Category: Uncategorised

REFUSED – TOMMY HILFIGER FLAG LOGO – COPYRIGHT REGISTRATION

Description: The Tommy Hilfiger Flag Logo – A two-dimensional graphic of a rectangle.  Within the rectangle are four smaller rectangles; two identically sized navy rectangles and two identically sized red and white rectangles.  The red and white rectangles are sandwiched between the navy rectangles.)

FACTS OF THE CASE:
On February 14, 2017, Tommy Hilfiger filed an application to register a copyright claim in the Work.In a November 30, 2017, letter, a Copyright Office registration specialist refused to register the claim, finding that it “lacks the requisite authorship necessary to support a copyright claim.”

APPLICATION FOR THE “FIRST REQUEST”:
In a letter dated February 28, 2018, Tommy Hilfiger requested that the Office reconsider its initial refusal to register the Work. This was the “First Request”.

Arguements:

Tommy Hilfiger argued that the Work:
(i)  is more than just geometric shapes, and a significant amount of creativity, thought, ingenuity, and authorship was involved in selecting, combining, and arranging the elements of the Flag Logo Design to form an original and unique design.” 

(ii)   “consists of four different rectangles arranged in a unique manner so as to collectively comprise one larger rectangle and includes a combination of different colors, different shapes, and different size elements.”

(iii) “location and arrangement of the shapes is unique in that it is a creative combination of the letters ‘T,’ ‘J,’ and ‘H’ of the nautical flag alphabet to create a unique flag, which represents the initials of Thomas J. Hilfiger.”

Decision of the Board on the “First Request”:

The U.S Copyright Office after reviewing the Work in light of the points raised in the First Request, concluded that the Work “does not contain a sufficient amount of original and creative graphic or artistic authorship to support a copyright registration.” The Office explained that there are no elements or features embodied in the Work, alone or combined, that are eligible for copyright protection.

APPLICATION FOR THE “SECOND REQUEST”:
Tommy Hilfiger made a second request pursuant to Regulation 37 of the Code of Federal Regulation [C.F.R. § 202.5(c)], 

Arguements:

Tommy Hilfiger argued that the originality present in the work exceeds the standard set forth in Feist Publications, Inc., v. Rural Telephone Service Co. (a landmark case in U.S. copyright law laying down the principles of registration of copyright and dealt hereinbelow): 

(i)   That the “four rectangles of two different shapes are arranged in a unique way to form one larger rectangle, transforming four rectangles into five.”

(ii)    That the rectangles are sized so that the long and short rectangles form the top and bottom to the “nearly square” rectangles within, and to this “unique” arrangement of shapes are added three colours.

(iii)   That the arrangement has meaning—mimicking the letter “H” when turned 90 degrees and displaying the letters “T,” “J,” and “H” in the nautical flag alphabet for Thomas J. Hilfiger. 

(iv)   Finally, Tommy Hilfiger noted that the flag means “going home” in the yachting world because the red on the right side of the Work denotes returning from one’s voyage.

Decision on the “Second Request”:
On 15th March,2019, after reviewing the the arguments in the second request, the Board affirmed the Registration Program’s denial of registration.

Grounds of refusal –

Legal framework governing Copyright in U.S.A:  
According to 17 U.S.C. § 102(a), A work may be registered if it qualifies as an “original work of authorship fixed in any tangible medium of expression.” The term “original” has 2 components i) sufficient creativity and ii) independent creation and explained the same as follows:

1.     Unoriginal geometric shapes and colours are not acceptable by the Office:
To begin with, the Work is a combination of four rectangles and three colors: two equally sized blue rectangles and two equally sized red and white rectangles between the blue horizontal blue bars.  The Office cannot register common geometric shapes or coloring w.r.t 37 C.F.R. § 202.1(a) which says “examples of works not subject to copyright and applications for registration include familiar symbols or designs and coloring”; noting that familiar symbols and designs cannot be registered.  Thus, the individual elements of the overall Work are not independently copyrightable.  Tommy Hilfiger acknowledges that “color alone and a standard shape alone are not registrable.”

