2013 (5) TMI 1023 - AT - Income Tax

Tribunal clarifies PE existence and revenue attribution, rejects rectification under section 254(2)

Samsung heavy Industries Co. Ltd. Versus Additional Director of Income-tax (International Taxation)

The Tribunal partly allowed the application by rectifying a clerical mistake in the order but found no other mistakes warranting rectification under ... - Issues Involved:1. Rectification of Mistakes Apparent from Record u/s 254 of the Act.2. Existence of Permanent Establishment (PE) in India.3. Attribution of Revenues to PE.4. Nature of Activities of Project Office.Summary:1. Rectification of Mistakes Apparent from Record u/s 254 of the Act:The applicant sought rectification of certain claimed mistakes in the Tribunal's order, arguing that the order was not in conformity with the binding decision of the Hon'ble jurisdictional Uttarakhand High Court in CIT v. BKI/HAM V.O.F. c/o Arthur Anderson Co. The Tribunal acknowledged a clerical mistake in para No. 20 of its order, where the date '24th May, 2006' was incorrectly mentioned instead of '17th Nov., 2007.' This mistake was rectified, but it was noted that this correction did not affect the Tribunal's findings on the issue.2. Existence of Permanent Establishment (PE) in India:The Tribunal had previously held that the applicant had a fixed place PE in India in the form of a project office. The applicant contended that the installation PE came into existence only after 17th Nov., 2007, when the jackets were brought to the offshore site for installation. The Tribunal found that the Mumbai project office of the assessee was opened on 24th May, 2006, and the PE of the assessee was existing in India at all points of time. The Tribunal rejected the applicant's contention, stating that the facts of the case were distinguishable from the cited case of BKI/HAM V.O.F. c/o Arthur Anderson & Co.3. Attribution of Revenues to PE:The applicant argued that the Tribunal's observation in para No. 64, which stated that the revenue recognized by the assessee related to hook up and commissioning, insurance, and pre-engineering surveys, was incorrect. The Tribunal clarified that this observation did not imply that the applicant had earned income from these activities during the relevant previous year. The Tribunal found no mistake in this para of the order.4. Nature of Activities of Project Office:The applicant contended that the Tribunal's observation in para No. 77, which stated that no material had been brought on record to prove that the activities of the project office were preparatory or auxiliary in nature, was incorrect. The Tribunal held that the material furnished by the assessee was not sufficient to show that its Mumbai office did not have any role to play in the execution of the contract. The Tribunal found no mistake in this para of the order.Conclusion:The Tribunal partly allowed the application, rectifying the clerical mistake in para No. 20 but found no other mistakes apparent from the record that warranted rectification u/s 254(2) of the Act.