Offshore supply receipts not taxable in India where title passed outside India and Indian operations were separately performed.

Receipts from a non-resident's offshore supply of escalators and elevators were held not taxable in India because the assessee's role was confined to design, manufacture and CIF supply outside India, while the Indian consortium partner separately handled clearance, transport, installation, testing, commissioning and maintenance. Separate scopes of work, separate invoices and separate consideration supported the finding that title in the goods passed outside India. On the principle that only income attributable to operations carried out in India can be taxed in India, the offshore supply receipts could not be brought to tax merely because the overall project also involved onshore work by another consortium member.

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Issues: Whether the receipts from offshore supply of escalators and elevators were taxable in India in the hands of the non-resident assessee.

Analysis: The consortium arrangement showed that the assessee and its Indian partner had separately defined scopes of work, separate invoices, and separate consideration in different currencies. The assessee's role was confined to design, manufacture, and offshore supply, while the Indian partner undertook clearance, transportation, installation, testing, commissioning, and maintenance. The record also showed that the offshore supply was on CIF terms and the title in the goods passed outside India. Applying the principle that only income attributable to operations carried out in India can be taxed in India, the receipts from the assessee's offshore supply could not be brought to tax merely because the overall project involved onshore elements performed by another consortium member.

Conclusion: The offshore supply receipts were not taxable in India and the addition was liable to be deleted in favour of the assessee.

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