2.     Lack of originality
Tommy Hilfiger correctly stated that “the Office should consider the work at issue in its entirety.”  However, as the Ninth Circuit explained in Satava, “a combination of unprotectable elements is eligible for copyright protection only if those elements are numerous enough and their selection and arrangement original enough that their combination constitutes an original work of authorship.” Indeed, some combinations of common or standard design elements may contain sufficient creativity to support a copyright, but not every combination will meet this threshold (like in the Fiest case).  Based on this standard, examination of the Work as a whole revealed a lack of copyrightable authorship.  The Work falls squarely into the Copyright Office’s regulations barring registration of a simple combination of basic geometric shapes and mere variations of coloration(37 C.F.R. § 202 “The Copyright Act does not protect common geometric shapes . . . .”).  Essentially, the Work is one large rectangle divided into two equally sized blue rectangles and two equally sized red and white rectangles.  The arrangement of four rectangles to create a larger rectangle, even if one among many possibilities, is not sufficiently creative to warrant copyright protection.  Additionally, the red, white, and blue colors added to the arrangement of shapes do not raise the Work into copyrightability; they are exceedingly common for flag designs. 

3.     Intent of author is irrelevant
Tommy Hilfiger argues that the “location and arrangement” of the rectangle shapes and colors “is a creative combination of the letters T, J, and H of the nautical flag alphabet representing the initials of Thomas J. Hilfiger (the founder of the Tommy Hilfiger brand).” The Board does not find this explanation persuasive.  First, to the extent that Tommy Hilfiger asks the Board to consider the symbolic meaning of the Work, the symbolic meaning or impression that a work conveys is irrelevant to whether a Work contains a sufficient amount of creativity.  [COMPENDIUM (THIRD) § 310.3].  Equally irrelevant is the intent of the author.(“The fact that a creative thought may take place in the mind of the person who created a work . . . has no bearing on the issue of originality unless the work objectively demonstrates original authorship.”). 

4.     Lack of creativity
The combination of pre-existing flags from the Nautical Flag Alphabet does not exhibit sufficient original authorship.  Compiled by the British government in 1857, the Nautical Flag Alphabet, also known as the International Code of Signals, consists of internationally agreed upon flag signals that are used to prevent incidents at sea. 
As discussed above, works composed of pre-existing elements may be copyrightable, but only if the selection, coordination, and/or arrangement of those elements reflect authorial discretion that is not so obvious or minor that the “creative spark is utterly lacking or so trivial as to be virtually non-existent.”  (Feist case). In this case it appears that the author principally employed the “J” and “H” flags to compose the Work, replacing the white rectangle in the “J” flag with the white and red rectangles from the “H” flag.  The combination of the two pre-existing flags was too trivial to support a claim to copyright. [e.g. Case- Homer Laughlin China Co. v. Oman (upholding refusal to register chinaware design pattern composed of simple variations of geometric designs due to insufficient creative authorship to support copyright registration). {COMPENDIUM (THIRD) § 905 (“Merely bringing together only a few standard forms or shapes with minor linear or spatial variations does not satisfy this requirement.”)}]. The Work is simply too basic in form.

——  Sreemoyee Majumdar, Student 4th year, Hazra Law College, Calcutta University currently interning in A.Sinha & Associates,Advocates 

DTAA: Service PE vs Agency PE : Saudi Arabia – India

Query : Based on the nature of business support/ marketing support activities proposed to be undertaken by the Indian affiliate entity viz. Aramco Asia India Private Limited (hereinafter “Aramco India”), as listed in the Statement of relevant facts (Annexure III), would Aramco India create a Permanent Establishment (“PE”) for the Applicant in India under Article 5 of Double Taxation Avoidance Agreement between India and Kingdom of Saudi Arabia (hereinafter “India-Saudi Arabia DTAA”), where such activities of Aramco India are duly compensated on an Arm’s Length basis in accordance with the Indian transfer pricing laws and regulations?

