Category Archives: Offshore services

Offshore services- live link with PE

The Supreme Court in Ishikawajima-harima Heavy Industries Ltd. vs. Director of Income-tax, Mumbai (2007) 288ITR408 held that in relation to offshore services, section 9(1)(vii)(c) required two conditions to be met to be taxable in India:

a) That the services which were the source of the income sought to be taxed had to be rendered in India;&

b) That the same shall be utilized in India.

In this case offshore service contract have been defined as the price of design and engineering including detail engineering in relation to supplies, services and construction and erection and cost of any other services to be rendered from outside India. In this case the appellant also supplied the equipments. The Court upon appreciation of the agreement terms held that both these conditions were not satisfied simultaneously since the appellants had provided services to persons resident in India, and though they had been used here, they had not been rendered in India thereby excluding the income from the ambit of taxation in India. The Court thus held a rule that for a non-resident to be taxed on income for services such a service had to be rendered within India, and