ITAT : No PE trigger for UAE Co. undertaking ‘grouting’ masonry work in India

Delhi ITAT rules that there is no PE of assessee (a UAE co. engaged in providing solutions for subsea off-shore construction industry) on account of the grouting activities carried out in India during AY 2007-08; Accepts assessee’s stand that the grouting activities fall within the construction activity as contemplated in specific provision of Article 5(2)(h), and since the number of days spent in India was less than the stipulated period of 9 months, there was no PE trigger for the assessee in India; Revenue had argued that Article 5(1) squarely applies to the assessee, further Revenue had argued that the assessee has equipment PE in India, lastly it was also contended that even movables place of business may constitute a PE despite they are temporary in location; Firstly, ITAT applies the maxim, “generalia specialibus non deroganf' i.e, a general provision would not be applicable when specific provision is there, next ITAT clarifies that merely because grouting is not a simple masonry work and involves complex aspects, it does not take it out of the construction activities as mentioned in Article 5(2)(h), “…and any further classification [as done by the Revenue] would amount to rewriting DTAA.”; Lastly, rejects Revenue’s stand that since the assessee indulged in on-going projects, 9 months stipulation cannot be applied, states that PE determination has to be made for each AY and with reference to DTAA provision.:ITAT