Reply: Based on the nature of business support / marketing support activities proposed to be undertaken by the Indian affiliate entity viz. Aramco Asia India Private Limited (Aramco India), as listed in the Statement of relevant facts (Annexure III) Aramco India would not create a Permanent Establishment (PE) for the Applicant in India under Article 5 of Double Taxation Avoidance Agreement between India and Kingdom of Saudi Arabia, where such activities of Aramco India are duly compensated on an Arm’s Length basis in accordance with the Indian transfer pricing laws and regulations

——————————FACTS OF THE CASE———————————-

Saudi Aramco is making offshore crude oil sales to Indian refineries like HPCL- Mittal Energy Limited, Hindustan Petroleum Corporation Limited etc., from outside India such that the title to such crude oil passes to customers outside India on a Free on Board (‘FOB’) basis; and payment is received by Saudi Aramco in a designated bank account outside India. All crude oil sales are completed by Saudi Aramco from outside India and it does not have any office in India.

To expand its India operations and for having a long term presence, Saudi  Aramco has established a Subsidiary company in India viz.  Aramco Asia India Private Limited (Aramco India), incorporated and registered under the Indian Companies Act, in 2013. Though the primary object of the new entity is to provide procurement support services, it would also create awareness about Aramco and Saudi Arabian crude oil amongst crude buyers and refineries in India.

The Applicant proposes to set up a support team in Aramco India which will closely coordinate and extend required support to Saudi Aramco’s Crude Oil Sales and Marketing Department (COSMD) for providing business support/marketing support function. However, it is mentioned that with regard to the negotiation of the material terms or conclusion of contracts with Indian customers as well as signing of such contracts for or and on behalf of Saudi Aramco, such activities will only be carried out by Saudi Aramco’s own employees based in Saudi Arabia. Aramco India, however, will only provide certain support in furtherance of the above sales operations. It will be helping in strategic sourcing and registration of major Indian oil and gas equipment manufactures and engineering procurement and construction (EPC) contractors, performing engineering and inspection evaluations, and plant audits for identified manufacturers and suppliers. It will also be supporting Saudi Aramco and other group companies with any additional material supply support.

 In the E-Funds judgment, 86 taxmann.com 240 (SC), a Service PE cannot be said to exist unless the foreign enterprise renders services in India through its employees to the customers of the foreign enterprise. In the instant case, the Applicant is only receiving services and not rendering any services. In any event, the Director of Aramco India who resides in Beijing is not an employee of the Applicant, and this Director cannot be said to be rendering any services to any customer of the Applicant in India. Hence, no Service or Agency PE can possibly be said to exist in the present case. Similar is the position with regard to the other Directors.

Fixed Place PE 

This is covered by Article 5(1) of the DTAA, and there are three requirements which have to be conjunctively established in order that a Fixed Place PE can exist. Firstly, there must be a specific identifiable fixed place of business in India; secondly, that fixed place must be put at the disposal of the foreign enterprise; and thirdly, the foreign enterprise must carry on its main business activity through that fixed place of business. Reference in this regard has been made to the decisions of the Hon’ble Supreme Court of India, in the Formula One case, 394 ITR 80 (SC), and also in the E-Funds case, 86 taxmann.com 240 (SC).

It is stated that even where such purchase contracts were to be concluded by Aramco India, it will still not result in creation of a PE as the “orders” referred to in Article 5(5)(c) are sales orders for the sale of the products of the foreign enterprise and not purchase orders for goods purchased by it for its internal operations.

In this connection, reliance was placed by the Applicant on the following judicial precedents to say that the proposed business support / marketing support activities would not result into constitution of Agency PE in terms of Article 5(5) of the DTAA: DDIT vs B4U International Holdings Ltd. (ITA No. 880/Mum/2005) (Mumbai ITAT) and upheld by the Bombay HC (2015) 374 ITR 453 (Bom); e-Bay International AG v ADIT (ITA No. 6784/M/2010) (Mumbai ITAT); and DDIT vs Daimler Chrysler A.G. (ITA No. 9211/Mum/2004) (Mumbai ITAT).

