Telenor ASA, New Delhi V. DCIT, New Delhi

ITA 1307/DEL/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8548 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Keywords: Business income; Transfer pricing; Double taxation relief; Permanent establishment
• Section: 142(1); 5(2); 234B; 43; 44DA; 13(2); 13; 153; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. KUL BHARAT, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 1307/DEL/2015 : ASSTT. YEAR : 2010-11 TELENOR ASA, C/O VAISH ASSOCIATES ADVOCATES, 1 ST FLOOR, MOHANDEV BUILDING, 13, TOLSTOY MARG, NEW DELHI-110001 VS DCIT, CIRCLE-GURGAON, INTL. TAXATION, NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. A ADCT5705F ASSESSEE BY : SH. AJAY VOHRA, SR. ADV. REVENUE BY : DR. PRABHA KANT, CIT DR DATE OF HEAR ING: 03 . 0 6 .20 2 1 DATE OF PRONOUNCEMENT: 12 .08 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27.01.2015 PASSED BY THE AO U/S 143 (3) R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN ASSESSING THE INCOME OF THE APPELLANT AT RS.8,26,76,663 ON NET BASIS AS AGAINST THE RETURNED INCOME OF RS.13,77,94,438 ON GROSS BASIS. 2. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN HOLDING THAT THE FEE OF RS. 13,77,94,438 RECEIVE D BY THE APPELLANT FOR PROVIDING BUSINESS SUPPORT SERVIC ES TO UNITECH WIRELESS (TAMIL NADU) INDIA P. LTD. (HEREINAFTER REFERRED TO AS (UNITECH WIRELESS) WA S ITA NO. 1307/DEL/2015 TELENOR ASA 2 LIABLE TO TAX AS BUSINESS PROFIT UNDER ARTICLE 7 OF THE INDIA-NORWAY DOUBLE TAX AVOIDANCE AGREEMENT (THE TREATY) INSTEAD OF FEES FOR TECHNICAL SERVICES (FTS) UNDER ARTICLE 12, AS CONTENDED BY THE APPELLANT. 3. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN HOLDING THAT STAY OF EMPLOYEES OF THE APPELLANT IN INDIA DURING THE RELEVANT PREVIOUS YEAR RESULTED IN CONSTITUTION OF PERMANENT ESTABLISHMENT (PE) OF T HE APPELLANT IN INDIA UNDER ARTICLE 5(2)(1) OF THE TRE ATY AND THE INCOME ARISING TO THE APPELLANT FROM UNITEC H WIRELESS WAS EFFECTIVELY CONNECTED WITH SUCH ALLE GED PE. 3.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN AGGREGATING THE TIME SPENT BY APPELLANTS EMPLOYEES IN INDIA FOR RENDERING SERVICES UNDER EAC H SOF FOR THE PURPOSES OF THE DURATION THRESHOLD IN ARTICLE 5(2)(1) OF THE TREATY. 3.2 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN NOT APPRECIATING THAT EACH SERVICE ORDER FOR M (SOF) CONSTITUTED AN INDEPENDENT ACTIVITY/PROJECT , AND THE DURATION THRESHOLD IN ARTICLE 5(2)(1) OF TH E TREATY WAS REQUIRED TO BE TESTED WITH REFERENCE TO PRESENCE OF EMPLOYEES IN INDIA IN RELATION TO EACH SOF ON AN INDIVIDUAL BASIS. 3.3 WITHOUT PREJUDICE, THAT THE ASSESSING OFFICER E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT EVEN I F THE PRESENCE OF EMPLOYEES IN INDIA IN RESPECT OF SOFS O F SIMILAR NATURE ARE CLUBBED, EVEN THEN THE DURATION THRESHOLD PRESCRIBED IN ARTICLE 5(2)(2) OF THE TREA TY WAS NOT BREACHED. 4. THAT WITHOUT PREJUDICE, THE ASSESSING OFFICER ER RED ON FACTS AND IN LAW IN NOT APPRECIATING THAT FEES F OR TECHNICAL SERVICES RECEIVED BY THE APPELLANT FROM UNITECH WIRELESS WAS NOT EFFECTIVELY CONNECTED TO ANY PRE-EXISTING PE OF THE APPELLANT IN INDIA, ; IN TER MS OF ARTICLE 13(5) AND WAS THUS NOT LIABLE TO TAX UNDER ARTICLE 7 OF THE TREATY. ITA NO. 1307/DEL/2015 TELENOR ASA 3 5. WITHOUT PREJUDICE TO THE ABOVE, THAT THE ASSESSI NG OFFICER ERRED ON FACTS AND IN LAW IN COMPUTING THE PROFITS ATTRIBUTABLE TO THE ALLEGED PE OF THE APPEL LANT IN INDIA AT RS.8,26,76,663 WITHOUT ANY COGENT BASIS AND WITHOUT CONSIDERING THE PROVISIONS OF THE ACT. 5.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN ATTRIBUTING 100% OF THE FEE RECEIVED BY THE APPELLANT FROM UNITECH WIRELESS FOR THE SERVICES RENDERED BY APPELLANT DURING THE RELEVANT PREVIOUS YEAR, WITHOUT APPRECIATING THAT THE SERVICES WERE PARTLY RENDERED FROM NORWAY AND THEREFORE SUCH SERVICES ARE NOT EFFECTIVELY CONNECTED TO THE ALL EGED PE OF THE APPELLANT IN INDIA. 5.2 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN NOT APPRECIATING THAT EVEN IF IT IS ASSUMED THAT THE PRESENCE OF THE EMPLOYEES OF APPELLANT RESULTED IN PE OF THE APPELLANT IN INDIA, THE INCOME DERIVED FR OM SUCH ALLEGED PE WAS LIMITED TO THE EXTENT OF MARKUP OF 3.5% AGREED ON COSTS INCURRED IN RENDERING SUCH SERVICES AND THEREFORE INCOME TO THE EXTENT OF SUCH MARKUP ONLY SHOULD BE LIABLE TO TAX IN INDIA. 5.3 THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN HOLDING THAT THE MARKUP OF 3.5% ON COST, CHARGED BY THE APPELLANT TO UNITECH WIRELESS, WHICH WAS ACCEPTED BY TO BE AT ARMS LENGTH BY THE TRANSF ER PRICING OFFICER IN THE TRANSFER PRICING ASSESSMENT OF THE APPELLANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, CANNOT BE TAKEN INTO CONSIDERATION F OR DETERMINING THE INCOME ATTRIBUTABLE TO THE ALLEGED PE OF THE APPELLANT IN INDIA. 5.4. THAT WITHOUT PREJUDICE THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN NOT COMPUTING TAXABLE PROFIT OF THE APPELLANT ON THE BASIS OF GLOBAL OPER ATING PROFIT/(LOSS) RATIO OF THE APPELLANT. 6.THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT. ITA NO. 1307/DEL/2015 TELENOR ASA 4 3. THE ASSESSEE, A TAX RESIDENT OF NORWAY, ENTERED INTO BUSINESS SERVICE AGREEMENT (BSA), DATED 10.08.2010 WITH UNITECH WIRELESS (TAMIL NADU) INDIA P. LTD. EFFECTI VE FROM 01.04.2009. AS PER THE BSA, THE ASSESSEE PROVIDED S ERVICES UNDER INDEPENDENT SOFS TO UNITECH WIRELESS (UW). SU CH INCOME, AS PER THE ASSESSEE WAS IN THE NATURE OF F EE FOR TECHNICAL SERVICES (FTS) AND SO OFFERED TO TAX @10 % ON GROSS BASIS, RELYING ON ARTICLE 13 OF THE DTAA BETWEEN IN DIA AND NORWAY. 4. FOR THE PREVIOUS YEAR ENDED 31ST MARCH 2010, IN RESPONSE TO NOTICE ISSUED UNDER SECTION 142(1) OF THE INCOME -TAX ACT, 1961 THE ASSESSEE FILED RETURN OF INCOME ON 06.07.2 011, DECLARING INCOME OF RS. 13,77,94,438/-. 5. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS A PE IN INDIA IN TERMS OF ARTICLE 5(2)(1) OF THE TREATY ON THE FOLLOWING GROUNDS: (I) THE EMPLOYEES OF ASSESSEE HAVE STAYED IN INDIA FOR A PERIOD OF 260 DAYS, WHICH EXCEED THE THRESHOLD PROVIDED IN ITEM (1) TO PARAGRAPH (2) OF ARTICLE 5 OF THE TREATY; (II) THE CONSULTANCY SERVICES RENDERED BY VARIOUS E MPLOYEES ARE FOR THE SAME PROJECT, IN AS MUCH AS THE SOFS ARE IN ACCORDANCE WITH THE AGREEMENT AND ARE GOVERNED BY THE PROVISIO NS OF THE SAID AGREEMENT; (III) THE SOFS WERE IN NATURE OF JOB ORDERS WHERE T HE ACTIVITIES TO BE PERFORMED, ITS DETAILS AND PERSONS RENDERING SUCH SERVICES ITA NO. 1307/DEL/2015 TELENOR ASA 5 ARE MENTIONED AND THE CLAUSES OF THE SOFS BIND IT T O THE AGREEMENT ONLY; (IV) THE ARRANGEMENT OF RENDERING SERVICES AND PAYM ENT OF FEE WERE MADE IN ACCORDANCE WITH PARA 3 READ WITH PARA 4 OF THE AGREEMENT ONLY. ACCORDINGLY, IT WAS CONCLUDED THAT THE SOFS ARE NOT SEPARATE AGREEMENTS; (V) FEE RECEIVED FROM UNITECH WIRELESS (UW), WHICH WAS IN THE NATURE OF FEES FOR TECHNICAL SERVICES (FTS) WAS EFFECTIVELY CONNECTED WITH THE PE OF THE ASSESSEE AND IN TERMS OF ARTICLE 13(5), INCOME OF THE ASSESSEE WAS LIABLE TO BE TAXE D AS PER ARTICLE 7 OF THE TREATY READ WITH SECTION 44DA OF T HE ACT. 6. THE ASSESSING OFFICER, IN THE DRAFT ASSESSMENT O RDER, DATED 28.03.2014, PASSED UNDER SECTION 143(3)/144C(1) OF THE ACT, HELD THAT THE ASSESSEE HAS A PERMANENT ESTABLISHMEN T (PE) IN INDIA IN TERMS OF ARTICLE 5(2)(1) OF THE TREATY. TH E AO HELD THAT THE TIME SPENT BY EMPLOYEES OF THE ASSESSEE IN INDI A DURING THE RELEVANT YEAR, WHILE RENDERING SERVICES TO UNITECH WIRELESS, EXCEEDED THE THRESHOLD PROVIDED IN THAT ARTICLE AND HAS ATTRIBUTED 100% OF THE RECEIPTS TO THE PE OF THE AS SESSEE IN INDIA AND COMPUTED THE INCOME OF THE PE OF THE ASSE SSEE AT RS.8,26,76,663 IN RELATION TO THE SERVICE FEE RECEI VED FROM UNITECH WIRELESS AFTER ALLOWING DEDUCTION OF EXPENS ES @40%. 7. THE LD. DRP VIDE ORDER DATED 16.12.2014 GAVE DIR ECTIONS U/S 144C(5) OF THE INCOME TAX ACT, 1961 TO THE ASSE SSING OFFICER WHICH ARE AS UNDER: ITA NO. 1307/DEL/2015 TELENOR ASA 6 5.2 DRP HAS EXAMINED THE ASSESSMENT ORDER AND FIND S THAT THE ASSESSMENT ORDER ON PAGE 9 HAS CATEGORICALLY STATED THAT BILLING SCHEME SHOWS CONSOLIDATED INVOICES IRRESPECTIVE OF THE SOF UNDER WHICH SERVICES HAVE BEEN RENDERED. EVEN BEFORE DRP NO EVIDENCE HAS BEEN PLACED BY THE ASSESSEE TO CONTEST THIS FINDING OF FACT BY THE AO. .... WHILE AO HAS CONSIDERED BUSINESS SERVICE AGREE MENT UNDER WHICH VARIOUS SOFS HAVE BEEN OPERATED AS A SINGLE PROJECT LIABLE TO TAX AS PER DTAA, THE ASSESSEE HAS CONSIDERED EACH SOF INDE PENDENTLY FOR TAX PURPOSES. 5.2.2 DRP HAS EXAMINED ARTICLE 5 OF DTAA WITH NORWA Y AND FINDS THAT SECTION 2(1) CLEARLY DEFINES PE WITH REFERENCE TO S AME OR CONNECTED PROJECT. IN THE CIRCUMSTANCES SOF CANNOT BE CONSIDE RED INDIVIDUALLY BUT MUST BE AGGREGATED AS HAS BEEN DONE BY THE AO. 5.2.3 THUS THERE IS NO INFIRMITY IN THE ORDER OF AO . CONSEQUENTLY IN VIEW OF THE ABOVE DISCUSSION DRP FINDS NO GROUND TO INTERFERE WITH THE ORDER OF THE AO AND THE OBJECTION IS REJECTED B Y THE DRP. 8. THUS, WE FIND THAT THE LD. DRP HELD THE ASSESSEE TO BE HAVING A PE IN INDIA BASED ON THE BILLINGS SCHEME S HOWING CONSOLIDATED INVOICES AND VARIOUS SOF HAVE BEEN OPE RATED AS A SINGLE PROJECT. 9. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE US AN D ARGUED THAT THE ASSESSEE CANNOT BE CONSIDERED AS A PE, REF ERRING TO VARIOUS PROVISIONS OF THE TREATY. THE LD. AR ARGUED THAT ARTICLE 5 OF THE TREATY DEFINES PE TO MEAN A FIXED PLACE OF B USINESS THROUGH WHICH THE BUSINESS OF AN ENTERPRISE IS WHOL LY OR PARTLY CARRIED ON. HE REFERRED TO PARAGRAPH 2 OF ARTICLE 5 OF THE DTAA WHICH PROVIDES ILLUSTRATIVE SITUATIONS, THAT COULD RESULT IN PE OF AN ENTERPRISE IN THE OTHER CONTRACTING STATE. THE R ELEVANT PROVISIONS RELIED ARE AS UNDER: ITA NO. 1307/DEL/2015 TELENOR ASA 7 ARTICLE 5: PERMANENT ESTABLISHMENT -1. FOR THE PUR POSES OF THIS CONVENTION, THE TERM 'PERMANENT ESTABLISHMENT' MEAN S A FIXED PLACE OF BUSINESS THROUGH WHICH THE BUSINESS OF AN ENTERP RISE IS WHOLLY OR PARTLY CARRIED ON. 2. THE TERM 'PERMANENT ESTABLISHMENT' INCLUDES ESPE CIALLY: .. (I) THE FURNISHING OF SERVICES, INCLUDING CONSULTAN CY SERVICES, BY AN ENTERPRISE THROUGH EMPLOYEES OR OTHER PERSONNEL ENG AGED BY THE ENTERPRISE FOR SUCH PURPOSE, BUT ONLY WHERE ACTIVIT IES OF THAT NATURE CONTINUE (FOR THE SAME OR A CONNECTED PROJECT) WITH IN THE COUNTRY FOR A PERIOD OR PERIODS AGGREGATING TO MORE THAN SIX MO NTHS WITHIN ANY 12-MONTHS PERIOD. CLAUSE (1) OF PARAGRAPH (2) OF ARTICLE 5 OF THE TRE ATY PROVIDES THAT AN ENTERPRISE SHALL BE DEEMED TO HAVE A PE IN A CON TRACTING STATE IF IT FURNISHES SERVICES (INCLUDING CONSULTANCY SERVIC ES), THROUGH EMPLOYEES, FOR ACTIVITIES THAT CONTINUE (FOR THE SAME OR CONNE CTED PROJECT) FOR A PERIOD OR PERIODS EXCEEDING 6 MONTHS IN ANY 12 MONTHS PERIOD IN THAT CONTRACTING STATE. 10. QUOTING THE RATIONALE GIVEN BY THE ASSESSING OF FICER, THE LD. AR ARGUED THAT THE WORDS SAME OR CONNECTED P ROJECTS SHOULD BE INTERPRETED FROM THE PROSPECTIVE OF THE S ERVICE PROVIDER AS CLARIFIED IN MODEL TAX CONVENTION ON IN COME AND ON CAPITAL. THE RELEVANT PART OF THE MODEL TAX CONVENT ION RELIED UPON BY THE LD. AR IS AS UNDER: 161. THE REFERENCE TO AN ENTERPRISE ... PERFORMIN G THESE SERVICES FOR THE SAME PROJECT SHOULD BE INTERPRETED FROM T HE PERSPECTIVE OF THE ENTERPRISE THAT PROVIDES THE SERVICES. THUS, AN ENTERPRISE MAY ITA NO. 1307/DEL/2015 TELENOR ASA 8 HAVE TWO DIFFERENT PROJECTS TO PROVIDE SERVICES TO A SINGLE CUSTOMER (E.G. TO PROVIDE TAX ADVICE AND TO PROVIDE TRAINING IN AN AREA UNRELATED TO TAX) AND WHILST THESE MAY BE RELATED T O A SINGLE PROJECT OF THE CUSTOMER, ONE SHOULD NOT CONSIDER THAT THE S ERVICES ARE PERFORMED FOR THE SAME PROJECT. 11. THE LD. AR ARGUED THAT THE DURATION OF STAY OF THE EMPLOYEES OF THE ASSESSEE IN INDIA, DURING THE RELE VANT PREVIOUS YEAR, WITH RESPECT TO THE VARIOUS PROJECTS UNDERTAKEN BY IT, WHICH ARE INDEPENDENT OF EACH OTHER, DOES NO T EXCEED SIX MONTHS PER PROJECT. THE SAMPLE CALCULATION OF THE N UMBER OF DAYS SPENT BY THE ASSESSEES EMPLOYEES ON EACH PROJECT WAS AS UNDER: STATEMENT OF FORM 1 NAME OF THE EMPLOYEE DATE OF ARRIVAL DATE OF DEPARTURE REMARKS DAYS TALMOEB, IVAR 16-MAR-09 31-MAR-09 OUT OF COVERAGE - RASMUSSEN, GRETHELINN 16-MAR-09 3-APR-09 SOBY, LARS CHRISTIAN 25-MAR-09 2-APR-09 MOE, OYVIND SOLBERG 25-MAR-09 2-APR-09 NYBORG, ESPEN 29-MAR-09 3-APR-09 REVHAUG, JON OMUND 30-MAR-09 4-APR-09 FALKGARD, KRISTIAN 14-APR-09 18-APR-09 APRIL 1-4 APRIL 14-30 REVHAUG, JON OMUND 14-APR-09 18-APR-09 20 WELLESEN, ASBJORN BJORNSTAD 14-APR-09 27-APR-09 MOE OYVIND SOLBERG 14-APR-09 29-APR-09 LINDSETH, BJORN 14-APR-09 30-APR-09 SOBY, LARS CHRISTIAN 16-APR-09 29-APR-09 TALMOEN, IVAR 20-APR-09 25-APR-09 REVHAUG, JON OMUND 26 - APR - 09 KMAY - 09 TALMOEN, IVAR 3-MAY-09 14-MAY-09 NYBORG, ESPEN 6-MAY-09 16-MAY-09 MOE, OYVIND SOLBERG 11-MAY-09 15-MAY-09 REVHAUG, JON OMUND 11-MAY-09 15-MAY-09 MAY 1 ITA NO. 1307/DEL/2015 TELENOR ASA 9 MOE, QYVIND SOLBERG 20-MAY-09 29-MAY-09 MAY 3-16 25 TALMOEN, IVAR 24-MAY-09 5-JUN-09 MAY 20-31 REVHAUG, JON OMUND 25-MAY-09 29-MAY-09 SOBY, LARS CHRISTIAN 25-MAY-09 4-JUN-09 NYBORG, ESPEN 27-MAY-09 5-JUN-09 LINDSETH, BJARN 2-JUN-09 24-JUN-09 NYBORG, ESPEN 8-JUN-09 23-JUN-09 JUNE 1-27 JUNE 29-30 MOE, OYVIND SOLBERG 19-JUN-09 23-JUN-09 28 TALMOEN, IVAR 15-JUN-09 26-JUN-09 REVHAUG, JON OMUND 22-JUN-09 27-JUN-09 NORDHAGEN, KJELL SIGURD 29-JUN-09 8-JUL-09 JULY 1-8 8 TORGERSEN, TORGEIR 4-AUG-09 22-AUG-09 AUG 4-22 18 TORGERSEN, TORGEIR 1-SEP-09 19-SEP-09 SEPT 1-19 18 TOTAL 117 STATEMENT OF FORM 2 NAME OF THE EMPLOYEE DATE OF ARRIVAL DATE OF DEPARTURE REMARKS DAYS REITAN, EVEN 19-JAN-09 29-JAN-09 OUT OF COVERAGE - TALMOEN, IVAR 16-MAR-09 31-MAR-09 OUT OF COVERAGE BJONNESS, FLALVOR A. 30-MAR-09 3-APR-09 LYCHE, INGVALD 1-APR-09 6-APR-0 9 APRIL 1-6 APRIL 20-30 16 TALMOEN, IVAR 20-APR-09 25-APR-09 BJONNESS, FLALVOR A. 20-APR-09 30-APR-09 OMTVEIT, OLAV HAUGE 21-APR-09 30-APR-09 TALMOEN, IVAR 3-MAY-09 14-MAY-09 LANDERGREN, ANDERS 3-MAY-09 16-MAY-09 CLAUSEN, STEINAR CONRADI 4-MAY-09 14-MAY-09 MAY 3-16 MAY 18-31 26 OMTVEIT, OLAV HAUGE 4-MAY-09 15-MAY-09 BJONNESS, HALVOR A. 4-MAY-09 15-MAY-09 CLAUSEN, STEINAR CONRADI 18-MAY-09 28-MAY-09 OMTVEIT, OLAV HAUGE 24-MAY-09 29-MAY-09 TALMOEN, IVAR 24-MAY-09 5-JUN-09 BJONNESS, FLALVOR A. 24-MAY-09 7-JUN-09 LANDERGREN, ANDERS 25-MAY-09 6-JUN-09 ITA NO. 1307/DEL/2015 TELENOR ASA 10 WENDT, LARS 2 8-MAY-0 9 20-JUN-09 JUNE 1-27 28 OMTVEIT, OLAV HAUGE 7-JUN-09 13-JUN-09 JUNE 29-30 CLAUSEN, STEINAR CONRADI 14-JUN-09 26-JUN-09 _ LANDERGREN, ANDERS 14-JUN-09 27-JUN-09 TALMOEN, IVAR 15-JUN-09 26-JUN-09 WENDT, LARS 29-JUN-09 17-JUL-09 JULY 1-17 17 CLAUSEN, STEINAR CONRADI 3-AUG-09 8-AUG-09 AUG 3-14 AUG 16-21 AUG 26-31 21 WENDT, LARS 3-AUG-09 14-AUG-09 FODSTAD, GEIR 16-AUG-09 21-AUG-09 WENDT, LARS 26-AUG-09 4-SEP-09 WENDT, LARS 21-SEP-09 2-OCT-09 SEPT 1-4 SEPT 21-30 13 WENDT, LARS 12-OCT-09 21-OCT-09 OCT 1-2, 12-21 11 TOTAL 132 DETAIL OF SERVICE ORDER FORM (SOF) SOF NO. NATURE OF ACTIVITY PAGE NO. OF PAPER BOOK DETAILS OF SERVICES PROVIDED COPY OF SOF DETAILS OF DAYS SPENT IN INDIA DETAILS OF DAYS SPENT IN INDIA - CLUBBED 1 SOURCING ACTIVITIES 152 158 137 179-180 10 SOURCING ACTIVITIES 154 169 144 15 SOURCING ACTIVITIES 155 174 149 2 MARKET ACTIVITIES 152-153 159 138 181 11 MARKET ACTIVITIES 154 170 145 16 MARKET ACTIVITIES 155 175 150 3 IT/ IS ACTIVITIES 153 160 139 92 OF CL PB 4 IT/ IS ACTIVITIES 153 161 140 7 IT/ IS ACTIVITIES 154 166 142 12 IT/ IS ACTIVITIES 154 171 146 17 IT/ IS ACTIVITIES 155 176 - 6 HR ACTIVITIES 153 163-165 141 182 18 HR ACTIVITIES 155 177 - 5 OTHER CONTRACTS 153 162 - - 8 OTHER CONTRACTS 154 167 143 - 9 OTHER CONTRACTS 154 168 - - 13 OTHER CONTRACTS 155 172 147 - ITA NO. 1307/DEL/2015 TELENOR ASA 11 14 OTHER CONTRACTS - 173 148 - 19 OTHER CONTRACTS 155 178 151 - 12. THE LD. AR FURTHER ARGUED THAT THE VARIOUS SOFS CONSTITUTE SEPARATE PROJECTS AND THE ACTIVITIES AND CANNOT BE TREATED AS SINGLE CONSOLIDATED ACTIVITIES. HE ARGUED THAT THREE TYPES OF SERVICES SPECIFIED IN THE AGREEMENT ARE INDEPENDENT OF EACH OTHER AND ARE MERELY GOVERNED BY THE TERMS AND CONDITIONS PRESCRIBED IN THE AGREEMENT. REFERRING TO THE VARIO US SERVICES SPECIFIED IN VARIOUS SOFS, THE LD. AR ARGUED THAT MERE MENTION OF VARYING SERVICES IN A COMMON AGREEMENT IS NOT A VALID GROUND TO TREAT ALL THE SERVICES AS ONE CONSOLIDATE D PROJECT. HE ARGUED THAT THE SEPARATE PROJECTS AND SOFS ARE GOVE RNED BY UNIFORM TERMS AND CONDITIONS AGREED BETWEEN THE PAR TIES DOESNT TAKE AWAY THE SEPARATE AND INDIVIDUAL NATUR E OF THE SERVICES RENDERED. THERE ARE DIFFERENT SERVICES LIKE MARKETING ACTIVITIES AND SOURCING ACTIVITIES WHICH ARE UNDERT AKEN BY THE DIFFERENT DEPARTMENTS AND CANNOT BE CLUBBED TOGETHE R AS AN INTEGRATED PROJECT BUT SHOULD BE TREATED AS SEPARAT E AND INDEPENDENT ACTIVITIES. HE ARGUED THAT THE PERFORMANCE OF SERVICES RENDERED UNDER AN SOF IS NOT DEPENDENT OR LINKED WITH PERFORMANCE OF SERVICES UNDER OTHER SOFS IN ANY MAN NER. IT WAS ARGUED THAT THERE IS NO INTERCONNECTION OR INTERLACING WITH OTHER SOF AND THEREFORE THE PERIOD OF STAY OF EMPLOYEES UNDER DIFFERENT AND SEPARATE SOFS CANNOT BE AGGREGATED TO DETERMINE THE PERIOD OF STAY FOR THE PURPOSE OF ARTICLE 5(2)( 1) OF THE TREATY. THE VARIOUS FUNCTIONS SUCH AS HR AND MARKETING SHOULD BE TREATED AS SEPARATE PROJECTS BUT CANNOT BE AGGRE GATED TO DETERMINE THE PERIOD OF STAY FOR THE PURPOSE OF DU RATION TEST UNDER ARTICLE 5(2)(1) OF THE TREATY. ITA NO. 1307/DEL/2015 TELENOR ASA 12 13. THE LD. AR FURTHER ARGUED THAT SINCE NO PE OF T HE ASSESSEE EXISTED IN INDIA, PRIOR TO THE VISIT OF PERSONNEL O F ASSESSEE TO INDIA, WHICH HAS BEEN ALLEGED BY THE ASSESSING OFFI CER, AS RESULTING IN CONSTITUTION OF PE OF ASSESSEE IN INDI A, THE AFORESAID FTS CANNOT BE SAID TO BE EFFECTIVELY CON NECTED TO ANY PRE-EXISTING PE AND HENCE THE PROVISIONS OF PAR AGRAPH 5 OF ARTICLE 13 HAVE NO APPLICATION. IN FACT, THE YEAR U NDER CONSIDERATION IS THE FIRST YEAR OF OPERATION OF THE ASSESSEE IN INDIA. CONSEQUENTLY, SUBJECT PAYMENTS ARE TAXABLE @10% ONLY, IN TERMS OF ARTICLE 13(2) OF THE TREATY . 