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Informist, Wednesday, Jun. 3, 2026

 

NEW DELHI – The Income Tax Appellate Tribunal Wednesday held that Canadian company IMAX Corp. does not have a permanent establishment in India under the Indo-Canadian Double Tax Avoidance Agreement, and hence, its income cannot be taxed by the Indian tax department. "...none of the tests provided for indicating the existence of a fixed place PE(permanent establishment) – place of business test, disposal test, permanence test and business activity test, are found to be fulfilled in this case," said the appellate tribunal.

 

It noted that IMAX Corp. had not breached the 120-day requirement for having a permanent establishment in installing its system through employees in India. On the income earned by IMAX Corp. on theatre design services, the appellate tribunal noted that these services were provided by the company remotely and no person visited India for it.

 

The appellate tribunal also rejected the income tax department's allegation of the existence of a supervisory permanent establishment of IMAX Corp. in India. The combined number of days of employees of IMAX Corp. visiting India for inspection of the premises of their clients and installation of theatres was less than the 120-day threshold, said the appellate tribunal.

 

IMAX Corp. is engaged in the business of developing, selling and leasing of large format theatre systems globally. IMAX Corp. also provides installation and related support services to its customers. The company had entered into agreements with Indian customers for sale and related services of theatre systems. 

 

Thereafter, the assessing officer proposed additions in IMAX Corp.'s income on the basis of an alleged existence of a fixed place permanent establishment in India. Challenging the addition of income, IMAX Corp. moved the appellate tribunal.  End

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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