Supreme Court’s view – Service PE

In Vodafone Holdings International, BV, 341 ITR 1 (2012), the Hon’ble Supreme Court had observed as under

  “66. The approach of both the corporate and tax laws, particularly in the matter of corporate taxation, generally is founded on the above mentioned separate entity principle, i.e., treat a company as a separate person. The Indian Income Tax Act, 1961, in the matter of corporate taxation, is founded on the principle of the independence of companies and other entities subject to income-tax. Companies and other entities are viewed as economic entities with legal independence vis-a-vis their shareholders/participants. It is fairly well accepted that a subsidiary and its parent are totally distinct tax payers. Consequently, the entities subject to income-tax are taxed on profits derived by them on standalone basis, irrespective of their actual degree of economic independence and regardless of whether profits are reserved or distributed to the shareholders/ participants……….

Now a days, it is fairly well settled that for tax treaty purposes a subsidiary and its parent are also totally separate and distinct tax payers.

67. It is generally accepted that the group parent company is involved in giving principal guidance to group companies by providing general policy guidelines to group subsidiaries.However, the fact that a parent company exercises shareholder’s influence on its subsidiaries does not generally imply that the subsidiaries are to be deemed residents of the State in which the parent company resides. Further, if a company is a parent company, that company’s executive director(s) should lead the group and the company’s shareholder’s influence will generally be employed to that end. This obviously implies a restriction on the autonomy of the subsidiary’s executive directors. Such a restriction, which is the inevitable consequence of any group structure, is generally accepted, both in corporate and tax laws.

In the case Formula One World Championships (supra). Para 27 of this decision reads as under: 

“27. The principal test, in order to ascertain as to whether an establishment has a fixed place of business or not, is that such physically located premises have to be ‘at the disposal’ of the enterprise. For this purpose, it is not necessary that the premises are owned or even rented by the enterprise. It will be sufficient if the premises are put at the disposal of the enterprise. However, merely giving access to such a place to the enterprise for the purposes of the project would not suffice. The place would be treated as ‘at the disposal’ of the enterprise when the enterprise has right to use the said place and has control thereupon.”

E-Funds (supra), the Hon’ble Supreme Court said at para 16, as under:

“16. This report would show that no part of the main business and revenue earning activity of the two American companies is carried on through a fixed business place in India which has been put at their disposal. It is clear from the above that the Indian company only renders support services which enable the assessees in turn to render services to their clients abroad. This outsourcing of work to India would not give rise to a fixed place PE and the High Court judgment is, therefore, correct on this score.”

Supreme Court’s view – Agency PE

In the Morgan Stanley case, Supreme Court explained as under:

 “9. Lastly, as rightly held by the AAR there is no agency PE as the PE in India had no authority to enter into or conclude the contracts. The contracts would be entered in the United States. They would be concluded in US. The implementation of those contracts is only to the extent of back office functions that would be carried out in India, and therefore, MSAS would not constitute an Agency PE as contended on behalf of the Department.”

In the case of E-Funds (86 taxmann.com 240), the Hon’ble Supreme Court explained as under (para 21, Pg. 52):

“21. …However, for the sake of completeness, it is only necessary to agree with the High Court, that it has never been the case of Revenue that e-Funds India was authorized to or exercised any authority to conclude contracts on behalf of the US company, nor was any factual foundation laid to attract any of the said clauses contained in Article 5(4) of the DTAA. This aspect of the case, therefore, need not detain us any further.”
Ratio

In the above analysis we are caught in between two situations. On the one hand are the specific provisions of the DTAA, the clauses in the Agreements, such as Clause 5 of the Services Agreement and Clauses 3 and 4 of the Proposed Addendum, which prohibit Aramco India from doing activities that are clearly in the domain of the Applicant, such as concluding contracts or obtaining orders, and exclude all such acts that may render Aramco India a PE of the Applicant. On the other hand we have the wordings used in the different services enumerated in the two agreements, which lend themselves to varied interpretation, in the absence of material facts. However, the above discussion shows that in view of the clear exclusions and prohibitions incorporated in the two agreements, as they presently stand, Aramco India would not be rendering services or doing such acts as can deem it to be a PE of the Applicant, under Article 5 of the India Saudi Arabia DTAA.