14. ON THE OTHER HAND, THE LD. DR VEHEMENTLY ARGUED THAT THE ARTICLE 5(2)(1) DOESNT DISTINGUISH BETWEEN SAME OR SIMILAR TYPE OF SERVICES. HE ARGUED THAT IT IS AN INCLUSIVE DEFI NITION OF SERVICES AND MANDATES THAT THE SERVICES INCLUDING C ONSULTANCY SERVICES OF THE SAME ARE TO BE TREATED AS CONNECTED PROJECTS. THE ARGUMENTS OF THE LD. DR IN WRITING ARE AS UNDER : 4. THE APPELLANT HAS CHALLENGED THE AO'S ADDITION BASED ON THE GROUND THAT, A) THAT SERVICES SPECIFIED IN VARIOUS SOFS CONSTITU TED SEPARATE PROJECTS. IT IS SUBMITTED THAT SERVICES GOVERNED BY UNIFORM TERMS AND CONDITIONS AGREED BETWEEN THE PARTIES AND MERE MENTION OF THE VARYING SERVICES IN A COMMON AGREEMENT, DOES NOT MA KE IT ONE CONSOLIDATED PROJECT. B) FURTHER, THE APPELLANT SUBMITTED THAT DIFFERENT SERVICES UNDER SOFS FOR MARKETING ACTIVITIES HAVE BEEN PROVIDED BY DIFFERENT DEPARTMENTS WITH DIFFERENT AREA OF EXPERTISE. SIMIL ARLY, THE SERVICES RELATED TO SOURCING ACTIVITIES HAVE BEEN BY DIFFERE NT DEPARTMENTS. ITA NO. 1307/DEL/2015 TELENOR ASA 13 THUS, IT IS SUBMITTED THAT EACH SOF, AND IN SOME CA SES, EACH SERVICE UNDER A SOF, IS SEPARATE AND INDEPENDENT. C) THE SERVICES RENDERED UNDER EACH SOF ARE UNIQUE. D) THE APPELLANT SUBMITTED THAT THE WORDS SAME' OR CONNECTED PROJECTS' IN THE CLAUSE ARTICLE 5(2)(I) SHOULD BE I NTERPRETED FROM THE PROSPECTIVE OF THE SERVICE PROVIDER AS CLARIFIED IN MODEL TAX CONVENTION OF INCOME AND ON CAPITAL: CONDENSED VERS ION 2017 AS FOLLOWS: 161. THE REFERENCE TO AN ENTERPRISE ... PERFORMIN G THESE SERVICES FOR THE SAME PROJECT SHOULD BE INTERPRETED FROM T HE PERSPECTIVE OF THE ENTERPRISE THAT PROVIDES THE SERVICES. THUS, AN ENTERPRISE MAY HAVE TWO DIFFERENT PROJECTS TO PROVIDE SERVICES TO A SINGLE CUSTOMER (E.G. TO PROVIDE TAX ADVICE AND TO PROVIDE TRAINING IN AN AREA UNRELATED TO TAX) AND WHILST THESE MAY BE RELATED T O A SINGLE PROJECT OF THE CUSTOMER, ONE SHOULD NOT CONSIDER THAT THE S ERVICES ARE PERFORMED FOR THE SAME PROJECT. E) INTIMATION IS REQUIRED TO GIVEN FOR SERVICES AG REED THROUGH EACH SOF TO THE AUDIT COMMITTEE. F) DURING THE YEAR UNDER CONSIDERATION, APPENDIX A WAS NOT IN FORCE AND SERVICES AGREED IN APPENDIX 1 WERE ALSO N OT RENDERED. ONLY THE SERVICES AGREED VIDE SEPARATE SOFS WERE RENDERE D BY THE APPELLANT. IN CASE SUCH SERVICES HAD ANY CONNECTION WITH THE MAIN AGREEMENT, THEN SERVICES AGREED IN APPENDIX A AND A PPENDIX 1 WOULD ALSO HAVE BEEN RENDERED. G) EACH REQUISITION OF EMPLOYEES FOR WHICH SEPARATE SOF WAS PLACED HAD NO INTER CONNECTION/INTER LACING WITH THE OTHER SOF ISSUED BY THE APPELLANT AND, THEREFORE, THE PERIOD OF STAY OF EMP LOYEES UNDER DIFFERENT AND SEPARATE SOFS COULD NOT BE AGGREGATED TO DETERMINE THE PERIOD OF STAY FOR PURPOSES OF ARTICLE 5(2)(I) OF THE TREATY. ITA NO. 1307/DEL/2015 TELENOR ASA 14 H) UNLESS THERE IS COMMERCIAL COHERENCE BETWEEN THE SAID ACTIVITIES, THE DURATION TEST OF SIX MONTHS HAS TO BE APPLIED W ITH REFERENCE TO EACH ACTIVITY. I) FOR CONSTITUTING A SERVICE PE IN TERMS OF ARTICL E 5(2)(I) OF THE TREATY, FURNISHING OF SERVICES INVOLVING ACTIVITIES OFF THAT NATURE SHOULD CONTINUE FOR A PERIOD EXCEEDING SIX MONTHS. USE OF THE WORDS ACTIVITIES OF THAT NATURE IN THE SAID ARTICLE WOUL D MEAN THAT SERVICES OF THE SAME NATURE SHOULD BE RENDERED FOR PERIOD EX CEEDING SIX MONTHS SO AS TO CONSTITUTE A SERVICE PE. J) AT BEST, ACTIVITIES OF THE SAME NATURE COULD ONL Y BE AGGREGATED. ACCORDINGLY, IT WOULD BE APPRECIATED, AT BEST THE S OFS LISTED BELOW UNDER EACH ACTIVITY HEAD, VIZ., (I) SOURCING ACTIVI TIES, (II) MARKET ACTIVITIES, (III) INFORMATION TECHNOLOGY/INFORMATIO N SYSTEM (IT/IS) ACTIVITIES AND (IV) HR ACTIVITIES, MAY BE CONSIDERE D AS PART OF THE SAME ACTIVITY OR PROJECT AND EVEN THEN THE NUMBER O F DAYS SPENT IN INDIA IN AGGREGATE DURING THE RELEVANT YEAR UNDER E ACH SUCH ACTIVITY/CONTRACT DO NOT EXCEED THE TIME THRESHOLD PRESCRIBED IN ARTICLE 5(2)(I) OF THE TREATY. K) IN PARAGRAPH 5 OF ARTICLE 13 OF THE TREATY IMPLI ES THAT THE PERMANENT ESTABLISHMENT OF A FOREIGN ENTERPRISE MUS T FIRST BE EXISTING OR SITUATED IN THE OTHER CONTRACTING STATE , AND THE EARNING OF FEES FOR TECHNICAL SERVICES MUST BE EFFECTIVELY CONNECTED WITH SUCH EXISTING PE. RELIANCE IS PLACED, IN THIS REGARD, ON THE DECISION OFF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GUARDIAN INTERNATIONAL CORPORATION: ITA NO. 101(DEL) 97. L) IN TERMS OF PARAGRAPH (1) OF ARTICLE 7 OF THE TR EATY, EVEN IF A NORWEGIAN ENTERPRISE CARRIES ON BUSINESS THROUGH A PE IN INDIA, ONLY THOSE PROFITS WHICH ARE ATTRIBUTABLE TO THAT PE CAN BE BROUGHT TO TAX IN INDIA. ITA NO. 1307/DEL/2015 TELENOR ASA 15 M) THE APPELLANT CLARIFIED THAT THE SERVICES WERE P ARTLY RENDERED FROM INDIA AND PARTLY FROM NORWAY THROUGH PHONE, EM AILS, ETC. FOR WORK PERFORMED OUTSIDE INDIA, NO PROFIT CAN BE TAXE D IN INDIA, WHETHER OR NOT AN APPELLANT HAS A PE IN INDIA. N) ONLY THE MARKUP OF 3.5% OVER COST CAN BE BROUGHT TO TAX IN INDIA AS INCOME OF THE ALLEGED PE AND NOT THE GROSS RECEI PTS. SINCE THE APPELLANT HAS INCURRED LOSS DURING THE FINANCIAL YE AR 2009-10, THERE IS NO INCOME ATTRIBUTABLE TO THE ALLEGED PERMANENT ESTABLISHMENT IN INDIA ON THE ABOVE BASIS. 5. WITH REFERENCE TO THE ABOVE ARGUMENTS OF THE APP ELLANT, AT THE OUTSET, IT MAY BE RELEVANT TO TAKE NOTE OF THE FACT S OFF THE PRESENT CASE IN RESPECT OF BUSINESS SERVICE AGREEMENT AND S OFS (SERVICE ORDER FORM). 6. IT IS NOTED THAT UNINOR HAS BEEN ISSUED UNITED A CCESS SERVICE LICENSES BY THE DEPARTMENT OF TELECOMMUNICATION TO PROVIDE TELECOMMUNICATION SERVICES AND THE APPELLANT HAS BE EN ENGAGED BY UNINOR AS A SERVICE PROVIDER TO EFFICIENTLY PROVIDE THE SERVICES. THIS IS THE CONTEST RECORDED IN THE BUSINESS SERVICE AGR EEMENT. FURTHER, THE AGREEMENT ITSELF DEFINES THAT APPENDIXES AND SE RVICE ORDER FORMS UNDER THE AGREEMENT SHALL BE DEEMED TO BE READ AS A N INTEGRAL PART OF THE AGREEMENT. (REFER PAGE 2 OF THE AGREEMENT). FURTHER, CLAUSE 4.4 OF THE BUSINESS SERVICE AGREEMENT PROVIDES THAT THE SERVICE CHARGE SHALL BE INVOICED QUARTERLY AND IT SPECIFIES THAT DIRECT CHARGE OF BUSINESS SERVICE SHOULD BE USED UNLESS THE BASIS FOR SEPARATE CHARGE IS DEMONSTRATED. IT IS OBSERVED BY DRP THAT THE INVOICE IS RAISED QUARTER WISE WITHOUT MAKING ANY DISTINCTION SOF WISE. 7. THE MOST RELEVANT ISSUE IN THIS CASE IS THAT WHE THER ARTICLE 5(2)(I) MANDATES THE SERVICES OF ONLY SIMILAR TYPE TO BE AG GREGATED TO ARRIVE AT THRESHOLD PERIOD OF 183 DAYS OR THE SERVICES OF THE SAME OR ITA NO. 1307/DEL/2015 TELENOR ASA 16 CONNECTED PROJECTS TO BE AGGREGATED? THE APPELLANT POSITION IS THAT THE SERVICES ACTIVITY PERIOD CAN BE AGGREGATED ONLY IF THE SERVICES ARE OF SAME NATURE. HOWEVER, IT IS IMPORTANT TO NOT E THAT THE TREATY HAS USED TWO DIFFERENT TERMS SERVICES AND PROJEC T. THIS MEANS THAT THE PROJECT IS DISTINCT FROM SERVICE. AS REG ARDS DEFINITION OF PROJECT, IT IS AN ACCEPTED POSITION THAT THE PROJ ECT IS A COLLECTION OF ACTIVITIES THAT ENVISAGES BUNDLE OF SERVICES OR BOU QUET OF SERVICES. THE PROJECT IS, THUS, A BUNDLE OF INTERCONNECTED AN D INTERRELATED SERVICES WITH UNDERLYING THEME OF COMPLETION OF PRO JECT AT HAND. THUS, THE TERM PROJECT AND SERVICES ARE DISTINC T. THE CLAUSE ARTICLE 5(2)(I) NOT ONLY COVERS SERVICES IN A PARTI CULAR PROJECT BUT ALSO CONNECTED PROJECTS. THUS, THE PLAIN READING OF THE ARTICLE 5(2)(I) HIGHLIGHTS THAT THE SCOPE OF SERVICES COVERED UNDER THE CLAUSE ARE NOT LIMITED TO ONE PROJECT BUT ALSO TO CONNECTED PR OJECT. THUS, THAT THE SERVICES, SIMILAR OR NOT, BUT OF THE SAME PROJE CT AND CONNECTED PROJECT NEED TO BE AGGREGATED TO CHECK THE TOTAL DU RATION OF THE ACTIVITY. 8. COMING TO THE OECD COMMENTARY ON THE EXPLANATION TOWARDS SAME OR CONNECTED PROJECTS IN THE CLAUSE ARTICL E 5(2)(I), IT IS CLARIFIED THAT THE EXPLANATION IS TOWARDS THE SAME OR CONNECTED PROJECT AND NOT SERVICES PER SE. FURTHER, THE EXAMP LE TAKEN IN THIS INTERPRETATION ONLY CLARIFIES THAT IF THERE ARE TWO DIFFERENT PROJECTS OF A SERVICE PROVIDER PERTAIN TO ONE PROJECT OF A PART ICULAR CUSTOMER, THEN SUCH UNCONNECTED PROJECTS WOULD NOT BE TAKEN A S SAME OR CONNECTED MERELY BECAUSE OF ONE CUSTOMER. SO, IT PR OVIDES THAT MERELY THE SERVICE IS TOWARDS UNINOR GROUP WILL NOT MAKE IT SIMILAR PROJECT. HOWEVER, IN THE PRESENT CASE, IT IS ONLY A SINGLE PROJECT EVEN AT THE END OF THE SERVICE PROVIDER WHICH HAS BEEN E NTERED THROUGH SINGLE BUSINESS SERVICE AGREEMENT AND SINGLE INVOIC E HAS BEEN RAISED ACROSS SERVICES OFF THE SAME PROJECT. THUS, THE AFO RESAID EXPLANATION OF OECD IS LIMITED TO TWO DIFFERENT PROJECTS WITH D ISTINCT SERVICE ITA NO. 1307/DEL/2015 TELENOR ASA 17 PROJECT WISE. IT DOES NOT DEAL WITH THE POSITION WH ERE IT IS A CASE OF SINGLE PROJECT WITH A BOUQET OF INTERCONNECTED SERV ICES. 9. FURTHER, LOOKING INTO VARIOUS SOFS, IT IS IMPORT ANT TO APPRECIATE THAT ALL SOFS ARE INTERLACED. ONCE CANNOT START SOF OF MARKETING TILL SOF OF SOURCING IS COMPLETE. SIMILARLY, THE SOF OF IT/IS ACTIVITY CANNOT BE INITIATED TILL SOF OF MARKETING IS OVER. ONE SOF IS THE FEEDER FOR OTHER SOF AND SO ON. 10. THIS IS EVIDENT FROM THE PERUSAL OF THE DESCRIP TION OF SOF. SOURCING ACTIVITY SOF PROVIDES FOR PREPARATION, EXE CUTION AND NEGOTIATION OF 2ND ROUND OF GSM AWARDS. ALL OTHER S OFS ARE WORKING TOWARDS THE NEXT STAGES OF SAME GSM PROJECT. THE SO URCING ACTIVITY SOF TALKS OF PREPARATION, EXECUTION AND NEGOTIATION OF IT OUTSOURCING CONTRACT AND THE MARKETING ACTIVITY SOF TALKS OF PR OCESS DESCRIPTION OF THE SAME IT PROJECT AND ALSO ABOUT IT PROCUREMEN T. FURTHER, IT/IS ACTIVITY SOF ALSO TALKS OF IT SOLUTION ARCHITECTURE AND IT SOLUTION SCOPING. THE NETWORK AND IS/IT ACTIVITY SOF TALKS O F BENCHMARKING FOR IT OUTSOURCING PROJECTS AND ITS EVALUATION. THE REAFTER, PROJECT OFFICE ACTIVITY SOF PROVIDES FOR SUPPORT AND ASSIST S IN COMPLETING CONTRACT FOR THE GSM NETWORK AND IT SUPPORT SYSTEMS . FURTHERMORE, WITH SAME THEME OF END TO END WORKING ON GSM PROJEC T AND IS/IT OUTSOURCING, THERE IS SOF ON BOARDING AND TRAINING, HR AND WORKSHOP ON REGULATORY ISSUES. EFFECTIVELY, IT IS SEEN THAT ALL SOFS ARE WELL INTEGRATED WHERE ONE SOF IS THE INPUT FOR THE SUBSE QUENT SOF FOR EXAMPLE, SOURCING SOF PROVIDES FOR FIRST PHASE OF P REPARATION AND EXECUTION OF CONTRACT AND MARKETING PHASE PROVIDES FOR NEXT PHASE I.E. DESCRIBING THE PROCESS PART OF THE CONTRACT AN D PROCUREMENT. IT/IS PHASE IS THE NEXT PHASE WHERE THE SOLUTION IS DESIGNED AND SO ON. 11. IT IS ALSO IMPORTANT TO HIGHLIGHT THAT THE ARTI CLE 5(2)(I) NOWHERE TALKS OF SAME OR SIMILAR TYPE OF SERVICES. IT ONLY MANDATES THE SERVICES INCLUDING CONSULTANCY SERVICES OF THE SAME OR CONNECTED ITA NO. 1307/DEL/2015 TELENOR ASA 18 PROJECT. FIRST, IT IS INCLUSIVE DEFINITION OF SERVI CES. IN THE PRESENT CASE, THE SERVICE PROVIDER HAS WORKED ON ONLY ONE P ROJECT WHICH HAS VARIOUS INTERLACED PHASES SPANNING OVER SOURCING, M ARKETING ETC. 12. IT MAY BE RELEVANT TO ADD THAT ANY PROJECT IS B OUND TO HAVE VARIOUS VERTICALS TO ENSURE THE END TO END COMPLETI ON OF PROJECT. FOR EXAMPLE ANY ORGANIZATION OR PROJECT WILL BE MIX OF PEOPLE, PROCESSES AND TECHNOLOGY AND ALL THREE ARE WELL INTEGRATED TO FINALLY SHAPEUP THE PROJECT/ORGANIZATION. THUS, ONE CANNOT TAKE A P LEA THAT HR SERVICES TOWARDS PEOPLE FUNCTIONS ARE DIFFERENT FRO M PROCESS FUNCTIONS EVEN IT THE SAME ARE FOR THE SAME PROJECT . 13. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE FACTS OF THE PRESENT CASE CLEARLY FIT INTO ARTICLE 5(2)(I) OF IN DIA NORWAY DTAA. THUS, IT IS PRAYED TO UPHOLD THE ACTION OF THE AO T O HOLD IT A CASE OF SERVICE PE. AS REGARDS THE ACTION OF THE AO IN ALLO WING EXPENSES TO THE TUNE OF 40% OF THE RECEIPTS IN ACCORDANCE WITH RULE 10, THE APPELLANT ARGUED TO APPLY MARK UP OF 3.5% ON COST WHICH TRANSLATES TO 3.38% OF REVENUE. THE DRP DEALT WITH THIS PLEA O F THE APPELLANT IN ITS ORDER. IT IS HIGHLIGHTED BY DRP THAT THE ACTION OF THE AO IS CORRECT IN VIEW OF THE FACT THAT NO DOCUMENTARY EVIDENCE WA S SUBMITTED IN RESPECT OF INCURRING OF EXPENDITURE. SINCE, THE COS T IN THIS CASE IS MAINLY ON ACCOUNT OF SALARY EXPENSES OF RESOURCES W ORKING ON DELIVERY OF SERVICES, THEREFORE, THE APPELLANT OUGH T TO HAVE SUBMITTED EVIDENCE REGARDING PAYMENT OF SALARY TO S UCH RESOURCES DURING ASSESSMENT PROCEEDINGS. THE CLAIM OF MARK UP OF 3.5% ON COST AS PER THE APPELLANT HAS TO BE DEMONSTRATED. O THERWISE ONE ESTIMATE OF THE AO (40% OF REVENUE=EXPENSES) CANNOT BE REPLACED BY ANOTHER ESTIMATE OF THE APPELLANT (3.5% MARK UP) . IN ABSENCE OF THE COST DETAILS WITH DOCUMENTARY EVIDENCE IN RESPE CT OF THE SERVICES CONDUCTED IN THIS CASE, THE ACTION OF THE AO TO EST IMATE EXPENSES AT 40% OFF THE REVENUE IS APPROPRIATE. ITA NO. 1307/DEL/2015 TELENOR ASA 19 14. AS REGARDS, RELIANCE ON DECISION OF ITAT IN THE CASE OF GUARDIAN INTERNATIONAL CORPORATION, THE SAME IS DISTINGUISHA BLE AS THE UNDERLYING DTAA IN CITED CASE IS OF INDIA USA WHICH IS DIFFERENT FROM INDIA NORWAY DTAA PARTICULARLY IN RESPECT OF ARTICL E 5(2)(I). 15. REBUTTING THE ARGUMENTS OF THE LD. REVENUE REPR ESENTATIVE, IT WAS ARGUED THAT THE SOFS FORM INTEGRAL PART OF T HE BUSINESS SERVICE AGREEMENT HAS NEVER BEEN DISPUTED BY THE AS SESSEE, HOWEVER, THE SOFS CONSTITUTE SEPARATE AND INDEPENDE NT PROJECTS, WHICH ARE MERELY GOVERNED BY UNIFORM TERM S AND CONDITIONS AGREED BETWEEN THE PARTIES. MERE MENTION OF THE VARYING SERVICES IN A COMMON AGREEMENT IS NOT A VAL ID GROUND FOR THE REVENUE TO TREAT ALL SOFS AS ONE CONSOLIDAT ED PROJECT. THE DISTINCT NATURE OF ACTIVITIES / SERVICES REQUIS ITIONED IN EACH SOFS HAVE ALREADY BEEN DEMONSTRATED BY POINTING OUT TO VARIOUS SERVICES AVAILED. 16. WITH REGARD TO COMMON INVOICES, IT WAS ARGUED T HAT THE SERVICE CHARGES ARE TO BE INVOICED QUARTERLY AND AS A MATTER OF FACT THE INVOICES ARE RAISED QUARTERLY WITHOUT MAKI NG ANY SOF WISE DISTINCTION IS FACTUALLY INCORRECT IN AS MUCH AS EACH INVOICE IS DULY SUPPORTED BY A DETAILED BACK-UP WORKING CLE ARLY SPECIFYING (A) TIME COST OF PERSONNEL, AND (B) TRAV ELLING EXPENSES INCURRED BY THE ASSESSEE AS PER EACH SOF S EPARATELY. THE SAID COMPREHENSIVE DETAILS OF COST INCURRED BY THE ASSESSEE UNDER EACH SOF FURTHER DEMONSTRATE THE DISTINCT NAT URE OF SOFS. 17. WITH REGARD TO THE INTERCONNECTED SERVICES, IT WAS ARGUED THAT IN THE PRESENT CASE THE SOFS DO NOT REPRESENT A SINGLE PROJECT BEING ENTERED UNDER A SINGLE AGREEMENT FOR WHICH A ITA NO. 1307/DEL/2015 TELENOR ASA 20 SINGLE INVOICE HAS BEEN RAISED. ON THIS ISSUE, IT W AS ARGUED THAT THE ASSESSEE, IN TERMS OF THE BUSINESS SERVICE AGRE EMENT, PROVIDED SERVICES AGREED FROM TIME TO TIME UNDER IN DEPENDENT SOFS TO UNITECH WIRELESS (TAMIL NADU) INDIA P. LTD. ; UNITECH WIRELESS (SOUTH) INDIA P. LTD., UNITECH WIRELESS (N ORTH) INDIA P. LTD., UNITECH WIRELESS (EAST) INDIA P. LTD., UNITEC H WIRELESS (WEST) INDIA P. LTD., UNITECH WIRELESS (DELHI) INDI A P. LTD., UNITECH WIRELESS (MUMBAI) INDIA P. LTD., UNITECH WI RELESS (KOLKATA) INDIA P. LTD., WHICH HAS BEEN COMMONLY REFERRED TO AS UNINOR AS FERVIDLY ARGUED THAT, UNINOR IS NOT A SINGLE CUSTOMER. UNINOR GROUP ENTITIES REQUISITIONED FROM TIME TO TIME BASED ON ITS BUSINESS NEEDS AND RELATED TO DIFFERENT FUNCTIONAL AREAS VIZ., SOURCING, MARKETING, IT/IS, HUMAN RESOURCES ETC. OF ITS BUSINESS WHICH WAS SPREAD ACR OSS VARIOUS PART OF INDIA. EACH SUCH SOF, IT IS PERTINENT TO NO TE, ENTAILED DISTINCT SCOPE OF ACTIVITIES, FOR WHICH EMPLOYEES F ROM DIFFERENT DEPARTMENTS WITH DIFFERENT AREAS OF EXPERTISE WERE DEPUTED BY THE ASSESSEE. IT WAS ARGUED THAT EACH REQUISITION BY WAY OF ISSUANCE OF SEPARATE SOF HAD NO COMMERCIAL OR GEOGR APHICAL COHERENCE WITH THE OTHER SOF ISSUED BY UNINOR, THER EFORE, THE PERIOD OF STAY OF ASSESSEES EMPLOYEES UNDER DIFFER ENT AND SEPARATE SOFS CANNOT BE AGGREGATED TO DETERMINE TH E PERIOD OF STAY FOR THE PURPOSES OF ARTICLE 5(2)(1) OF THE IND IA-NORWAY DTAA. 18. FOR THE SAKE OF CONVENIENCE AND READY REFERENCE , THE ARGUMENTS OF BOTH THE PARTIES IN WRITING ARE REPROD UCED HEREUNDER: ITA NO. 1307/DEL/2015 TELENOR ASA 21 WRITTEN SUBMISSION CIT(DR) 1. THE APPELLANT TELENOR IS A TAX RESIDENT OF NORWAY. IT HAS ENTERED INTO BUSINESS SERVICE AGREEMENT, DATED 10.08.2010, WITH UNIT ECH WIRELESS (TAMIL NADU) INDIA P. LTD., WHICH WAS EFFECTIVE FROM 0 1.04.2009. IN TERMS OF THE SAID AGREEMENT, THE APPELLANT, DURING THE YEA R UNDER CONSIDERATION, PROVIDED SERVICES TO UNITECH WIRELESS THROUGH DIFFERENT SE RVICE ORDER FORM (SOF) UNDER VARIOUS NATURE OF ACTIVITIES SUCH AS SOURCING, MARKETING, IT/IS, HR AND OTHER CONTRACTS. 2. SUCH INCOME WAS OFFERED TO TAX @10% ON GROSS BASIS BEIN G IN THE NATURE OF FEE FOR TECHNICAL SERVICES, IN TERMS OF ARTICL E 13 OF THE AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION BETWEEN I NDIA AND KINGDOM OF NORWAY. 3. THE AO CONSIDERED IT TO BE A CASE WHERE THERE IS AN EXISTENCE OF SERVICE PE AND THE FTS HAS BEEN CHARGED TO TAX CONSIDERING IT T O BE EFFECTIVELY CONNECTED TO PE. 4. THE APPELLANT HAS CHALLENGED THE AO'S ADDITION BASED ON THE GROUND THAT A) THAT SERVICES SPECIFIED IN VARIOUS SOFS CONSTITUTED SEPAR ATE PROJECTS. IT IS SUBMITTED THAT SERVICES GOVERNED BY UNIFORM TERMS AND CONDITIONS AGREED BETWEEN THE PARTIES AND MERE MENTION OF THE V ARYING SERVICES IN A COMMON AGREEMENT, DOES NOT MAKE IT ONE CONSOLIDATED PRO JECT. B) FURTHER, THE APPELLANT SUBMITTED THAT DIFFERENT SE RVICES UNDER SOFS FOR MARKETING ACTIVITIES HAVE BEEN PROVIDED BY DIFFERENT DEPARTMENTS WITH DIFFERENT AREA OF EXPERTISE. SIMILARLY, THE SERVICES RE LATED TO SOURCING ACTIVITIES HAVE BEEN BY DIFFERENT DEPARTMENTS. THUS, I T IS SUBMITTED THAT ITA NO. 1307/DEL/2015 TELENOR ASA 22 EACH SOF, AND IN SOME CASES, EACH SERVICE UNDER A SOF, IS SE PARATE AND INDEPENDENT. C) THE SERVICES RENDERED UNDER EACH SOF ARE UNIQUE. D) THE APPELLANT SUBMITTED THAT THE WORDS SAME' OR CO NNECTED PROJECTS' IN THE CLAUSE ARTICLE 5(2)(I) SHOULD BE INTERPRETED FR OM THE PROSPECTIVE OF THE SERVICE PROVIDER AS CLARIFIED IN MODEL TAX CONVENTI ON OF INCOME AND ON CAPITAL: CONDENSED VERSION 2017 AS FOLLOWS: 161. THE REFERENCE TO AN ENTERPRISE ... PERFORMING THESE SERVICES FOR THE SAME PROJECT SHOULD BE INTERPRETED FROM THE PERSPECTI VE OF THE ENTERPRISE THAT PROVIDES THE SERVICES. THUS, AN ENTERPRISE MAY HAV E TWO DIFFERENT PROJECTS TO PROVIDE SERVICES TO A SINGLE CUSTOMER (E.G. TO PROVIDE TAX ADVICE AND TO PROVIDE TRAINING IN AN AREA UNRELATED TO TAX) AND WHILST THESE MAY BE RELATED TO A SINGLE PROJECT OF THE CUSTOMER , ONE SHOULD NOT CONSIDER THAT THE SERVICES ARE PERFORMED FOR THE SAME PRO JECT. E) INTIMATION IS REQUIRED TO GIVEN FOR SERVICES AGREE D THROUGH EACH SOF TO THE AUDIT COMMITTEE. F) DURING THE YEAR UNDER CONSIDERATION, APPENDIX A W AS NOT IN FORCE AND SERVICES AGREED IN APPENDIX 1 WERE ALSO NOT RENDERE D. ONLY THE SERVICES AGREED VIDE SEPARATE SOFS WERE RENDERED BY THE APPELLANT. IN CASE SUCH SERVICES HAD ANY CONNECTION WITH THE MAIN AGREEMEN T, THEN SERVICES AGREED IN APPENDIX A AND APPENDIX 1 WOULD ALSO HAVE BEEN RENDERED. G) EACH REQUISITION OF EMPLOYEES FOR WHICH SEPARATE SOF WAS PLACED HAD NO INTER CONNECTION/INTER LACING WITH THE OTHER SOF ISSU ED BY THE APPELLANT AND, THEREFORE, THE PERIOD OF STAY OF EMPLOYEES UNDER DIFFERENT AND ITA NO. 1307/DEL/2015 TELENOR ASA 23 SEPARATE SOFS COULD NOT BE AGGREGATED TO DETERMINE THE PERIOD OF STAY FOR PURPOSES OF ARTICLE 5(2)(1) OF THE TREATY. H) UNLESS THERE IS COMMERCIAL COHERENCE BETWEEN THE SAID A CTIVITIES, THE DURATION TEST OF SIX MONTHS HAS TO BE APPLIED WITH REF ERENCE TO EACH ACTIVITY. I) FOR CONSTITUTING A SERVICE PE IN TERMS OF ARTICLE 5(2) (I) OF THE TREATY, FURNISHING OF SERVICES INVOLVING ACTIVITIES OFF THAT NAT URE SHOULD CONTINUE FOR A PERIOD EXCEEDING SIX MONTHS. USE OF THE WORDS ACTIV ITIES OF THAT NATURE IN THE SAID ARTICLE WOULD MEAN THAT SERVICES OF THE SAME NATURE SHOULD BE RENDERED FOR PERIOD EXCEEDING SIX MONTHS SO AS TO CONSTITUTE A SERVICE PE. J) AT BEST, ACTIVITIES OF THE SAME NATURE COULD ONLY BE AGGREGATED. ACCORDINGLY, IT WOULD BE APPRECIATED, AT BEST THE SOFS L ISTED BELOW UNDER EACH ACTIVITY HEAD, VIZ., (I) SOURCING ACTIVITIES, (II) MARKET ACTIVITIES, (III) INFORMATION TECHNOLOGY/INFORMATION SYSTEM (IT/IS) ACTI VITIES AND (IV) HR ACTIVITIES, MAY BE CONSIDERED AS PART OF THE SAME ACTIVIT Y OR PROJECT AND EVEN THEN THE NUMBER OF DAYS SPENT IN INDIA IN AGGREG ATE DURING THE RELEVANT YEAR UNDER EACH SUCH ACTIVITY/CONTRACT DO NOT EX CEED THE TIME THRESHOLD PRESCRIBED IN ARTICLE 5(2)(I) OF THE TREATY. K) IN PARAGRAPH 5 OF ARTICLE 13 OF THE TREATY IMPLI ES THAT THE PERMANENT ESTABLISHMENT OF A FOREIGN ENTERPRISE MUST FIRST BE EX ISTING OR SITUATED IN THE OTHER CONTRACTING STATE, AND THE EARNING OF FEES FOR TECHNICAL SERVICES MUST BE EFFECTIVELY CONNECTED WITH SUCH EXISTING PE. RELI ANCE IS PLACED, IN THIS REGARD, ON THE DECISION OFF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GUARDIAN INTERNATIONAL CORPORATION: ITA NO. 101( DEL) 97. ITA NO. 1307/DEL/2015 TELENOR ASA 24 L) IN TERMS OF PARAGRAPH (1) OF ARTICLE 7 OF THE TREA TY, EVEN IF A NORWEGIAN ENTERPRISE CARRIES ON BUSINESS THROUGH A PE IN INDIA, ONL Y THOSE PROFITS WHICH ARE ATTRIBUTABLE TO THAT PE CAN BE BROUGHT TO T AX IN INDIA. M) THE APPELLANT CLARIFIED THAT THE SERVICES WERE PART LY RENDERED FROM INDIA AND PARTLY FROM NORWAY THROUGH PHONE, EMAILS, ETC. FOR WORK PERFORMED OUTSIDE INDIA, NO PROFIT CAN BE TAXED IN IN DIA, WHETHER OR NOT AN APPELLANT HAS A PE IN INDIA. N) ONLY THE MARKUP OF 3.5% OVER COST CAN BE BROUGHT T O TAX IN INDIA AS INCOME OF THE ALLEGED PE AND NOT THE GROSS RECEIPTS. SI NCE THE APPELLANT HAS INCURRED LOSS DURING THE FINANCIAL YEAR 2009-10, TH ERE IS NO INCOME ATTRIBUTABLE TO THE ALLEGED PERMANENT ESTABLISHMENT IN INDIA ON THE ABOVE BASIS. 