IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A No.1890/Del/2025 Assessment Year: 2022-23 IMAX THEATRE SERVICES LTD. Vs THE ASSISTANT COMMISSIONER OF

2525, Speakman Drive, Mississauga, INCOME TAX, Circle 2(1)(1), Ontario, Foreign, Canada, International Taxation, Canada 999999. Civic Centre, Minto Road, PAN No. AACC15822K New Delhi, Delhi 110002.

Appellant Respondent Assessee by Shri S.K. Aggarwal, CA & Shri Himanshu, CA Revenue by Shri M.S. Nethrapal, CIT DR Date of hearing: 06.05.2026 Pronouncement on 13.05.2026

O R D E R

PER SANJAY AWASTHI, ACCOUNTANT MEMBER:

1. This appeal arises from Ld. AO’s order u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereafter as “the Act”) dated 24.01.2025. This order itself incorporates the directions of Ld. DRP dated 31.12.2024.

1.1 The assessee is a tax resident in Canada and as per the India-Canada DTAA (hereafter as “the DTAA”), it holds a valid Tax Residency Certificate issued by the Canadian Government. The assessee is engaged in the business of providing maintenance services of Theatre Systems (IMAX Theatre Systems) globally, including India. The assessee entered into a separate agreement with an Australian vendor for providing maintenance services to its customers in India as well as other globally placed entities.

1.2 The main controversy in this case pertains to an allegation that the assessee has a Fixed Place Permanent Establishment (PE). There is also an allegation that there is a services PE of the assessee in India and therefore some profits were proposed by the AO to be attributed on the basis of the said PE as under:

i. Maintenance Services – Rs.590,35,967/-;

ii. Sale of glasses etc. 19,69,881/-.

Thereafter, the Ld. AO applied a profit rate of 25% on the resultant amount of Rs.610,05,848/- by invoking Rule 10 of the I.T. Rules and made an addition of Rs.152,51,462/-. The Ld. DRP upheld the proposal of the Ld. AO regarding the existence of a fixed place PE and also of a supervisory PE in India. However, the DRP reduced the profit rate from 25%, as proposed in the draft order, to 12.5%. This resulted in a total addition of Rs.76,25,731.

1.3 Aggrieved with this action, the assessee has approached the ITAT with the following grounds: -

“Ground No.1: Allegation of Fixed Place Permanent Establishment (‘PE’) of the Appellant in India:

1.1 On the facts and in the circumstances of the case and in law, the Ld. AO and the Ld. DRP have erred in holding that the Appellant had a Fixed Place PE in India without appreciating that the conditions for constituting a Fixed place PE are not satisfied in this case.

1.2 On the facts and circumstances of the case and in law, the Ld. AO and Ld. DRP grossly erred in holding that the Appellant has a Fixed place PE in India under India Canada DTAA through remote access of the Theatre system without appreciating that:

(a) The remote access of the Theatre system is provided by the customers for the limited purpose of maintenance services, assistance in troubleshooting, software updates, bog fixing, etc.

(b) No modification (technical/hardware/software) can be made through such remote access.

(c) The remote access of the system is provided by the Indian customers to monitor the performance and ensure smooth running of such system.

(d) The remote access for the purpose of merely rendering maintenance services to the customer cannot be construed as control for service provider's own account.

1.3 On facts and circumstances of the case and in law, the Id. AO and Id. DRP having failed to appreciate that there was no degree of permanence or continuity in the activities carried out by the Appellant through the sub-

contractor (ie. Australian vendor).

Ground Ne. 2: Allegation of Service PE of the Appellant in India:

2.1 On the facts and circumstances of the case and in law, the Ld. AO has grossly erred in holding that the Appellant has a Service PE in India under Articl