TaxTMI 
TaxTMI 
2006 (12) TMI 177
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....by it to the customers as an integral part of transfer of process technology as well as supply of engineering design. During the year under consideration, the assessee had supplied engineering design as well as process technology and had also rendered all the services incidental thereto as indicated above to the Indian customers, viz., Indian Oil Corporation, Reliance Petroleum Limited, Nagarjuna Oil Corporation Ltd. and Tamil Nadu Petro Products Limited as per the agreements entered into with them. The amount received as consideration from the Indian customers under the said agreements aggregating to Rs. 104,98,05,305/- was declared by the assessee-company in its return of income as 'royalty' and 'fees for included services' liable to tax at the rate of 15 per cent in India as per the Indo-American Tax Treaty on the basis that it was not having any permanent establishment in India during the year under consideration. Besides the supply of engineering design and process technology, the assessee-company had also supplied equipment directly to the Indian customers and the profit arising from such sale being the commercial/business profit was claimed to be not taxable ....
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....etween India and USA. He, therefore, held that the royalty income and business income earned by the assessee in India were chargeable to tax in India as per the provisions of Income-tax Act, 1961 by virtue of Article 12(6) read with Article 7(3) of the DTAA between India and USA. Accordingly, he worked out the tax payable by the assessee on the income from royalties and fees for included services amounting to Rs. 104,98,05,305/- at the rate of 20 per cent relying on the provisions of section 44D read with section 115A. As regards the supply of equipment by the assessee directly to the Indian customers of the value of Rs. 2,49,34,953/-, the Assessing Officer found that similar equipments were supplied by the assessee to the Indian customers even through UOP India Pvt. Ltd. allowing a profit margin of 17.62 per cent to the said Indian company. He, therefore, found it reasonable to adopt a net profit of 15 per cent on such supply and worked out the income of the assessee liable to tax in India from the supply of equipment directly to the Indian customers at Rs. 37,40,243/- with a tax payable at the rate of 48 per cent thereon. Accordingly, the total tax payable by the assessee-company....
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....e deposition made by Mr. Aspray thus was limited only in respect of the equipment supply and the same was misconstrued by the Assessing Officer to cover the supply of technology part also. It was also contended that the interfacing did by the UOPIPL was limited to the supply of equipment only and the same could not be extended for supply of technology. It was further submitted on behalf of the assessee that there are three features which must be prevalent in the arrangement so as to treat a person as a dependent agent within the meaning of Article 5(4) of the Indo-American DTAA and since none of these three elements was present in the arrangement between the assessee-company and UOPIPL, the Assessing Officer was patently wrong in holding UOPIPL as the dependent agency PE of the assessee in India. Reliance was placed on behalf of the assessee on the decision of Authority for Advance Rulings in the case of TVM Ltd. v. CIT [1999] 237 ITR 2301 (New Delhi) to contend that neither the UOPIPL nor the UOP Asia Limited having carried out any activity which could be construed of creating a dependent agency PE of the assessee in India, the Assessing Officer was not justified in holding that t....
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....d by it and the same thus was constituting an agency PE of the assessee in India. (e) The assessee was carrying on installation work at various projects in India. Moreover, the huge receipts shown by the assessee were mainly on account of designing of the projects as well as their commissioning which could not have been done without regular site visits by its staff. The assessee was also regularly holding meetings in India and was providing training in India to the employees of the Indian customers. (f) The news releases dated 4-6-2002 and 4-3-2003 downloaded from the assessee's website also show clearly that the assessee-company had physical presence in India as its teams were regularly present at the sites of Jamnagar Refinery of Reliance Petroleum Limited during execution of the said project. (g) All the aforesaid facts taken together clearly show that the assessee-company also had an installation PE in India within the meaning of Article 5(2)(k) of DTAA between India and USA. 5. The aforesaid comments offered by the Assessing Officer were confronted by the learned CIT(A) to the assessee and in the counter comments, it was reiterated on behalf o....