5. WITH REFERENCE TO THE ABOVE ARGUMENTS OF THE APPEL LANT, AT THE OUTSET, IT MAY BE RELEVANT TO TAKE NOTE OF THE FACTS OFF THE PRESENT CASE IN RESPECT OF BUSINESS SERVICE AGREEMENT AND SOFS (SERVICE ORDER FORM ). 6. IT IS NOTED THAT UNINOR HAS BEEN ISSUED UNITED ACCESS SE RVICE LICENSES BY THE DEPARTMENT OF TELECOMMUNICATION TO PROVIDE TEL ECOMMUNICATION SERVICES AND THE APPELLANT HAS BEEN ENGAGED BY UNINOR A S A SERVICE PROVIDER TO EFFICIENTLY PROVIDE THE SERVICES. THIS IS TH E CONTEST RECORDED IN THE BUSINESS SERVICE AGREEMENT. FURTHER, THE AGREEMEN T ITSELF DEFINES THAT APPENDIXES AND SERVICE ORDER FORMS UNDER THE AGREE MENT SHALL BE DEEMED TO BE READ AS AN INTEGRAL PART OF THE AGREEME NT. (REFER PAGE 2 OF THE AGREEMENT). FURTHER, CLAUSE 4.4 OF THE BUSINESS SERVI CE AGREEMENT PROVIDES THAT THE SERVICE CHARGE SHALL BE INVOICED QUARTE RLY AND IT SPECIFIES THAT DIRECT CHARGE OF BUSINESS SERVICE SHOULD BE USED UNLESS T HE BASIS FOR SEPARATE CHARGE IS DEMONSTRATED. IT IS OBSERVED BY DRP TH AT THE INVOICE IS RAISED QUARTER WISE WITHOUT MAKING ANY DISTINCTION SOF WISE. ITA NO. 1307/DEL/2015 TELENOR ASA 25 7. THE MOST RELEVANT ISSUE IN THIS CASE IS THAT WHETHER AR TICLE 5(2)(I) MANDATES THE SERVICES OF ONLY SIMILAR TYPE TO BE AGGREGA TED TO ARRIVE AT THRESHOLD PERIOD OF 183 DAYS OR THE SERVICES OF THE SAME OR CONNECTED PROJECTS TO BE AGGREGATED? THE APPELLANT POSITION IS TH AT THE SERVICES ACTIVITY PERIOD CAN BE AGGREGATED ONLY IF THE SERVICES A RE OF SAME NATURE. HOWEVER, IT IS IMPORTANT TO NOTE THAT THE TREATY HAS U SED TWO DIFFERENT TERMS SERVICES AND PROJECT. THIS MEANS THAT THE PROJEC T IS DISTINCT FROM SERVICE. AS REGARDS DEFINITION OF PROJECT, IT IS A N ACCEPTED POSITION THAT THE PROJECT IS A COLLECTION OF ACTIVITIES THAT ENVI SAGES BUNDLE OF SERVICES OR BOUQUET OF SERVICES. THE PROJECT IS, THUS, A BU NDLE OF INTERCONNECTED AND INTERRELATED SERVICES WITH UNDERLYING THEME OF COMPLETION OF PROJECT AT HAND. THUS, THE TERM PROJECT AND SERVICES ARE DISTINCT. THE CLAUSE ARTICLE 5(2)(I) NOT ONLY COVERS SERVI CES IN A PARTICULAR PROJECT BUT ALSO CONNECTED PROJECTS. THUS, THE PLAIN READ ING OF THE ARTICLE 5(2)(I) HIGHLIGHTS THAT THE SCOPE OF SERVICES COVERED UNDE R THE CLAUSE ARE NOT LIMITED TO ONE PROJECT BUT ALSO TO CONNECTED PROJECT . THUS, THAT THE SERVICES, SIMILAR OR NOT, BUT OF THE SAME PROJECT AND CONN ECTED PROJECT NEED TO BE AGGREGATED TO CHECK THE TOTAL DURATION OF THE ACTIVITY. COMING TO THE OECD COMMENTARY ON THE EXPLANATION TOW ARDS SAME OR CONNECTED PROJECTS IN THE CLAUSE ARTICLE 5(2)(I), IT IS CLARIFIED THAT THE EXPLANATION IS TOWARDS THE SAME OR CONNECTED PROJECT AND NOT SERVICES PER SE. FURTHER, THE EXAMPLE TAKEN IN THIS INTERPRETATIO N ONLY CLARIFIES THAT IF THERE ARE TWO DIFFERENT PROJECTS OF A SERVICE PROVIDER PERTAIN TO ONE PROJECT OF A PARTICULAR CUSTOMER, THEN SUCH UNCONNECTED PROJECTS WOU LD NOT BE TAKEN AS SAME OR CONNECTED MERELY BECAUSE OF ONE CUSTOMER. SO, IT PROVIDES THAT MERELY THE SERVICE IS TOWARDS UNINOR GROUP WILL NOT MAKE IT SIMILAR PROJECT. HOWEVER, IN THE PRESENT CASE, IT IS ONLY A SINGLE PROJECT EVEN AT THE END OF THE SERVICE PROVIDER WHICH HAS BEEN ENTERED THROUGH SINGLE BUSINESS SERVICE AGREEMENT AND SINGLE INVOICE HAS BE EN RAISED ITA NO. 1307/DEL/2015 TELENOR ASA 26 ACROSS SERVICES OFF THE SAME PROJECT. THUS, THE AFORESAID EXP LANATION OF OECD IS LIMITED TO TWO DIFFERENT PROJECTS WITH DISTINC T SERVICE PROJECT WISE. IT DOES NOT DEAL WITH THE POSITION WHERE IT IS A CASE OF SINGLE PROJECT WITH A BOUQET OF INTERCONNECTED SERVICES. FURTHER, LOOKING INTO VARIOUS SOFS, IT IS IMPORTANT TO APPRECIATE THAT ALL SOFS ARE INTERLACED. ONCE CANNOT START SOF OF MARKETING TILL SOF OF SOURCING IS COMPLETE. SIMILARLY, THE SOF OF IT/IS ACTIVI TY CANNOT BE INITIATED TILL SOF OF MARKETING IS OVER. ONE SOF IS THE FEEDER FOR OTHER SOF AND SO ON. THIS IS EVIDENT FROM THE PERUSAL OF THE DESCRIPTION OF S OF. SOURCING ACTIVITY SOF PROVIDES FOR PREPARATION, EXECUTION AND NEGOTIATI ON OF 2 ND ROUND OF GSM AWARDS. ALL OTHER SOFS ARE WORKING TOWARDS THE NEX T STAGES OF SAME GSM PROJECT. THE SOURCING ACTIVITY SOF TALKS OF PREPARA TION, EXECUTION AND NEGOTIATION OF IT OUTSOURCING CONTRACT AND THE MARKETI NG ACTIVITY SOF TALKS OF PROCESS DESCRIPTION OF THE SAME IT PROJECT AND ALSO ABOU T IT PROCUREMENT. FURTHER, IT/IS ACTIVITY SOF ALSO TALKS OF IT SOLUTION ARCHITECTURE AND IT SOLUTION SCOPING. THE NETWORK AND IS /IT ACTIVITY SOF TALKS OF BENCHMARKING FOR IT OUTSOURCING PROJECTS AND IT S EVALUATION. THEREAFTER, PROJECT OFFICE ACTIVITY SOF PROVIDES FOR SUP PORT AND ASSISTS IN COMPLETING CONTRACT FOR THE GSM NETWORK AND IT SUPPORT SYSTEMS. FURTHERMORE, WITH SAME THEME OF END TO END WORKING ON GSM PROJECT AND IS/IT OUTSOURCING, THERE IS SOF ON BOARDING AND TRAINI NG, HR AND WORKSHOP ON REGULATORY ISSUES. EFFECTIVELY, IT IS SEEN THA T ALL SOFS ARE WELL INTEGRATED WHERE ONE SOF IS THE INPUT FOR THE SUBSEQ UENT SOF FOR EXAMPLE, SOURCING SOF PROVIDES FOR FIRST PHASE OF PREPAR ATION AND EXECUTION OF CONTRACT AND MARKETING PHASE PROVIDES FOR N EXT PHASE I.E. DESCRIBING THE PROCESS PART OF THE CONTRACT AND PROCUREMENT . IT/IS PHASE IS THE NEXT PHASE WHERE THE SOLUTION IS DESIGNED AND SO O N. ITA NO. 1307/DEL/2015 TELENOR ASA 27 IT IS ALSO IMPORTANT TO HIGHLIGHT THAT THE ARTICLE 5( 2)(1) NOWHERE TALKS OF SAME OR SIMILAR TYPE OF SERVICES. IT ONLY MANDATES THE SER VICES INCLUDING CONSULTANCY SERVICES OF THE SAME OR CONNECTED PROJECT. FIRST, IT IS INCLUSIVE DEFINITION OF SERVICES. IN THE PRESENT CASE, THE SERVICE PR OVIDER HAS WORKED ON ONLY ONE PROJECT WHICH HAS VARIOUS INTERLACED PHASES SP ANNING OVER SOURCING, MARKETING ETC. IT MAY BE RELEVANT TO ADD THAT ANY PROJECT IS BOUND T O HAVE VARIOUS VERTICALS TO ENSURE THE END TO END COMPLETION OF PROJECT . FOR EXAMPLE ANY ORGANIZATION OR PROJECT WILL BE MIX OF PEOPLE, PROCESSE S AND TECHNOLOGY AND ALL THREE ARE WELL INTEGRATED TO FINALLY SHAPEUP THE PROJECT/ORGANIZATION. THUS, ONE CANNOT TAKE A PLEA THA T HR SERVICES TOWARDS PEOPLE FUNCTIONS ARE DIFFERENT FROM PROCESS FUNCTI ONS EVEN IT THE SAME ARE FOR THE SAME PROJECT. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE FACTS OF THE PRESENT CASE CLEARLY FIT INTO ARTICLE 5(2)(1) OF INDIA NORWAY DTA A. THUS, IT IS PRAYED TO UPHOLD THE ACTION OF THE AO TO HOLD IT A CASE OF SERVI CE PE. AS REGARDS THE ACTION OF THE AO IN ALLOWING EXPENSES TO THE TUNE OF 4 0% OF THE RECEIPTS IN ACCORDANCE WITH RULE 10, THE APPELLANT ARGUED TO APPLY MARK UP OF 3.5% ON COST WHICH TRANSLATES TO 3.38% OF REVENUE. THE DRP D EALT WITH THIS PLEA OF THE APPELLANT IN ITS ORDER. IT IS HIGHLIGHTED BY D RP THAT THE ACTION OF THE AO IS CORRECT IN VIEW OF THE FACT THAT NO DOCUMENTARY EV IDENCE WAS SUBMITTED IN RESPECT OF INCURRING OF EXPENDITURE. SINCE, THE COST IN THIS CASE IS MAINLY ON ACCOUNT OF SALARY EXPENSES OF RESOURCES WORK ING ON DELIVERY OF SERVICES, THEREFORE, THE APPELLANT OUGHT T O HAVE SUBMITTED EVIDENCE REGARDING PAYMENT OF SALARY TO SUCH RESOURCES D URING ASSESSMENT PROCEEDINGS. THE CLAIM OF MARK UP OF 3.5% ON COST AS PER THE APPELLANT HAS TO BE DEMONSTRATED. OTHERWISE ONE ESTIMAT E OF THE AO (40% OF REVENUE=EXPENSES) CANNOT BE REPLACED BY ANOTHER ESTIM ATE OF THE ITA NO. 1307/DEL/2015 TELENOR ASA 28 APPELLANT (3.5% MARK UP). IN ABSENCE OF THE COST DETAI LS WITH DOCUMENTARY EVIDENCE IN RESPECT OF THE SERVICES CONDUCTED IN THIS CASE, THE ACTION OF THE AO TO ESTIMATE EXPENSES AT 40% OFF TH E REVENUE IS APPROPRIATE. AS REGARDS, RELIANCE ON DECISION OF ITAT IN THE CASE OF GUARDIAN INTERNATIONAL CORPORATION, THE SAME IS DISTINGUISHAB LE AS THE UNDERLYING DTAA IN CITED CASE IS OF INDIA USA WHICH IS DIFFERENT FRO M INDIA NORWAY DTAA PARTICULARLY IN RESPECT OF ARTICLE 5(2)(1). REJOINDER TO THE WRITTEN SUBMISSIONS FILED BY THE L D. CIT(DR) THIS HAS REFERENCE TO THE WRITTEN SUBMISSIONS E-FILED B Y THE LD. CIT(DR) BEFORE THE HONBLE BENCH ON 1ST JUNE 2021. IN CONJUNCTIO N WITH WRITTEN SUBMISSIONS FILED ON 06.01.2020, THE APPELLANT WISHES TO SUBMIT THE FOLLOWING REJOINDER TO LEGAL CONTENTIONS RAISED BY THE LD. CIT(DR): RE: AGGREGATION OF SERVICES OF SIMILAR NATURE UND ER DIFFERENT SERVICE ORDER FORMS (SOFS) ARE AN INTEGRAL PART O F THE BUSINESS SERVICE AGREEMENT [PARA 5-6 OF THE SUBMISSION] IN THE AFOREMENTIONED PARAGRAPHS, THE LD. CIT (DR), HAS OBSERVED THAT THE BUSINESS SERVICE AGREEMENT ('THE AGREEMENT) ITSELF PROVIDES THAT THE APPENDICES AND SERVICE ORDER FORMS UNDER THE AGREEMENT SH ALL BE DEEMED TO BE READ AS AN INTEGRAL PART OF THE AGREEMENT. IN THIS REGARD, IT IS SUBMITTED THAT THE FACT THAT SOFS FORM INTEGRAL PART OF THE BUSINESS SERVICE AGREEMENT HAS NEVER BEEN DISPUTED BY THE APPELLANT. THE APPELLANTS CONTENTION, AS SUBMITTED VIDE THE WRITT EN