The Ecologically Sensitive Wetlands In Kolkata & Its Protection

Protecting the Environment is something that should be as good as protecting oneself from perils of danger. One such sensitive zone in a mega metropolis like Kolkata are the ‘East Kolkata Wetlands’ and the vast expanse it covers and the constant threat it faces due to shrinking land for urban development.  So protecting such diverse zone is of primary importance for more reasons than one.

The East Kolkata Wetlands (Conservation and Management) Act, 2006 (W.B. Act No. VII of 2006) is one such Act that provides statutory recognition for the Wetlands and its protection based on the Ramsar Convention (Iran). 
The East Kolkata Wetlands (Conservation and Management) Act, 2006
Published on March 31, 2006 in the Kolkata Gazette, Extraordinary, by the Government of West Bengal, Law Department (Legislative). The Act was preceded by the W.B. Ordinance No. VII of 2005. The Act deemed to have come into force on the 16th day of November, 2005.

The Objectives of the Act , 2006 are to provide for conservation and management of the ‘East Kolkata Wetlands’ as there is an increasing pressure on the land for human settlement leading to filling up of the wetlands and the East Kolkata wetlands are ecologically and socio-economically very important. “East Kolkata Wetlands” means such of the areas included in the list of Ramsar Sites as are specified in Schedule I and shown in the map in Schedule II. 

“Ramsar Sites” means the wetlands of international importance under Ramsar Convention.

“Ramsar Convention” means the Ramsar Convention on Wetlands Ramsar Iran. 

The Preamble of this Act further points out that the wetlands act as regulator of water regime, source for underground water recharging, mechanism for waste treatment, air quality purifier and store for fire fighting and have great ecological significance for human life.  
The Act provides for setting up by the State Government the “East Kolkata Wetlands Management Authority” as a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property and to contract. Such Authority may, by its said name, sue or be sued. 

It may be noted that Ramsar is a Convention on Wetlands, signed in Ramser, Iran, in 1971, which is inter governmental treaty providing the framework for national action and international co-operation for the convention and wise use of wetlands and their resources. There are 147 contracting parties to the Convention, with 1524 wetland sites, adding up to 129.2 million hectares, designed for inclusion in the Ramsar List of Wetlands of International Importance. The East Kolkata Wetlands are one of them. (vide “Wetland Victory- 1, One Ordinance; Mary Heroes” by Aditi Roy Ghatak, published in “The Statesman”, Kolkata, dated 9.12.2005).
In the article, “Wetland Victory” it has been pointed out that a Calcutta High Court order on 16 November has directed the State Govt. to demolish all constructions along the Eastern Metropolitan Bypass under the Bantala Police Station and return the wetlands to their original sate. 

It is mandatory for every person holding any land in the East Kolkata wetlands to maintain and perverse such land in a manner that its area is not diminished, or its character is not changed, or it is converted for any purpose other than the purpose for which it was settled or previously held, except with the previous sanction of the Authority u/s. 10 . (Section 9) 
Section 10 of the Act lays down the procedure for granting sanction by the Authority for change of character or mode of use of the land held by any person in the East Kolkata Wetlands. But the Authority shall have no power to grant sanction for change of character or mode of use of land unless the change is for improvement or upkeep of the local environment and its surroundings. 