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....leases were general in nature often meant for layman and the same, therefore, could not be treated as an accurate basis for determining the tax liability. 6. After taking into consideration the submissions made on behalf of the assessee-company before him as well as the comments of the Assessing Officer and the counter comments of the assessee in the light of material available on record, the learned CIT(A) held that UOPIPL could not be treated as an independent entity and that it was rather a wholly owned subsidiary of the assessee-company. It was also noted by him that Mr. Aspray was working with the assessee-company in different capacities before joining as Managing Director of UOPIPL and he, therefore, was fully conversant with the nature of activities of the group and its business model. He also held that in the capacity of Managing Director of UOPIPL, Mr. Aspray was competent to throw light on the nature of business relationship between UOPIPL and the assessee-company and there was no evidence brought on record by the assessee-company to show that such relationship had undergone any change after the joining of Mr. Aspray as the MD of UOPIPL. He held that Mr. Aspray, thus, ....
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.... by Mr. Aspray in his statement and overall conduct of business of the assessee-company with the various parties in India, that although the contracts were signed outside India, but short of signing the contracts, all the negotiations were carried out by the UOPIPL personnel in India. Relying on the decision of Authority for Advance Rulings in the case of TVM Ltd. v. CIT [1999] 237 ITR 230 (New Delhi), he, therefore, upheld the action of the Assessing Officer in holding that the assessee had an agency PE in India within the meaning of Article 5(4) of the DTAA between India and USA. 7. The learned CIT(A) also observed that the assessee-company was actively involved in designing and installation of machinery as well as commissioning of projects in India and as evident from page No.9 of the UOP brochure filed before him, the technical employees of the assessee-company were also involved in providing training to the customers' personnel, product testing, equipment inspection and project management. He held that rendering of these types of services could not have been possible without the frequent presence of the engineers of the assessee-company at the sites of the customers in ....
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....by the Assessing Officer in his assessment order at the rate of 20 per cent on the income from royalty and fees for included services in accordance with the provisions of section 44D read with section 115A and at the rate of 48 per cent on the profit from the turnover of supply of equipment directly to the Indian customers determined by applying a net profit rate of 15 per cent. The quantum of such turnover of supply of equipment was actually found to be more by the learned CIT(A) than what was taken by the Assessing Officer in the assessment order and since this revised figure of turnover was furnished by the assessee-company itself, the learned CIT(A) directed the Assessing Officer to enhance the income of the assessee taxable in India on account of profit from the supply of equipment directly to the Indian customers taking the revised figure of turnover of the said activity. Aggrieved by the order of learned CIT(A), the assessee-company has preferred this appeal before the Tribunal. 8. The main issue involved in this appeal is whether the assessee-company could be said to have a Permanent Establishment (PE) in India during the year under consideration. The other issues relati....
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....stantial cause", as held by Hon'ble Supreme Court in the case of Mahavir Singh v. Naresh Chandra AIR 2001 SC 134, must be read with the word "requires" so that it is only where the appellate court requires additional evidence, the Rule will apply. He also relied on the decision of Hon'ble Rajasthan High Court in the case of CIT v. Rao Raja Hanut Singh [2001] 252 ITR 528 to contend that the revenue is obviously not entitled to place any fresh or additional evidence before the ITAT under rule 29. According to him, the revenue is not even entitled to make a prayer for admission of additional evidence as placed in the form of a bunch of papers and that too after the conclusion of arguments from the side of the assessee. If at all it was entitled to do so, then also such evidence ought to have been initially placed on record with the leave of the Tribunal before the commencement of hearing. 12. The learned counsel for the assessee further submitted that none of the documents sought to be filed as additional evidence by the revenue pertains to the year under consideration i.e., assessment year 2001-02 and the same are also not complete or self-contained documents which could b....
