Director of Income Tax (International Taxation) vs R and B Falcon Offshore Ltd.

Barin Ghosh, C.J.—These Appeals arise from the selfsame order of the Tribunal, whereby the Tribunal dealt with three Appeals preferred by the assessee involving a similar question, but in relation to three different assessment years. The point in issue to be decided was, whether the assessee had a permanent establishment in India during the relevant assessment years. The facts relevant in relation thereto were placed by the assessee before the Assessing Officer, which were not disputed. Those facts were also not challenged at the Appellate stage or before the Tribunal. The facts suggested that the assessee brought in a rig and operated the said rig for and on account of its clients in India. Those rigs were deployed for such purpose on dates, as were furnished by the assessee and the same were remained unused during the dates as furnished by the assessee on account of maintenance and repair. The Assessing Officer felt that the Double Taxation Avoidance Agreement inter se India and United States, which was applicable in the instant case, used the word "used" without furnishing meaning to the said word and, accordingly, meaning thereof should be culled out from the income tax Act, 1961, which includes ''ready for use'' and felt that even during the time of repair and maintenance, the rig was lying ready for use and, as such, the rig having been used for more than 120 days during the relevant assessment years, the assessee, in the form of the said rig, had a permanent establishment in India in terms of the meaning of ''permanent establishment'' as given in Article 5(2)(j) of the said Agreement. The First Appellate Authority accepted the said contention. The Tribunal pointed out that Article 5(2)(j) is as follows:

The term ''permanent establishment'' includes especially: an installation or structure used for the exploration or exploitation of natural resources, but only if so used for a period of more than 120 days in any twelve calendar month period;

According to the Tribunal, the word ''used'' has been sufficiently explained in the Agreement requiring no further explanation and, for that matter, there is no scope of entering into the income tax Act, inasmuch as, the word ''used'' has been used in conjunction of ''an installation or structure for exploration or exploitation of natural resources and only if so used for a period of more than 120 days in 12 month period'' and, thereby, made it absolutely clear that the Agreement meant user of installation and structure for exploration or exploitation of natural resources and not merely being ready for use. Having had concluded the same, the Tribunal has reversed the findings of the Assessing Officer as well as the First Appellate Authority.

Having had considered what we have stated above, we have not been able to persuade ourselves to take a different view. We, accordingly, dismiss these Appeals.