COMMNR. OF INCOME TAX, MEERUT vs M/S HYUNDAI HEAVY INDUSTRIES CO. LTD.

The Supreme Court ruled that the Korean company, M/s Hyundai Heavy Industries Co. Ltd., constituted a permanent establishment (PE) in India under Article 5(3) of the Convention for Avoidance of Double Taxation (CADT) due to the duration of its project exceeding nine months. The Court held that the profits attributable to the PE were taxable in India as per Article 7 of the CADT, rejecting the assessee's claims for exemption and the Completed Contract Method for accounting. The decision affirmed the assessment order which deemed the income from the Indian operations as taxable.