Where the Authority is satisfied that the character or mode of use of a land is being changed or has been changed in contravention of any provision of this Act the Authority may, by order in writing, require the person responsible for the change to restore the land, at his own expense, to the original character or mode of use within a period specified in the order and, in case of default by such person, undertake the restoration by itself and recover the cost thereof as arrears of land-revenue. (Vide Section 11) 
The State Government is empowered to give direction from time to time, to the Authority who shall be guided, in performance of its functions, by such directions, provided no such direction shall be inconsistent with any provision of this Act. ( Section 16) 

Power is conferred on the State Government by Notification to include any area in, or exclude any area from, or enlarge, curtail or modify any areas of, East Kolkata Wetlands and, thereupon, Schedule I and Schedule II shall be deemed to have been amended accordingly. Such power is to be exercised if it is of opinion that it is expedient or necessary in the public interest. (Section 17) 

The Act makes failure to comply with or contravention of any provision of the Act or the rules made, or orders issued thereunder a cognizable and non-cognizable offence and punishable with imprisonment with may extend to three years or with fine which may extend to one lac rupees or with both, and in case such failure or contravention continues, with an additional fine which may extend upto five thousand rupees for every day during which such failure or contravention continues after the conviction for first such contravention. (Section 18). 

Section 19 deals with offences by a Company and body corporate, which includes firm, association or individuals. Section 20 deals with offences by officers of the State Government or local bodies. 

Section 23 confers power on the State Government by notification to make rules for carrying out the purposes of the Act.

Few Notable Sections from the Act:Section 8 . Application for change of character or mode of use of land – 

(1) Any person holding a land in the East Kolkata Wetlands may apply for a change of character or mode of use of the land, to the Authority in Form 1, in triplicate . 

(2) The application shall be accompanied with fees as may be fixed by the Authority from time to time. 

(3) The receipt of the application shall be acknowledged by the Authority. 

(4) The Authority shall, on receipt of the application, examine the merit of the case and if necessary cause an inspection of the proposed site throw an expert committee: 

Provided that if the Authority believes that there is no merit in the case, it may, after giving the applicant a reasonable opportunity of being heard, reject the application for change of character or mode of use of land and inform the applicant within 60 days of receipt of the said citing reasons for rejection. 
(5)The Authority shall after examination of the merit of the case and inspection of the proposed side, refer the application with observations thereof, in duplicate, to the Collector of the concerned District, within 60 days, for taking necessary actions for issuance of an order under section 4(c) of the West Bengal Land Reforms Act, 1955.

Section 9 . Maintenance and preservation of land in East Kolkata Wetlands –

(1) Not withstanding anything contained in any law for the time being in force, every person holding any land in the East Kolkata Wetland shall maintain and preserve such land in a manner its area is not diminishes or its character is not changed, or it is not converted for any purposed other than the purpose for which was settled or previously held, except with the previous sanction of the Authority under Section 10. 

Section 10 . Procedure for granting section — 

(1) Any person holding a land in the East Kolkata Wetlands may apply, in such manner as may be prescribed, to the Authority for change of character or mode of use of the land. 

(2) The Authority shall, on receipt of the application, examine the merit of the case and, if necessary, inspect the proposed site. 

(3) After examination of the case and inspection, if any, of the proposed site under sub-section(2), the Authority shall refer the case to the Collector of the concerned District for taking necessary action for issuance of an order under Section 4C of the West Bengal Land Reforms Act, 1955 (West Ben Act X of 1956) 

(4) On receipt of the order from the Collector of the concerned District, the Authority may pass, in such form and with such restrictions and conditions as may be prescribed, an order granting sanction for change of character or more of use of the land: 

Provided that if the sanction may result in filling up of water body, the Authority shall, prior to granting sanction under this sub-section, require the person to create at an appropriate place within the East Kolkata Wetlands a water body of which the area shall not be less than the area of the water body which may be so filled up. 

(5) Nothing in this section shall empower the Authority to grant sanction for change of character or mode of use of a land unless the change is for improvement pr upkeep of the local environment and its surroundings. 