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....o support the adverse findings recorded in the order of assessment to the effect that assessee has an agency PE in India and the additional evidence now being sought to be produced by the revenue seeks to patch up this weak part of the case attempted to be made out by the Assessing Officer. He contended that it is thus a clear attempt being made by the revenue to get the assessment set aside to be made de novo by seeking the admission of additional evidence and thereby it fill up the omission by having a second innings which is not permissible as held by ITAT in the case of Asstt. CIT v. Anima Investment Ltd. [2000] 73 ITD 125 (Delhi)(TM). 16. The learned counsel for the assessee emphasized that none of the authorities cited by the learned DR supports the contention of the Department that it is entitled to lead additional evidence before the Tribunal. On the other hand, the statement giving details of the various decisions of High Courts as well as the Tribunal placed at page Nos. 28 and 29 clearly shows that in none of the cases, the additional evidence sought to be produced by the Department was admitted by the Tribunal and even such a request made by the assessee also was not....
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.... In support of this contention, he placed reliance on the decision of Hon'ble Supreme Court in the case of Manji Dana v. CIT [1966] 60 ITR 582. He also cited the decision of Hon'ble Madras High Court in the case of Anaikar Trades & Estates (P.) Ltd. v. CIT [1990] 186 ITR 313 wherein certain affidavits given by the five purchasers affirming receipt of excess consideration than shown in the documents were sought to be filed by the revenue as additional evidence to support its case that the provisions of section 52(2) were applicable and the Tribunal admitted the same and restored the matter to the AAC observing that in order to decide the question of applicability of section 52(2) which was the subject-matter of appeal before it, it would be necessary in the interest of justice to consider the said affidavits. On appeal preferred by the assessee against the order of the Tribunal, Hon'ble Madras High Court held that the Tribunal had discretion to allow production of additional evidence under rule 29 of the Appellate Tribunal Rules, 1963 if the same was found to be required to enable it to pass orders or for any other substantial cause. 19. The learned CIT-DR submitted t....
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....ht to be produced by the Department in the present case was not available for production before the lower authorities for the reason that the same was recovered during the course of survey carried on subsequently on 10-3-2006 and the same, therefore, deserves to be admitted accepting the application filed under rule 29 of Appellate Tribunal Rules, 1963 as held by Hon'ble Kerala High Court in the case of Asstt. CIT v. Gautam Investments (P.) Ltd. [2001] 250 ITR 324. 21. We have considered the rival submissions and also perused the relevant material on record in the light of various case laws cited at the bar. In the present case, the application moved by the Department under rule 29 for admission of additional evidence comprising documents found during the course of survey carried out subsequently at the assessee's premises has been strongly opposed by the learned counsel for the assessee. First of all, his contention is that as per Rule 29 of Appellate Tribunal Rules, 1963 there is a complete bar for the revenue to furnish any additional evidence unless it is so required by the Tribunal. In effect, his argument is that only if the Tribunal requires any additional evidenc....
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....expenses as claimed by him. The Tribunal found that there was no necessity of fresh evidence and accordingly, declined to admit the fresh evidence sought to be produced by the revenue. Aggrieved by the order of the Tribunal, the revenue preferred a reference application before the Hon'ble Rajasthan High Court which was rejected by their Lordships holding that the discretion to admit the additional evidence was that of the Tribunal as circumscribed by Rule 29 of the Appellate Tribunal Rules, 1963 and the Tribunal having exercised the said jurisdiction in accordance with the said rule, no question of law arose from its order. In this context, Hon'ble Rajasthan High Court referred to the relevant Rule 29 of the Appellate Tribunal Rules, 1963 and observed on page 535 of the report that the second limb of the condition of Rule 29 is if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them. It was observed by the Hon'ble Rajasthan High Court that a case before it was not a case where the assessee had raised any grievance that the assessing authority ....
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....tional evidence mainly on the ground that it required investigation of facts and proceeded to uphold the order of the AAC. Aggrieved by the refusal of the Tribunal to admit the additional evidence sought to be produced by it, the revenue filed a reference application before the Hon'ble Bombay High Court and considering that the additional evidence sought to be produced by the revenue was not found to be required by the Tribunal to pass the orders, no fault was found by their Lordships with the order of the Tribunal refusing to admit the additional evidence sought to be produced by the revenue. It was observed by the Hon'ble Bombay High Court that although the parties to appeal are not entitled to produce additional evidence before the Tribunal, it has been given a power to require any document to be produced or any witness to be examined to enable it to pass order or for any other sufficient cause as per Rule 29 of the Appellate Tribunal Rules, 1963. 24. It is thus clear that none of the decisions cited by the learned counsel for the assessee lays down a proposition that there is a complete bar for the revenue to adduce any additional evidence before the Tribunal under R....