SUBMISSIONS FILED BEFORE THE HONBLE BENCH, IS THAT THE SOFS CONSTITUTE SEP ARATE AND INDEPENDENT PROJECTS, WHICH ARE MERELY GOVERNED BY UN IFORM TERMS AND ITA NO. 1307/DEL/2015 TELENOR ASA 29 CONDITIONS AGREED BETWEEN THE PARTIES. MERE MENTION OF THE VARYING SERVICES IN A COMMON AGREEMENT IS, IN OUR RESPECTFUL SUBMI SSION, NOT A VALID GROUND FOR THE REVENUE TO TREAT ALL SOFS AS ONE CONSOLIDATED PROJECT. THE DISTINCT NATURE OF ACTIVITIES / SERVICES REQUISITIONED IN EACH SOFS HAVE ALREADY BEEN DEMONSTRATED, W.R.T. COPIES OF THE SOFS PL ACED ON RECORD VIDE OUR WRITTEN SUBMISSIONS FILED ON 06.01.2020. ALSO, CONTENTION OF THE LD. CIT(DR) THAT AS PER CLAUSE 4 .4, THE SERVICE CHARGES ARE TO BE INVOICED QUARTERLY AND AS A MATTER O F FACT THE INVOICES ARE RAISED QUARTERLY WITHOUT MAKING ANY SOF WISE DISTI NCTION, IT IS RESPECTFULLY SUBMITTED, IS FACTUALLY INCORRECT INASMUCH EA CH INVOICE IS DULY SUPPORTED BY A DETAILED BACK-UP WORKING [REFER PAGES 1 21-128 OF MERIT PAPER BOOK] CLEARLY SPECIFYING (A) TIME COST OF PERSONNEL , AND (B) TRAVELLING EXPENSES INCURRED BY THE APPELLANT AS PER E ACH SOF SEPARATELY. THE SAID COMPREHENSIVE DETAILS OF COST INCURRED BY THE APP ELLANT UNDER EACH SOF FURTHER DEMONSTRATE THE DISTINCT NATURE OF SOF S. APART FROM THE ABOVE, YOUR HONOURS ATTENTION IS ALSO D RAWN TO THE DETAILED SUBMISSIONS FILED ON 06.01.2020 WHEREIN THE A PPELLANT HAS EXPLAINED HOW EACH SOF CONSTITUTES A SEPARATE AND DISTIN CT PROJECT. RE: ALL THE SOFS ARE INTERLACED/ INTERCONNECTED [P ARA 7-12 OF THE LD. CHYDRVS SUBMISSION] IN PARAGRAPH 7 OF THE SUBMISSION, LD. CIT(DR) SEEKS TO D RAW A DISTINCTION BETWEEN THE TERMS SERVICES' AND PROJECT AND HAS CONTEN DED THAT THE CLAUSE ARTICLE 5(2)(1) NOT ONLY COVERS SERVICES IN A PARTIC ULAR PROJECT BUT ALSO CONNECTED PROJECTS. THUS, THE PLAIN READING OF THE A RTICLE 5(2) (1) HIGHLIGHTS THAT THE SCOPE OF SERVICES COVERED UNDER THE CLA USE ARE NOT LIMITED TO ONE PROJECT BUT ALSO TO CONNECTED PROJECT. TH US, THAT THE ITA NO. 1307/DEL/2015 TELENOR ASA 30 SERVICES, SIMILAR OR NOT, BUT OF THE SAME PROJECT AND CONN ECTED PROJECT NEED TO BE AGGREGATED TO CHECK THE TOTAL DURATION OF THE ACTIVITY. LD. CIT(DR), IN PARAGRAPH 8 OF THE SUBMISSIONS, WHILE ACCEPTING INTERPRETATION OF OECD COMMENTARY THAT - WHETHER A PROJECT IS SAME OR CONNECTED HAS TO BE SEEN FROM THE PERSPECTIVE OF SERVICE PROVIDER, HAS ARBITRARILY DISPUTED THE APPLICATION OF THIS CLAUSE IN A PPELLANTS CASE ON THE GROUND THAT OECD DOES NOT MAKE REFERENCE TO A SINGLE P ROJECT WITH A BOUQUET OF INTERCONNECTED SERVICES. AS PER THE LD. CIT(DR ), IN THE PRESENT CASE THE SOFS REPRESENT A SINGLE PROJECT BEING ENTERED U NDER A SINGLE AGREEMENT FOR WHICH A SINGLE INVOICE HAS BEEN RAISED. IN PARAGRAPHS 9-12, THE LD. CIT(DR) HAS CONTENDED THAT ALL THE SOFS ARE INTERCONNECTED WITH EACH OTHER. FURTHER, THE SAID SOFS, IT IS PERTINENT TO NOTE, WERE ISSUED BY UNINOR GROUP FROM TIME TO TIME BASED ON ITS BUSINESS NEEDS AND R ELATED TO DIFFERENT FUNCTIONAL AREAS VIZ., SOURCING, MARKETING, I T/IS, HUMAN RESOURCES ETC. OF ITS BUSINESS WHICH WAS SPREAD ACROSS VARIOUS P ART OF INDIA. EACH SUCH SOF, IT IS PERTINENT TO NOTE, ENTAILE D DISTINCT SCOPE OF ACTIVITIES, FOR WHICH EMPLOYEES FROM DIFFERENT DEPARTM ENTS WITH DIFFERENT AREAS OF EXPERTISE WERE DEPUTED BY THE APPELLANT. IT WILL BE APPRECIATED THAT UNINOR GROUP HAD REQUISIT IONED SERVICES OF DIFFERENT PERSONNEL OF THE APPELLANT IN RELATION TO DIFFERENT FUNCTIONAL AREAS VIZ., SOURCING, MARKETING, IT/IS, HUMAN RESOURCES ETC. OF ITS BUSINESS WHICH WAS SPREAD ACROSS VARIOUS PARTS OF INDIA. IT IS RESPECT FULLY SUBMITTED THAT EACH REQUISITION BY WAY OF ISSUANCE OF SEPARATE SO F HAD NO COMMERCIAL OR GEOGRAPHICAL COHERENCE WITH THE OTHER SOF ISSUED BY UNINOR, THEREFORE, THE PERIOD OF STAY OF APPELLANTS EMPLOYEES UNDER DIFFERENT AND SEPARATE SOFS CANNOT BE AGGREGATED TO D ETERMINE THE ITA NO. 1307/DEL/2015 TELENOR ASA 31 PERIOD OF STAY FOR THE PURPOSES OF ARTICLE 5(2)(1) OF T HE INDIA-NORWAY DTAA. AS REGARDS THE LD. CIT(DR)S CONTENTION THAT THE SOFS CO NSTITUTE SINGLE PROJECT OWING TO EXECUTION OF A SINGLE AGREEMENT AND SI NGLE INVOICE BEING RAISED BY THE APPELLANT ACROSS THE SERVICES OF SAME PROJECT, PLEASE REFER REPLY TO S.NO. (A) ABOVE. THE LD. CIT(DR) HAS FURTHER CONTENDED THAT ALL THE SO FS ARE INTERLACED INASMUCH AS ONE SOF ACTS AS FEEDER FOR THE OTHER, CITING T HAT MARKETING SOFS CANNOT START TILL SOURCING SOF IS COMPLETE AND SIM ILARLY SOF OF IT/IS ACTIVITY CANNOT BE INITIATED TILL SOF OF MARKETING IS COMPLETE. THE LD. CIT(DR) HAS FURTHER REITERATED THE SUBMISSION THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE MERELY A MIX OF PEOPLE, PR OCESSES AND TECHNOLOGY WHICH ARE INTEGRATED TO FINALLY SHAPE UP A SINGLE PROJ ECT. IT IS RESPECTFULLY SUBMITTED THAT THE CONTENTION OF TH E LD. CIT (DR) THAT SOFS ARE INTERLACED AND ONE SOF ACTS AS A FEEDER FOR TH E OTHER IS FACTUALLY INCORRECT, AS IS CLEARLY EVIDENT FROM THE ACTIVITY- WISE DETAILS OF VISITS MADE BY THE EMPLOYEES IN INDIA (REFER PAGES 103-107 OF CASE LAW PAPER BOOK). ON PERUSAL OF THE SAID DETAILS, IT WILL KINDLY BE APP RECIATED THAT THE ACTIVITIES WERE CARRIED OUT SIMULTANEOUSLY INASMUCH AS THE DATES OF VISIT OF APPELLANTS EMPLOYEES TO EXECUTE THE SOFS ISSUED FOR SOUR CING, MARKETING, IT/IS, AND HR ACTIVITIES OVERLAPPED WITH EA CH OTHER. IT IS, THEREFORE, CLEAR THAT THE APPELLANTS EMPLOYEES FROM D IFFERENT DEPARTMENTS WITH DIFFERENT EXPERTISE AREAS OF EXPERTISE WERE INDEP ENDENTLY EXECUTING THE WORK REQUISITIONED BY THE UNINOR GROUP. YOUR HONOURS KIND ATTENTION IS ALSO INVITED TO CLAUSE 2 OF THE AGREEMENT WHICH CLEARLY STATES THAT THE APPELLANT HAS BEEN APPOIN TED AS A NON- ITA NO. 1307/DEL/2015 TELENOR ASA 32 EXCLUSIVE SERVICE PROVIDER AND THAT UNINOR GROUP MAY, A T ITS DISCRETION, APPOINT ANY OTHER SERVICE PROVIDER TO PROVIDE THE SAID SERVICES: APPOINTMENT 2.1 SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEME NT, UNINOR, HEREBY APPOINTS THE SERVICE PROVIDER AND THE SERVICE P ROVIDER HEREBY ACCEPTS THE SAID APPOINTMENT AS NON-EXCLUSIVE SERVICE PROVI DER FOR PROVIDING SERVICES. 2.2 UNINOR MAY APPOINT ANY OTHER SERVICE PROVIDER TO PROVIDE THE SAME/SIMILAR SERVICES AT ANY OF UNINOR LOCATIONS AT WHATE VER TERMS IT DEEMS FIT, AT ITS SOLE DISCRETION. HOWEVER, SUCH APPOINTMEN T DOES NOT FREE UNINOR FOR ANY OF THE OBLIGATIONS UNDER THIS AGREEMEN T FOR SERVICES ALREADY AGREED UNDER THIS AGREEMENT BY WAY OF APPROV AL OF APPENDIX A (APPENDIX 1) OR SERVICE ORDER FORM AS PER THE FORMAT GIVEN IN SCHEDULE I. ON PERUSAL OF THE AFORESAID, IT WILL KINDLY BE APPRECI ATED THAT THE APPELLANT WAS NOT AN EXCLUSIVE SERVICE PROVIDER AND ITS SERVICES WERE AVAILED BY THE UNINOR GROUP ONLY ON NEED BASIS, FOR WHICH SEPARATE SO FS WERE ISSUED BY IT FROM TIME TO TIME. IN THAT VIEW OF THE MATTER , THE APPELLANT, BY NO STRETCH OF IMAGINATION, BE CONSTRUED TO BE CARRYING OUT A CONSOLIDATED PROJECT ACTIVITY COMPRISING OF DIFFERENT SERVICES. IN FACT , THE APPELLANT APPROPRIATED THE MANPOWER AND OTHER RESOURCES FOR REN DITION OF SERVICES AS PER DISTINCT SOFS, AS AND WHEN ISSUED. AT THE COST OF REPETITION, REFERENCE IS AGAIN MADE TO T HE OECDS MODEL TAX CONVENTION ON INCOME AND ON CAPITAL: CONDENSED VERSION 2017 WHEREIN IT HAS BEEN CLARIFIED THAT THE WORDS SAME OR CONNECTED P ROJECTS SHOULD BE INTERPRETED FROM THE PERSPECTIVE OF THE SERVICE PROVIDE R AND MERELY ITA NO. 1307/DEL/2015 TELENOR ASA 33 BECAUSE SERVICES UNDER DIFFERENT PROJECTS ARE PROVIDED TO A SINGLE CUSTOMER, THE SAME SHOULD NOT BE AGGREGATED: '161. THE REFERENCE TO AN 'ENTERPRISE ... PERFORMING THESE SERVICES FOR THE SAME PROJECT SHOULD BE INTERPRETED FROM THE PERSPECTI VE OF THE ENTERPRISE THAT PROVIDES THE SERVICES. THUS, AN ENTERPRISE MAY HAV E TWO DIFFERENT PROJECTS TO PROVIDE SERVICES TO A SINGLE CUSTOMER (E.G. TO PROVIDE TAX ADVICE AND TO PROVIDE TRAINING IN AN AREA UNRELATED TO TAX) AND WHILST THESE MAY BE RELATED TO A SINGLE PROJECT OF THE CUSTOMER , ONE SHOULD NOT CONSIDER THAT THE SERVICES ARE PERFORMED FOR THE SAME PRO JECT. RELIANCE IS ALSO PLACED, IN THIS REGARD, ON THE FOLLOWIN G DECISIONS, WHEREIN APPLYING THE AFORESAID PRINCIPLE, IT HAS BEEN HELD THA T WHERE DIFFERENT PURCHASE ORDERS / CONTRACTS WERE ISSUED FOR VARIOUS DIFFERE NT ACTIVITIES, UNLESS THERE IS COMMERCIAL COHERENCE BETWEEN THE SAID ACTIVI TIES, THE DURATION TEST OF SIX MONTHS HAS TO BE APPLIED WITH REF ERENCE TO EACH ACTIVITY. - SUMITOMO CORPORATION V. DCIT: 114 ITD 61 (DEL IT AT ) - PARA 76 TO 80 -AFFIRMED BY DELHI HIGH COURT IN 382 ITR 75 (DELH I), AGAINST WHICH REVENUES SLP HAS BEEN DISMISSED BY THE SUPREME C OURT IN 257 TAXMAN 554 - ADIT V. KRUPP UHDE GMBH : (2008) 28 SOT 254 (DEL ITA T) - ADIT V. VALENTINE (MAURITIUS) LTD.: 130 TTJ 417 (MUM ITAT) - VALENTINE MARITIME (GULF) LLC VS. ACIT 45 SOT 359 (M UM ITAT) - DCIT VS. J. RAY MCDERRMOTT EASTERN HEMISPHERE LIMITED: (2012) 54 SOT 363 (MUM ITAT) - REFERRED EARLIER ORDER OF THE TRIBUNAL FOR SAME ASSESSMENT YEAR REPORTED IN (2010) 39 SOT 240 - KREUZ SUBSEA PTE. LTD. VS. DDIT: 69 SOT 368 (MUMBAI I TAT) ITA NO. 1307/DEL/2015 TELENOR ASA 34 IN THE PRESENT CASE TOO, THE ACTIVITIES CARRIED OUT BY TH E APPELLANT IN THE CAPACITY OF A NON-EXCLUSIVE SERVICE PROVIDER TO UNITECH W IRELESS ON NEED BASIS, CANNOT, IN OUR RESPECTFUL SUBMISSION, BE HELD TO BE INTERLACED/ HAVE COMMERCIAL COHERENCE. THE APPELLANT, HAD ALTERNATIVELY CONTENDED THAT EVEN IF THE SOFS UNDER EACH ACTIVITY HEAD, VIZ., (I) SOURCING ACTIVITIES, (II) MARKET ACTIVITIES, (III) INFORMATION TECHNOLOGY/ INFORMATION SYSTEM (IT/IS) ACT IVITIES AND (IV) HR ACTIVITIES, WERE CONSIDERED AS PART OF THE SAME ACTIVITY OR PROJECT, EVEN THEN THE NUMBER OF DAYS SPENT IN INDIA IN AGGREGATE DURING THE RELEVANT YEAR UNDER EACH SUCH ACTIVITY/ CONTRACT DID NOT EXCEED THE TIME THRESHOLD PRESCRIBED IN ARTICLE 5(2)(1) OF THE TREATY [REFER PAG ES 103 TO 107 OF CASE LAW PAPER BOOK]. RE: ATTRIBUTION OF INCOME [PARA 13 OF THE LD. CIT(D R)S SUBMISSION] WITH REGARD TO THE ALTERNATE CONTENTION OF THE APPEL LANT, W.R.T. ATTRIBUTION OF INCOME, THE APPELLANT, HAD SUBMITTED AS UNDER: A. IN TERMS OF EXPLANATION 1(A) TO SECTION 9(1)(I) O F THE INCOME-TAX ACT, 1961 (THE ACT) READ WITH PARAGRAPH (1) OF ART ICLE 7 OF THE INDIA- NORWAY DTAA, ONLY THE INCOME RELATING TO THE SERVICES A CTUALLY RENDERED BY APPELLANTS EMPLOYEES IN INDIA COULD BE ATTRIBUTED TO THE ALLEGED PE IN INDIA; B. ONLY THE MARK UP OF 3.5% OF COST [AS PER ARTICLE 4. 