Cargo booking activities of shipping agent do not constitute DAPE under Article 5 of the India-Mauritius DTAA, as these activities are not akin to concluding contracts – Mumbai bench of the Tribunal

In brief 

The Mumbai bench of the Income-tax Appellate Tribunal (Tribunal)¹ , in the case of a taxpayer, a foreign shipping line, concluded that the taxpayer’s Indian agent is an independent agent acting in the ordinary course of its business, and its activities are not devoted exclusively or almost exclusively on the taxpayer’s behalf. Therefore, it was concluded that the taxpayer does not have an agency permanent establishment (PE) in India. The routine activity of booking cargo or freight does not tantamount to ‘conclusion of contracts’ in India on behalf of the taxpayer. Accordingly, even if the taxpayer’s case is not covered by Article 8 of the India–Mauritius Double Taxation Avoidance Agreement (DTAA), the business profits (Article 7) would not be chargeable to income-tax in India, as it does not have a PE (Article 5) in India.