In the case of Krupp Uhde GmbH, the Mumbai Tribunal has given a key decision on Construction Permanent Establishment (PE). Key learnings from the decision are as follows:
– For calculating the threshold period, consolidation of unconnected projects needs to be done only in cases where the Tax Treaty specifically provides for it.
– Date of commencement of existence of PE would depend on whether the activity is undertaken on stand-alone basis or is dependent on any past activities relating to the project.
– Intervening period caused on account of temporary and seasonal interruptions cannot be excluded.
– Threshold period is to be counted activity-wise, irrespective of the years involved.
Intertax