2 OF THE AGREEMENT], WHICH TRANSLATES TO 3.38% OF REVENUES, COULD AT BEST BE CONSIDERED AS THE INCOME ATTRIBUTABLE TO THE REVENUES P ERTAINING TO THE ALLEGED PE IN INDIA; C. THE ASSESSING OFFICER OUGHT TO HAVE APPLIED THE GLOB AL OPERATING PROFIT/ (LOSS) MARGIN OF THE APPELLANT TO THE REVENUE S RELATABLE TO ALLEGED ITA NO. 1307/DEL/2015 TELENOR ASA 35 PE, THE SAME BEING A RATIONAL AND ACCEPTED METHOD OF COMPUTING INCOME OF PE. SINCE THE APPELLANT HAS, IN FACT, INCURRED LOSSES GLOBALLY DURING THE FINANCIAL YEAR 2009-10, THERE IS NO INCOME ATTRIBUTAB LE TO THE ALLEGED PE IN INDIA ON THE ABOVE BASIS. WITH REGARD TO THE SUBMISSION IN POINT (B) ABOVE, THE LD. CIT(DR) HAS REITERATED THE ASSESSING OFFICERS STAND THAT THE APPELLAN T HAD FAILED TO FURNISH DOCUMENTARY EVIDENCES IN RESPECT OF INCURRENCE OF E XPENDITURE. IT HAS FURTHER BEEN ALLEGED THAT SINCE THE COST IS MAINLY ON ACCOUNT OF SALARY EXPENSES OF RESOURCES ON DELIVERY OF SERVICES, THEREFORE TH E APPELLANT OUGHT TO HAVE SUBMITTED EVIDENCE REGARDING PAYMENT OF SALARY TO SUCH RESOURCES DURING THE ASSESSMENT PROCEEDINGS. IN THIS REGARD, ATTENTION OF THE HONBLE BENCH IS INVI TED TO INVOICES RAISED BY THE APPELLANT AND THE SPECIFICATION SHEET PROVIDING SOF WISE BREAKUP OF THE HOURLY AND TRAVEL COSTS BILLED IN THE INVOICES RAISED BY THE APPELLANT, ALONG WITH MARK-UP CHARGED THEREON [REFER PAGES 109 T O 115 AND 121 TO 128 OF THE MERIT PAPER BOOK]. NON-FURNISHING OF EVID ENCE FOR ACTUAL PAYMENT OF SALARY, IT IS SUBMITTED, IS INCONSEQUENTIAL I NASMUCH AS THE COMPLETE DETAILS OF COST BASE ALONG WITH MARK-UP HAVE AL READY BEEN PLACED ON RECORD, WHICH HAS NOT BEEN DISPUTED BY THE LOW ER AUTHORITIES. RE: THE DECISION OF DELHI BENCH OF TRIBUNAL IN THE CASE OF GUARDIAN INTERNATIONAL CORPORATION: ITA NO. 101 (DEL) 97 [PA RA 14 OF THE LD. CIT(DR)S SUBMISSION] AS PER ARTICLE 13(5) OF THE INDIA-NORWAY DTAA, INCOME IN THE NATURE OF, INTER ALIA, FEES FOR TECHNICAL SERVICES (FTS) WOULD NO T BE TAXABLE UNDER THAT ARTICLE AND WOULD INSTEAD BE TAXABLE UNDER ARTI CLE 7, IF THE PAYMENT MADE IS EFFECTIVELY CONNECTED WITH A PRE-EXISTING PERM ANENT ESTABLISHMENT OF THE FOREIGN ENTERPRISE IN INDIA. ITA NO. 1307/DEL/2015 TELENOR ASA 36 THE APPELLANT, IT ITS WRITTEN SUBMISSION, HAD DRAWN SUP PORT FROM THE DECISION OF DELHI BENCH OF TRIBUNAL IN THE CASE OF GUARD IAN INTERNATIONAL CORPORATION (SUPRA) FOR THE PROPOSITION THAT SINCE THE ALLEGED PE OF THE APPELLANT DID NOT EXIST IN INDIA PRIOR TO THE VISIT O F PERSONNEL OF APPELLANT TO INDIA, THE FEES FOR TECHNICAL SERVICES CANNOT BE SAID TO BE EFFECTIVELY CONNECTED TO ANY PRE-EXISTING PH AND HENCE THE PROVISION S OF PARAGRAPH 5 OF ARTICLE 13 HAVE NO APPLICATION. IN FACT, THE YEAR UNDER CONSIDERATION IS THE FIRST YEAR OF OPERATION OF THE APPELLANT IN INDI A. CONSEQUENTLY, SUBJECT PAYMENTS ARE TAXABLE @10% ONLY, IN TERMS OF ARTICLE 1 3(2) OF THE TREATY. THE LD. CIT(DR) HAS, HOWEVER, SUBMITTED THAT THE AFOR ESAID DECISION IF DISTINGUISHABLE SINCE IT DEALS WITH PROVISIONS OF INDIA-U SA DTAA, WHILE THE CASE OF APPELLANT REQUIRES APPLICATION OF INDIA-NORWAY DTAA, PARTICULARLY IN RESPECT OF ARTICLE 5(2)(1). IT IS, RESPECTFULLY SUBMITTED THAT THE LANGUAGE OF ART ICLE 5(2)(1) OF INDIA- NORWAY DTAA, WHICH RELATES TO CONSTITUTION OF A SERVICE PE, HAS NO RELEVANCE INASMUCH AS THE DECISION OF GUARDIAN INTERNATIO NAL CORPORATION (SUPRA) WAS CITED BY THE APPELLANT IN THE CONTEXT OF TA XATION OF FTS INCOME IN ABSENCE OF A PRE-EXISTING PE. THE LANGUAGE OF RELEV ANT DTAAS IN THIS REGARD IS REPRODUCED HEREIN BELOW FOR READY REFERENCE : INDIA-NORWAY DTAA ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICE S .. 5. THE PROVISIONS OF PARAGRAPHS 1 AND 2 SHALL NOT APPL Y IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES, BE ING A RESIDENT OF A CONTRACTING STATE, CARRIES ON BUSINESS IN THE OTHER CONT RACTING STATE IN WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARISE, T HROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN, OR PERFORM IN THAT OTHER STATE INDEPENDENT PERSONAL SERVICES FROM A FIXED BASE SITUATED THEREIN, AND THE ITA NO. 1307/DEL/2015 TELENOR ASA 37 RIGHT, PROPERTY OR CONTRACT IN RESPECT OF WHICH THE ROY ALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID IS EFFECTIVELY CONNECTED WITH SU CH PERMANENT ESTABLISHMENT OR FIXED BASE. IN SUCH CASE THE PROVISIONS O F ARTICLE 7 OR ARTICLE 15, AS THE CASE MAY BE, SHALL APPLY. INDIA-USA DTAA ARTICLE 12 ROYALTIES AND FEES FOR INCLUDED SERVICE S .. 6. THE PROVISIONS OF PARAGRAPHS 1 AND 2 SHALL NOT APPL Y IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR INCLUDED SERVICES, B EING A RESIDENT OF A CONTRACTING STATE, CARRIES ON BUSINESS IN THE OTHER CONTR ACTING STATE, IN WHICH THE ROYALTIES OR FEES FOR INCLUDED SERVICES ARISE, TH ROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN, OR PERFORM S IN THAT OTHER STATE INDEPENDENT PERSONAL SERVICES FROM A FIXED, BASE SITUATE D THEREIN, AND THE ROYALTIES OR FEES FOR INCLUDED SERVICES ARE ATTRIBUTABLE TO SUCH PERMANENT ESTABLISHMENT OR FIXED BASE. IN SUCH CASE THE PROVISIONS O F ARTICLE 7 (BUSINESS PROFITS) OR ARTICLE 15 (INDEPENDENT PERSONAL S ERVICES), AS THE CASE MAY BE SHALL APPLY. ON PERUSAL OF THE ABOVE, IT MAY KINDLY BE APPRECIATED THE LANGUAGE OF ARTICLE 13(5) OF INDIA-NORWAY DTAA AND ARTICLE 12(6) OF THE INDIA-USA DTAA, WHICH ARE RELEVANT IN THE PRESENT CASE, ARE SIMIL ARLY WORDED. BOTH THE DTAAS REQUIRE THAT THE PERMANENT ESTABLISHMENT OF A FOREIGN ENTERPRISE MUST FIRST BE EXISTING OR SITUATED IN THE O THER CONTRACTING STATE, AND THE EARNING OF FEES FOR TECHNICAL SERVICES MUST BE EFF ECTIVELY CONNECTED WITH SUCH EXISTING PE. IN VIEW THEREOF, IT IS RESPECTFULLY SUBMITTED THAT TH E LD. CIT(DR)S CONTENTION THAT THE DECISION OF GUARDIAN INTERNATIONAL CORPORATION (SUPRA) IS DISTINGUISHABLE MERELY ON ACCOUNT OF DIFFERENT UNDE RLYING DTAA HAS NO BASIS AND LIABLE TO BE REJECTED. ITA NO. 1307/DEL/2015 TELENOR ASA 38 ATTENTION OF THE HON'BLE BENCH IS FURTHER INVITED TO THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT V. SUMITOMO CORPO RATION: [2016] 382 ITR 75 (DELHI) [REVENUES SLP WAS DISMISSED BY THE SUPRE ME COURT IN 257 TAXMAN 554]. IN THAT CASE, THE ASSESSEE, A JAPANESE CO MPANY, HAVING VARIOUS LIASON OFFICES (LO) AND PROJECT OFFICES (P O) IN INDIA, RECEIVED CERTAIN SUPERVISION FEE FROM MARUTI UDYOG LTD. (MUL) FOR SUPERVISING THE INSTALLATION OF THE MACHINERY AND EQUI PMENT SUPPLIED TO MUL WHICH WAS NOT OFFERED TO TAX ON THE GROUND THAT S AID SUPERVISORY ACTIVITIES DID NOT CONSTITUTE A PERMANENT ESTABLISHMENT (PE) IN INDIA. HOWEVER, THE ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE HA D PE IN INDIA BY WAY OF PO & LO, EVEN THE SUPERVISION FEE WAS TAXABL E IN INDIA AS BUSINESS INCOME, BEING ATTRIBUTABLE TO THE PE IN INDIA. THE ISSUE FOR CONSIDERATION WAS WHETHER THE SUPERVISION FEE BEING IN T HE NATURE OF FTS COULD BE SAID TO BE EFFECTIVELY CONNECTED WITH THE PE AN D THUS BROUGHT TO TAX AS BUSINESS PROFITS IN INDIA. THE HIGH COURT, AFTER CONSIDERING THE LANGUAGE OF ARTI CLE 12(5) OF THE INDO-JAPAN DTAA [WHICH IS SIMILARLY WORDED AS ARTICLE 13 (5) OF INDIA- NORWAY DTAA], OBSERVED THAT THE CLAUSE MAKES A DISTINCT ION BETWEEN THOSE INCOMES WHICH ARE THE RESULT OF ACTIVITIES OF THE PE AND THE INCOME THAT ARISES BY REASON OF DIRECT DEALINGS BY THE ENTERPR ISE FROM THE HEAD OFFICE WITHOUT THE AID OR ASSISTANCE OF THE PE. ACCORDIN GLY, THE COURT HELD THAT ONLY INCOME WHICH IS CONNECTED WITH THE ACTIVITIES OF A PRE-EXISTING PE COULD BE BROUGHT TO TAX AS BUSINESS PROFITS, AND THEREFOR E, SUPERVISION FEE WAS NOT TAXABLE AS BUSINESS PROFITS IN THIS CASE. 19. WE HAVE GONE THROUGH THE BUSINESS SERVICE AGREEMENT (PB 89 TO 108), COPIES OF INVOICE (PB 109 TO 115), DETAILS OF EMPLOYEES (PB 116 TO 119), PROJECT WISE AGREEMENTS, DETAILS OF ACTIVITIES, SCHEM E OF BILLING, ITA NO. 1307/DEL/2015 TELENOR ASA 39 WORKING OF SPLIT TIME, COMMENTARY ON ARTICLE 5 REGARDI NG PE AND VARIOUS CASE LAWS SUPPORTED BY BOTH THE PARTIES. 20. WITH REGARD TO THE CONTENTION THAT SERVICES SPECIFIED IN VARIOUS SOFS CONSTITUTED SPECIFIC PROJECT AND THEIR SERVICES GOVERNED BY UNIFORM TERMS & CONDITIONS AGREED BETWEEN THE PARTIES AND MERE MENTI ON OF THE VARYING SERVICES AND COMMON AGREEMENT DOES NOT MAKE IT CONSOLIDA TED PROJECT CANNOT BE FOUND TO BE CORRECT ON THE FACTS OF THE CASE AS THE AGREEMENT DATED 18.08.2010 BETWEEN THE ASSESSEE NAMELY TELENOR SA AND UNINOR . IT IS THIS CONTRACT WHICH DEFINES THE MUTUAL OBLIGATIONS AND IMPLEMENTATION. THERE IS NO OTHER INTER-SE AGREEMENT WITH ANY OF THE PARTIES OR AMONG THE PARTIES. THIS GIVES RISE TO A CONCLUSI ON THAT THE BUSINESS SERVICE AGREEMENT IS A SINGLE UNIFIED AGREEMENT. ON GOING THROUGH THE CLAUSES OF THE AGREEMENT, WE FIND THAT NO SINGLE CLAUSE IS GIVING IT A SHAPE OF MULTIPLE AGREEMENTS. 