Section 11 . Restoration of land to originate character or mode of use. – 

(1) Authority is, either suo motu or on receipt of any information, satisfied that the character or mode of use of a land is being changed or has been changed in contravention of any provision of this Act, it may, by order in writing, require the person responsible for the change to restore the land, at its own expense to the original character or mode of use within such period as may be specified in the order. And, in case of default by such person, under take the restoration by itself and recover the cost there of as arrears of land revenue: 

Provided that before passing the order the authority shall give the person a reasonable opportunity of being heard. The Authority may use appropriate technology and method in determining whether a land comprises or has comprised a wet land or whether water is being or has been drawn from a wetland so as to change the character or mode of use of the wetland or whether a wetland is being or has been filed up partially or fully or whether a wetland is being or has been encroached upon in any manner.

Permanent Establishment arising out of “Exploration of Natural Resources”

Permanent Establishment arising out of “Exploration of Natural Resources”

In the absence of a specific clause pertaining to “exploration for mineral oils, natural resources” in DTAA between India and other countries in Article 5 as an exemption from being a Permanent Establishment (“PE”) through duration, the income arising from providing services related to “exploration of natural resources” in high seas or land shall be considered as a “business income” in India.  
Klaus Vogel in his Commentary on Double Taxation Conventions, Third Edition(para 44, pg294)states with regard to Article 5(2),while referring to exploration of natural resources as mentioned at subparagraph (f) , that since this sub para does not include exploration and only refers to extraction of natural resources, and since it has not been possible to arrive at a common view on the basic questions of attribution of taxation rights and of the qualification of the income from exploration activities, the contracting States may agree upon the insertion of specific provisions.
They may agree, for instance, that an enterprise of a contracting State, as regards activities of exploration of natural resources: (a) shall be deemed not to have a permanent establishment in that State; or (b) shall be deemed to carry on such activities through a permanent establishment in that other state; or (c) shall be deemed to carry on such activities through a permanent establishment in that other State if such activities last longer than a specified period of time.
For e.g. DTAA between India-SingaporeThe term “permanent establishment” includes especially :

(f)
a mine, an oil or gas well, a quarry or any other place of extraction of natural resources ;
(j)
an installation or structure used for the exploration or exploitation of natural resources but only if so used for a period of more than 120 days in any fiscal year.

Notwithstanding the provisions of paragraphs 3 and 4, and enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in that Contracting State for a period of more than 183 days in any fiscal year in connection with the exploration, exploitation or extraction of mineral oils in that Contracting State.DTAA between India-USAThe term “permanent establishment” includes especially :

(j)
an installation or structure used for the exploration or exploitation of natural resources, but only if so used for a period of more than 120 days in any twelve-month period ;

DTAA between India-JapanThe term ‘permanent establishment’ includes especially :

(f)
a mine, an oil or gas well, a quarry or any other place of extraction of natural resources ;
(j)
an installation or structure used for the exploration of natural resources, but only if so used for a period of more than six months.

DTAA between India-UKThe term “permanent establishment” shall include especially :

(h)
a mine, an oil or gas well, quarry on other place of extraction of natural resources;
(i)
an installation or structure used for the exploration or exploitation of natural resources;

activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelve-month period




DTAA India-NetherlandsThe term “permanent establishment” includes especially :

(f)
a mine, an oil or gas well, a quarry or any other place of extraction of natural resources ;
(i)
an installation or structure used for the exploration of natural resources provided that the activities continue for more than 183 days.

DTAA India-Saudia ArabiaThe term “permanent establishment” includes especially :

(f)
a mine, a gas well, a quarry or any other place of extraction of natural resources.

The one between India and Saudi Arabia is an example in which exploration of natural resources is not covered.  However, the term used is extraction of natural resources.  But the same is not qualified by any specific duration. 
The Supreme Court in the latest judgment in Formula One has set out the test of  PE as ‘permanence test’, ‘business activity test’ and ‘disposal test’. The same test would also have to be applied for establishing a PE in India.

