Permanent establishment and offshore-supply attribution require fresh contract-based examination before income can be taxed in India.

Attribution of offshore-supply receipts required fresh examination because the existence of a permanent establishment in India depended on the complete contractual framework, the scope of work and the allocation of responsibilities among consortium members. As the relevant contracts had not been fully examined, the tribunal held that the matter could not be decided mechanically on prior assessments and restored the issue for de novo adjudication. The Assessing Officer was directed to reconsider the contracts and surrounding facts after giving the assessee an opportunity to be heard, so the additions were not finally sustained at this stage.

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Issues: Whether the additions relating to offshore supplies and related income could be sustained without fresh examination of the contracts and the factual basis for existence of a permanent establishment in India, or whether the matter required restoration for de novo adjudication.

Analysis: The appeals were decided by following the assessee's own earlier order on the same question for prior assessment years. The core controversy turned on whether the assessee had a permanent establishment in India under Article 5(2) of the India-France DTAA and whether any part of the offshore-supply receipts could be attributed to India. Since the determination depended on the contractual terms, the scope of work, and the allocation of responsibilities among consortium members, and the complete contracts had not been examined, a fresh factual inquiry was necessary. The matter was therefore restored to the Assessing Officer for a thorough examination of the relevant contracts and materials after giving the assessee an opportunity to be heard.

Conclusion: The issue was remitted for fresh adjudication and the additions were not finally sustained at this stage.

Final Conclusion: The assessment issues were sent back for reconsideration on facts, and the appeals were allowed in the limited procedural sense.

Ratio Decidendi: Where the existence of a permanent establishment and attribution of offshore-supply income depend on the contractual framework, the matter cannot be decided mechanically on past assessments and must be examined afresh on the basis of the complete contracts and surrounding facts.

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