Huawei Technologies Co. Ltd. vs. ADIT [2020] 122 taxmann.com 130 (Delhi – Trib.)

Income from the supply of telecommunication network equipment, installation, and commissioning of the same is taxable in India

Assessee, a Chinese Company was engaged in the business of supplying and installation of telecommunications network equipment’s to telecom companies in India through its Indian subsidiary. The employees of the Indian subsidiary company were involved in bidding, negotiating, and finalising the deal on behalf of Chinese Company. Indian Subsidiary could not on its own carry out installation and commissioning of equipment and there were regular visits of expat employees of the assessee which closely monitored the progress right from bidding till the final implementation phase. Indian subsidiary  constituted a fixed place Permanent establishment as its premises were at disposal of the assessee’s employees.

Since the assessee and the Indian Subsidiary jointly submitted bids for tenders, the said activity resulted in the constitution of dependent agent PE. Further, the act of installation had been performed only with the supervision of assessee’s resources, the activity of supervision in connection with installation constituted ‘Installation PE’ as per Article 5(2)(j) of the India-China DTAA

The ITAT concluded that the Income from the supply of telecommunication network equipment, installation, and commissioning of the same is taxable in India.