PRINCIPLES OF ADVERSE POSSESSION

The Supreme Court in the case of T.Ravi vs B.Chinna Narasimha (2017) 3 SCC (Civil) has briefly discussed the principles of “Adverse Possession” as follows:

i)  Merely a bald statement that there was Adverse Possession is not enough to set up a plea of Adverse Possession.  It has to be clearly set out from which date it commenced and became hostile when there was repudiation of the title.

ii) There are 3 classic requirements of plea of Adverse Possession – “Nec Vi”, “Nec Clam” and “Nec Precario” meaning peaceful, open and continuous respectively and it is important to plead and prove the same.

The Supreme Court cited the case of Karnataka Board of Wakf vs Union of India (2004) 10 SCC 779 which held that when litigation was pending regarding the property, it cannot be said that the possession was peaceful or hostile in any view of the matter. The relevant paras held:

“11. In the eye of the law, an owner would be deemed to be in possession of a property so long as there is no intrusion. Non-use of the property by the owner even for a long time won’t affect his title. But the position will be altered when another person takes possession of the property and asserts a right over it. Adverse possession is a hostile possession by clearly asserting hostile title in denial of the title of the true owner. It is a well-settled principle that a party claiming adverse possession must prove that his possession is “nec vi, nec clam, nec precario”, that is, peaceful, open and continuous. The possession must be adequate in continuity, in publicity and in extent to show that their possession is adverse to the true owner. It must start with a wrongful disposition of the rightful owner and be actual, visible, exclusive, hostile and continued over the statutory period. (See S.M. Karim v. Bibi Sakina AIR 1964 SC 1254, Parsinni v. Sukhi (1993) 4 SCC 375 and D.N. Venkatarayappa v. State of Karnataka (1997) 7 SCC 567.) Physical fact of exclusive possession and the animus possidendi to hold as owner in exclusion to the actual owner are the most important factors that are to be accounted in cases of this nature. Plea of adverse possession is not a pure question of law but a blended one of fact and law. Therefore, a person who claims adverse possession should show: (a) on what date he came into possession, (b) what was the nature of his possession, (c) whether the factum of possession was known to the other party, (d) how long his possession has continued, and (e) his possession was open and undisturbed. A person pleading adverse possession has no equities in his favour. Since he is trying to defeat the rights of the true owner, it is for him to clearly plead and establish all facts necessary to establish his adverse possession. [Mahesh Chand Sharma (Dr.) v. Raj Kumari Sharma (1996) 8 SCC 128.] 

12. A plaintiff filing a title suit should be very clear about the origin of title over the property. He must specifically plead it. (See S.M. Karim v. Bibi Sakina (Supra).) In P. Periasami v. P. Periathambi (1995) 6 SCC 523 this Court ruled that: (SCC p. 527, para 5) 

“Whenever the plea of adverse possession is projected, inherent in the plea is that someone else was the owner of the property.” 


The pleas on title and adverse possession are mutually inconsistent and the latter does not begin to operate until the former is renounced. Dealing with Mohan Lal v. Mirza Abdul Gaffar (1996) 1 SCC 639 that is similar to the case in hand, this Court held: (SCC pp. 640-41, para 4) 


“4. As regards the first plea, it is inconsistent with the second plea. Having come into possession under the agreement, he must disclaim his right thereunder and plead and prove assertion of his independent hostile adverse possession to the knowledge of the transferor or his successor in title or interest and that the latter had acquiesced to his illegal possession during the entire period of 12 years i.e. up to completing the period his title by prescription nec vi, nec clam, nec precario. Since the appellant’s claim is founded on Section 53-A, it goes without saying that he admits by implication that he came into possession of land lawfully under the agreement and continued to remain in possession till date of the suit. Thereby the plea of adverse possession is not available to the appellant.””


In light of the above rulings that to take up the plea of Adverse Possession one has to take into consideration the factual aspects of the ownership as the onus of proving the right of Adverse Possession falls on the person claiming the same.