ORDER

PER YOGESH KUMAR, U.S. JM:

The present appeal is filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals)-Delhi-42, (‘Ld. CIT(A)’ for short), dated 06/10/2025 for the Assessment Year 2020-21.

2. Brief facts of the case as mentioned in the order of the CIT(A) are as under: -

“2.1 The appellant is a non-resident foreign company incorporated in the USA and is engaged in providing a wide range of petroleum consulting services to clients worldwide in the oil and gas industry. It filed the return of income on 05.02.2021 declaring total income as Nil. The case was taken up for scrutiny.

2.1 During the year under consideration, the appellant has earned revenue from multiple contracts with Oil and Natural Gas Corporation of India (ONGC) and Oil India Limited (OIL) for rendering various petroleum consulting services in India. The receipts totaled to INR 147,620,042 (INR 85,335,612 from ONGC and INR 62,284,430 from OIL)

2.2 The AO issued a show-cause notice that since the contract deliverables are for more than 90 days then why activities performed by the appellant should not be considered as Service PE under India-US DTAA and taxed under 44BB of the Act as the minimum threshold of 90 days for constitution of the PE under Article 5(2)(l) of the DTAA was crossed.

2.3 In response, the appellant contended that since the stay of employees was less than 90 days, the company did not have a service PE in India.

2.4 The AO observed that the duration of the contract entered into by the appellant with ONGC and OIL was more than 90 days, accordingly, the appellant had a Service PE in India. The AO applied the provisions of section 44BB of the Act and computed the total income as Deemed Income @ 10% of the total revenue u/s 44BB of the Act of Rs. 1,47,62,005/-.

2.5 The appellant contended before the CIT(A) that the stay of employees of the appellant in India was less than the threshold of 90 days as provided under the India-US DTAA for creation of Service PE. The CIT(A) did not accept the argument of the appellant and concluded that the appellant formed a service PE in India, the income of which was taxable u/s 44BB of the Act. The assessment order was upheld and the CIT(A) dismissed the appeal of the assessee in the first round of proceedings before the CIT(A). Aggrieved with the order of CIT (A), the assessee preferred an appeal before the Tribunal. The Hon’ble ITAT in its order dated 02.04.2024 in ITA No. 1065/Del/2023 found that the CIT(A) held that the assessee has not substantiated its contentions regarding stay in India by way of the any documentary evidences such as passport etc. of the employees. The assessee has only submitted during appeal an unsigned document specifying the period of stay of various employees. Before the ITAT Before us, assessee argued that given an opportunity, the complete details would be submitted to the ld. CIT(A). The ld. DR opposed to the proposal in principle. Having considered the matter, we hold that no prejudice would be caused to the Revenue by remanding the matter to the file of the ld. CIT (A) to examine and complete the correct period of stay considering the documents specifying the period of stay.”

3. After the order of the Tribunal in ITA No. 1065/Del/2023 dated 02/04/2024, in the second round the Ld. CIT(A) vide order dated 06/10/2025, deleted the addition of Rs. 62,63,816/- holding that the said receipt cannot be treated as business income of the PE of the Appellant in India under Section 44BB of the Act. Aggrieved by the order of the Ld. CIT(A) dated 06/10/2025, the Revenue preferred the captioned Appeal.

4. The Ld. DR vehemently submitted that, the Ld. CIT(A) has erred by not considering the assessee a Service Permanent Establishment ("PE") in India under the provisions of the Act and India-US Double Taxation Avoidance Agreement ('DTAA'). Further contended that the Ld. CIT(A) has erred in holding that the threshold period of 90 days under Article 5(2)(1) of the India-U