercially separate from the installation contract — separate agreement, separate scope, separate consideration and a handover in between — and be able to show the date of handover. Where the Assessing Officer aggregates contracts, make him identify the legal basis for aggregation and test it against the specific duration clause in your treaty rather than against the general concept of a PE. Take the threshold from the treaty itself: Article 5(3) of the India-Netherlands treaty uses six months, while other Indian treaties use nine or twelve months, and present the arithmetic in months and in days. Attack the attribution percentage separately and in the alternative, so that if a PE is found for one project the attribution for the others does not follow by default.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying or doubting this order has been found. There is, however, something a practitioner needs: the assessee was formerly Hitt Holland Institute of Traffic Technology B.V., and the Revenue's appeal against the earlier Kolkata Bench order in its case, ITA No. 104 of 2019 (Commissioner of Income Tax (International Taxation and Transfer Pricing) v Hitt Holland Institute of Traffic Technology B.V., now known as Saab Technologies B.V.), remains pending in the Calcutta High Court; by order of 25 June 2024 it was adjourned to the monthly list of August 2024. That appeal is against the earlier-year order, not this one, so this order is not itself under appeal, but the same question in the same assessee's case is before the High Court and undecided. Two further limits go to how far the order travels. The threshold is treaty-specific: Article 5(3) of the India-Netherlands agreement uses six months, while other Indian treaties use nine or twelve months and some deem a service permanent establishment on a days count instead, so the number has to be taken from the treaty in issue. And the findings here are findings of fact on documents - the completion certificate and the site readiness report - so a project whose documents show a different sequence is untouched by the order. For a year governed by the Income-tax Act 2025 the successor of s.9(1)(i) and of the treaty-override provision in s.90 should be identified before the argument is put; that correspondence has not been established here. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
ON THE STRUCTURE. The order has thirteen numbered paragraphs and the Tribunal's reasoning is concentrated in paragraph 10. ONE CAUTION ABOUT QUOTING FROM IT, and it is the reason the quotation on this page is a short one. The sentence beginning 'providing annual maintenance services after handing over the project /site to the customer would not be tantamount to carrying out installation activities' appears twice in the document - once in the Tribunal's own paragraph 10 and once, in almost the same words, in the appellant's recorded submission ('The appellant submits that providing any annual maintenance services pursuant to completion of installation activities...'). Because of that duplication no quotation is taken from that sentence here. The sentence used is the short concluding sentence of paragraph 10, which was independently re-verified and is unmistakably the Tribunal speaking. ON THE FIGURES IN THE DISPOSAL. They are reproduced on this page exactly as printed, punctuation defects included: 'Rs. 57,54.726/-' for the AAI (Delhi Phase-1) project and 'Rs. 3.68,387' for the AAI-5 project; the AMC-GOK figure is printed as Rs. 8,45,105. Read the first and third as Rs. 57,54,726 and Rs. 3,68,387 only if the original order confirms it. ON WHAT THIS ENTRY LEAVES OUT. The order also construes Article 11 (interest) and Article 12 (fees for technical services) of the India-Netherlands agreement, and paragraph 10 closes with a finding on interest income of the Government. This entry is confined to the installation permanent establishment and the attribution; those Articles are neither tagged nor stated here, and nothing on this page should be cited for them. ON THE THREE PROJECTS. They are the AAI (Delhi Phase-1) project, the AAI-5 project and the AMC-GOK project, all for assessment year 2018-19. The Assessing Officer took the duration as more than 183 days and attributed ten per cent of the receipts of the alleged installation permanent establishment to India, arriving at the duration by considering the original installation contract together with a subsequent annual maintenance contract cumulatively. It is that aggregation the Tribunal held bad in law, and the attribution fell with it. ON WHAT THE TRIBUNAL RELIED ON. The completion certificate and the site readiness report fixed when the work in India was taken up. The Bench relied on its own earlier order in the assessee's case under its former name, on the Mumbai Bench's order in Kreuz Subsea Pte. Ltd., and on Cal Dive Marine Construction (Mauritius) Ltd. for the proposition that the date of signing of the contract cannot be the start of the period. On that basis the calculation for the AMC and ASMGCS work came to below 180 days. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed. The appellate order was set aside and the additions by way of profit attribution for the AAI (Delhi Phase-1), AMC-GOK and AAI-5 projects were quashed, grounds 2, 3, 4, 5 and 8 being allowed. The Tribunal held that providing annual maintenance services after handing over the project or site to the customer would not amount to carrying out installation activities for the constitution of an installation PE, that the Assessing Officer's cumulative consideration of the original installation contract and the subsequent annual maintenance contract was bad in law, and that his attribution of 10 per cent of the receipts to the alleged installation PE for that project was erroneous; the calculation of the PE period for the AMC and ASMGCS work was below 180 days and the entire transaction was less than six months, so the transaction was declared a non-PE in India (para 10).
TaxSphere, “Saab Technologies B.V. v DCIT (International Taxation), Kolkata”, https://taxnotice.vittsphere.com/caselaw/case/saab-technologies-article-5-3-installation-pe-six-month-threshold/ (validity last checked 2026-09-08)
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