21. WITH REGARD TO THE CONTENTION THAT DIFFERENT SERV ICES UNDER SOFS ARE NOT INTER RELATED AND ARE UNIQUE, IT IS NECESSARY TO GO THROUGH THE ENTIRE ACTIVITY OF THE ASSESSEE WITH RELATION TO THE UNINOR . U NINOR SERVICES WERE LAUNCHED SIMULTANEOUSLY IN THE CIRCLES TAMIL NADU, K ERALA, KARNATAKA, ANDHRA PRADESH, UTTAR PRADESH EAST, UTTAR P RADESH WEST AND BIHAR (INCLUDING JHARKHAND), MAKING IT THE WIDEST COVE RAGE OPERATOR HAS LAUNCHED WITHIN INDIA. THE LAUNCH OF UNINOR SERVICES HAP PENED AFTER TELENOR GROUP FINALIZED THE TRANSACTION WITH UNITECH G ROUP AND MADE THE FIRST INVESTMENT INTO UNINOR. THE STATEMENT OF THE STE IN-ERIK VELLAN, MANAGING DIRECTOR OF UNINOR AT THE TIME OF LAUNCH WI TH LAUNCH IN SEVEN CIRCLES AND ROAMING AGREEMENTS IN PLACE FOR THE REST, WE HAVE STARTED OUR SERVICE IN INDIA ON DAY ONE AS A PAN-INDIAN NATIONAL O PERATOR. THIS IS A PROUD ACHIEVEMENT OF A COMMITTED AND TALENTED TEAM. WHILE OUR LAUNCH TODAY IS INDEED A MILESTONE IN A LONGER JOURNEY TO BE COME A SIGNIFICANT ITA NO. 1307/DEL/2015 TELENOR ASA 40 OPERATOR IN INDIA, WE ARE DELIGHTED TO HAVE MADE SU CH A STRONG START' AUGMENTS THE FACT THAT THERE ARE ONLY TWO ENTITIES INV OLVED UNINOR AND TELENOR, THE ASSESSEE. 22. WITH REGARD TO THE SCHEME OF BILLING, THE BILLS A RE RAISED ON QUARTERLY BASIS, CONSOLIDATED INVOICES RAISED IRRESPECTIVE OF THE SOFS UNDER WHICH THE SERVICES WERE RENDERED. THE COMMON BILLING BY THE RECIPIENT AND THE COMMON PAYMENTS GIVES RISE TO A CONCLUSION THAT THIS IS ON E SINGLE CONTRACT. WE HAVE GONE THROUGH THE VARIOUS SERVICE ORDER FORMS WHEREIN IT HAS BEEN MENTIONED CONTINUOUSLY THAT THE CONTRACTS ARE PE RFORMED IN ACCORDANCE WITH THE SERVICE AGREEMENT BETWEEN UNINOR AND TELENOR ASA, REFERRED AS THE CONTRACTOR AND UNINOR REFERRED AS THE RECIPIENT FOR ALL THE SERVICES. 23. WE HAVE GONE THROUGH THE VARIOUS SOFS WHICH INVOLV E SOURCING ACTIVITIES, MARKETING ACTIVITIES, ITES ACTIVITIES, NETW ORK ACTIVITIES, PROJECT ACTIVITIES. THE ENTIRE SCHEMES OF ACTIVITIES ARE AS UNDER: SOF 1: SOURCING ACTIVITIES PREPARATION, EXECUTION AND NEGOTIATION OF 2 ND ROUND OF GSM AWARDS PREPARATION, EXECUTION AND NEGOTIATION OF IT OUTSOURCI NG CONTRACT.. PREPARATION, EXECUTION AND NEGOTIATION OF IN CONTRACT AWARD ...................... SOF 2: MARKET ACTIVITIES DEVICE STRATEGY DEVELOPMENT .. PRODUCT DEVELOPMENT ..................... ITA NO. 1307/DEL/2015 TELENOR ASA 41 SOF 3: IT/IS ACTIVITIES IS/IT SOLUTION, ARCHITECTURE AND BUSINESS SCOPING SERVICE DELIVERY PLATFORM SOLUTION AND ARCHITECTURE ............. SOF 4: NETWORK AND IS/IT ACTIVITIES BENCHMARKING FOR IT OUTCOURCING PROJECT; COMMERCIAL WORKST REAM PROJECT SUPPORT FOR IT OUTSOURCING PROJECT; COMMERCIAL WOR KSTREAM .............................. SOF 5: PROJECT OFFICER ACTIVITIES SUPPORT AND ASSIST IN COMPLETING CONTRACTS FOR GSM NETWOR K AND IT SUPPORT SYSTEMS - UPDATE PROJECT PLANS - MILESTONE IDENTIFICATION .................... SOF 6: 1) ON-BOARD AND TRAINING PROJECT SUPPORT - ADVISOR TO LOCAL HR PERSONNEL - INDUCTION DAY 2) TELENOR WAY BOOK-ORDERING AND DISTRIBUTION - 150 COPIES ORDERED .......................... SOF 7: IT/IS ACTIVITY IS / IT SOLUTION, ARCHITECTURE AND BUSINESS SCOPING SOF 8: PLANNING / STRATEGY WORKSHOP ON REGULATORY AN D CARRIER ISSUES ITA NO. 1307/DEL/2015 TELENOR ASA 42 TIME AND TRAVEL COST FOR PREPARATION AND PARTICIPATIO N IN WORKSHOP ON STRATEGY FOR VARIOUS CARRIER AND REGULATORY ISSUES IN DELHI / NOIDA / GURGOAN. SOF 9: 1) PROCUREMENT STRUCTURAL / TAX SUPPORT ON CONTRACTS 2) AMALGAMATION - ASSESSMENT OF TAX LIABILITIES STAMP DUTY ...................... SOF 10: SOURCING ACTIVITIES EXECUTION AND NEGOTIATIONS OF 3RD ROUND OF GSM CONTRAC T AWARDS FOLLOW UP OF IT OUTSOURCING CONTRACT ................................ SOF 11: MARKET ACTIVITIES DEVICE STRATEGY CRM DEVELOPMENT AND SPECIFICATION .................... SOF 12: IT / IS ACTIVITIES IS/ IT SOLUTION, ARCHITECTURE AND BUSINESS SCOPING REVENUE ASSURANCE AND FRAUD MANAGEMENT SOF 13: 1) SECURITY SUPPORT 2) INFORMATION SECURITY SUPPORT SOF 15: SOURCING ACTIVITIES SUPPORT IN ESTABLISHING THE DISTRIBUTION COMPANY ITA NO. 1307/DEL/2015 TELENOR ASA 43 SOF 16: MARKET ACTIVITIES PRODUCT DEVELOPMENT DISTRIBUTION REVIEW .................. SOF 17: IT/IS ACTIVITIES INDIA 2G IS/IT HUB SOF 18: HR ACTIVITIES BONUS COMPENSATION 24. ON GOING THROUGH THE SEQUENCE OF ACTIVITIES AND COMM ENTARY OF THE OECD WITH REGARD TO THE ARTICLE 5(2)(1), IT CAN BE CON CLUDED THAT THE ACTIVITIES CONSISTS OF SAME AND ENTER-CONNECTED PROJECTS. T HE OECD MODEL COMMENTARY WITH REGARD TO THE PERMANENT ESTABLISHMENT ARTICLE 5 AND IN REFERENCE TO THE ENTERPRISE COMMENTED AS UNDER: THE REFERENCE TO AN ENTERPRISE ... PERFORMING THE SE SERVICES FOR THE SAME PROJECT SHOULD BE INTERPRETED FROM THE PERSP ECTIVE OF THE ENTERPRISE THAT PROVIDES THE SERVICES. THUS, AN ENT ERPRISE MAY HAVE TWO DIFFERENT PROJECTS TO PROVIDE SERVICES TO A SIN GLE CUSTOMER (E.G. TO PROVIDE TAX ADVICE AND TO PROVIDE TRAINING IN AN AREA UNRELATED TO TAX) AND WHILST THESE MAY BE RELATED TO A SINGLE PR OJECT OF THE CUSTOMER, ONE SHOULD NOT CONSIDER THAT THE SERVICES ARE PERFORMED FOR THE SAME PROJECT. 25. WITH REFERENCE TO THE CONNECTED PROJECT THE C OMMENTARY FURTHER HELD AS UNDER: ITA NO. 1307/DEL/2015 TELENOR ASA 44 THE REFERENCE TO CONNECTED PROJECTS IS INTENDED TO COVER CASES WHERE THE SERVICES ARE PROVIDED IN THE CONTEXT OF S EPARATE PROJECTS CARRIED ON BY AN ENTERPRISE BUT THESE PROJECTS HAVE A COMMERCIAL COHERENCE .THE DETERMINATION OF WHETHER PROJECTS AR E CONNECTED WILL DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE BUT FACTORS THAT WOULD GENERALLY BE RELEVANT FOR THAT PURPOSE INCLUD E: - WHETHER THE PROJECTS ARE COVERED BY A SINGLE MASTER CONTRACT; - WHERE THE PROJECTS ARE COVERED BY DIFFERENT CONTRAC TS, WHETHER THESE DIFFERENT CONTRACTS WERE CONCLUDED WITH THE S AME PERSON OR WITH RELATED PERSONS AND WHETHER THE CONCLUSION OF THE ADDITIONAL CONTRACTS WOULD REASONABLE HAVE BEEN EXP ECTED WHEN CONCLUDING THE FIRST CONTRACT; - WHETHER THE NATURE OF THE WORK INVOLVED UNDER THE D IFFERENT PROJECTS IS THE SAME; - WHETHER THE SAME INDIVIDUALS ARE PERFORMING THE SER VICES UNDER THE DIFFERENT PROJECTS. SUB-PARAGRAPH B) REQUIRES THAT DURING THE RELEVANT PERIODS, THE ENTERPRISE IS PERFORMING SERVICES THROUGH INDIVIDUA LS WHO ARE PERFORMING SUCH SERVICES IN THAT OTHER STATE. FOR T HAT PURPOSE, A PERIOD DURING WHICH INDIVIDUALS ARE PERFORMING SERV ICES MEANS A PERIOD DURING WHICH THE SERVICES ARE ACTUALLY PROVI DED, WHICH WOULD NORMALLY CORRESPOND TO THE WORKING DAYS OF THESE IN DIVIDUALS. AN ENTERPRISE THAT AGREES TO KEEP PERSONNEL AVAILABLE IN CASE A CLIENT NEEDS THE SERVICES OF SUCH PERSONNEL AND CHARGES TH E CLIENT STANDBY CHARGES FOR MAKING SUCH PERSONNEL AVAILABLE IS PERF ORMING SERVICES THROUGH THE RELEVANT INDIVIDUALS EVEN THOUGH THEY A RE IDLE DURING THE WORKING DAYS WHEN THEY REMAIN AVAILABLE 26. WHEN THE ABOVE HYPOTHETICAL QUESTIONS ARE ANSWE RED IN THE REALISTIC REALM, WE FIND THAT THE ACTIVITIES OF THE ASSESSEE WITH REGARD TO THE RECIPIENTS FOR SERVICES CAN BE S AID TO BE ITA NO. 1307/DEL/2015 TELENOR ASA 45 INTER-CONNECTED, INTER LACED, SEQUENTIAL TECHNICAL SERVICES. IT CANNOT BE SAID THAT THEY ARE UNRELATED TO EACH OTHE R AS NONE OF THE ACTIVITY COULD STAND IN ISOLATION WITH THE OTHE R ACTIVITY AND NO SINGLE ACTIVITY CAN GIVE RISE TO PERFORMANCE AND ACHIEVING OF THE PURPOSE OF THE RECIPIENT. THE ACTIVITIES START WITH PREPARATION, EXECUTION AND NEGOTIATION OF THE GLOBA L SYSTEM FOR MOBILE COMMUNICATION (GSM) TO DEVISING THE STRATEGY DEVELOPMENT, PREPARATION OF IT SOLUTIONS ARCHITECT, BENCHMARKING THE SAME, RECRUITING THE MANPOWER FOR THE PURPOSE OF IMPLEMENTATION AND TRAINING THEM FOR VAR IOUS ACTIVITIES IN RELATION TO GSM ROLE OUT TO CUSTOMERS . IT IS A CLEAR COMMERCIAL COHERENCE BETWEEN THE SAID ACTIVITY AS N O SINGLE ACTIVITY MENTIONED ABOVE DOESNT SERVE ANY PURPOSE INDIVIDUALLY, WHEN SEGREGATED. ALL THESE ACTIVITIES ARE DIFFERENT FACET OF ONE SEAMLESS FUNCTION. THE PROJECT AS DEFI NED IN THE ARTICLE 5(2)(1) CONSISTS OF BUNDLE OF INTER-CONNECT ED AND INTER- RELATED SERVICES WITH THE UNDERLYING THEME OF COMPL ETION OF PROJECTS. IN THE INSTANT CASE, THE IMPLEMENTATION O F ONE SOF LEADS TO THE OTHER AND IT CAN BE OBSERVED THAT THEY ARE WELL INTEGRATED , THE OUTCOME OF ONE SOF BECOME THE INPUTS FOR THE OTHER SOF. THUS, BASED ON THE UNIFIED AGREEMENT, CONSOLIDATED BILLING PATTERN, THE ACTIVITIES BEING INTER RELATED AS FOUN D IN THE PRECEEDINGS PARAS, WE HEREBY HOLD THAT THE EXISTENC E OF THE PE OF THE ASSESSEE IS UNDENIABLE. 27. HAVING HELD SO, THE NEXT ISSUE REMAINS TO BE AD JUDICATED IS TO DETERMINE AS WHAT IS THE TAXABLE INCOME EARNED B Y THE ASSESSEE IN INDIA. WE FIND FROM THE RECORDS THAT TH E AO MADE ITA NO. 1307/DEL/2015 TELENOR ASA 46 AD-HOC DISALLOWANCE OF 60% OF THE REVENUES RECEIVED BY THE ASSESSEE ALLOWING ONLY THE 40% OF THE RECEIPTS AS E XPENDITURE. THE ASSESSEE ARGUED THAT ONLY THE MARK-UP OF 3.5% O F THE COST WHICH TRANSLATES TO 3.38% OF THE REVENUES COULD AT BEST BE CONSIDERED AS THE INCOME ATTRIBUTABLE TO THE REVENU ES PERTAINING TO THE PE IN INDIA. WE ARE ALSO IN AGREE MENT WITH THE ASSESSEE THAT THE REVENUES RAISED OUT OF THE SERVIC ES RENDERED FROM NORWAY CANNOT BE ATTRIBUTED TO THE PE OF THE A SSESSEE IN INDIA. THE ISSUE OF DETERMINATION OF THE PROFITS IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO PASS A N ORDER BY TAKING INTO CONSIDERATION, THE SERVICES RENDERED BY THE ASSESSEE FROM INDIA AND ALSO FROM NORWAY, THE EVIDENCE OF TH E EXPENSES INCURRED AS SUBMITTED BY THE ASSESSEE. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/08/2021. SD/- SD/- (KUL BHARAT) ( DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 12/08/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR