Sec. 9 of Income Tax Act, 1961—Income—Income deemed to accrue or arise in India - Threshold period of 12 months have not exceeded, consequently no PE can be said to have been established, thus, no income can be held to be taxable in India.

Facts: During the course of hearing, assessee was asked to explain as to why it should not be regarded to constitute a PE in India as per Article 5(2)(g) of India-Cyprus Tax Treaty following the assessment order for AY 2008-09. AO passed the order u/s 143(3)/144C observing that for the reasons recorded in the assessment order, assessee is held to have PE in India in terms of the duration of assessee’s operation in India and made an addition of 10% of the gross receipts of the assessee. Aggrieved by such an addition, assessee preferred an appeal. CIT(A) dismissed the appeal and confirmed the addition made by the AO. Assessee is, therefore, in this appeal before Tribunal.

Held, that threshold period of 12 months have not exceeded in the present case and consequently no PE can be said to have been established in Article 5(2)(g), accordingly, it was held that no income of the assessee on the Contract executed by assessee in India can be held to be taxable in terms of Article 5(2)(g) of the DTAA. In the result, appeal of the assessee is allowed. - BELLSEA LTD. V/s DY. DIT - [2020] 182 ITD 420 (ITAT-DELHI)