Offshore supply receipts not taxable in India where supply was completed abroad and no India-attributable operations were carried out.

Receipts from offshore supply of escalators and elevators were held not taxable in India where the assessee's contractual role was limited to design, manufacture and offshore supply, the Indian associate handled installation and related onshore work, title passed outside India, and no operations attributable to that supply were carried out in India. The addition was deleted. The refund claim was not decided finally on merits; the Assessing Officer was directed to verify the supporting material and determine the refund in accordance with law. The dispute therefore resulted in relief on taxability, with the refund issue remitted for verification.

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Issues: (i) Whether receipts from offshore supply of escalators and elevators were taxable in India. (ii) Whether the assessee's refund claim required verification and could be directed to be determined by the Assessing Officer.

Issue (i): Whether receipts from offshore supply of escalators and elevators were taxable in India.

Analysis: The assessment dispute turned on whether the assessee's receipts represented taxable income in India from a composite contract or whether they were merely offshore supply receipts outside Indian tax jurisdiction. The Tribunal followed its own earlier decision in the assessee's case on identical facts, holding that the assessee's scope was confined to design, manufacture and supply, while the Indian associate undertook installation and related onshore work. It was noted that the title in the goods passed outside India and that no operations attributable to the offshore supply were carried out in India in respect of the assessee's scope of work.

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

Issue (ii): Whether the assessee's refund claim required verification and could be directed to be determined by the Assessing Officer.

Analysis: The refund claim was not finally adjudicated on merits at this stage. The Tribunal directed the Assessing Officer to verify the supporting material and determine the refund in accordance with law.

Conclusion: The refund claim was remitted for verification and determination, in favour of the assessee.

Final Conclusion: The appeal succeeded on the substantive taxability dispute and the refund claim was kept alive for verification, resulting in a partial relief to the assessee.

Ratio Decidendi: Income from offshore supply is not taxable in India where the contractually demarcated supply segment is completed outside India and no attributable operations are carried out in India for that segment.

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