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....took the view that in order to decide the question of the applicability of section 52(2) of the Act which was the subject-matter of appeal before it, it would be necessary in the interest of justice to consider these affidavits and in that view, directed the restoration of the matter before the Appellate Assistant Commissioner after allowing the revenue to produce the said affidavits as additional evidence. The matter was carried before the Hon'ble Madras High Court and their Lordships upheld the action of the Tribunal in admitting the additional evidence filed by the revenue observing that under Rule 29 of the Appellate Tribunal Rules, if the Tribunal required any document to be produced or affidavit to be filed to enable it to pass order or for any other substantial cause, it may allow the document to be produced or the affidavits to be filed. It was also held by the Hon'ble Madras High Court that this power conferred upon the Tribunal under Rule 29 was properly exercised by it in the facts and circumstances of the case. 26. Similarly, in the case of R. Dalmia cited by the learned DR, the assessee was in control of a number of companies in particular "JT". The ITO held....
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....g on the decision of Hon'ble Supreme Court in the case of K. Venkataramiah v. A. Seetharama Reddy AIR 1963 SC 1526, it was, however, held by the Hon'ble Calcutta High Court that under Rule 27(1) of Order 41 of the CPC, the appellate court has the power to allow additional evidence not only if it requires such an evidence "to enable it to pronounce judgment" but also for "any other substantial cause". Explaining further, it was also observed by the Hon'ble Calcutta High Court that there might well be cases where even though the Court found that it was able to pronounce judgment on the state of record as it was and so it could not strictly say that it required additional evidence to enable it to pronounce judgment, it still considered that in the interest of justice something which remained obscure should be filled up so that it could pronounce the judgment in a more satisfactory manner, such a case would be one for allowing additional evidence for any other substantial cause under Rule 27(1)(b) of Order 41 of the Code. To the similar effect is the decision of Hon'ble Punjab & Haryana High Court in the case of Saligram Prem Nath cited by the learned CIT-DR wherein it ....
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....ers or for any substantial cause and if the Tribunal is satisfied that the additional evidence so produced is required to enable it to pass orders or for any other substantial cause, it can allow the parties including the revenue to produce such additional evidence exercising its discretion in terms of the said Rule. 30. It is a settled position that production of additional evidence at the appellate stage is not a matter of right to litigating public and allowing of production of additional evidence is in the discretion of the Tribunal. The said discretion however, is to be exercised judicially and not arbitarily. As held by Hon'ble M.P. High Court in the case of CIT v. Kum Satya Setia [1983] 143 ITR 486, it is within the discretion of the appellate authority to allow production of additional evidence if the said authority requires any document to enable it to pass orders or for any other substantial cause. The Tribunal is the final fact-finding body under the scheme of the Income-tax Act and powers, therefore, have necessarily to be exercised by it for deciding the questions of fact. While exercising its powers, if the Tribunal is of the opinion that additional evidence is....
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....ld that the legitimate occasion for the application of the said Rule is when on examining the evidence as it stands some inherent lacuna or defect becomes apparent. To the similar effect is another decision of Hon'ble Supreme Court in the case of Natha Singh v. Financial Commissioner, Taxation AIR 1976 SC 1053. 31. As per rule 29 of the Appellate Tribunal Rules, 1963, the Tribunal has the power to allow additional evidence not only if it requires such evidence "to enable it to pronounce judgment" but also "for any other substantial cause". There may be cases where even though the Tribunal finds that it is able to pronounce judgment on the state of record as it is and so it cannot strictly say that it requires additional evidence to enable it to pronounce judgment, it still considers that in the interest of justice, something which remains obscure, should be filled up so that it can pronounce the judgment in a more satisfactory manner. Such requirement of the Tribunal is likely to arise ordinarily when some inherent lacuna or defect becomes apparent upon its appreciation of the evidence. The power of the Tribunal to admit additional evidence in support of the claim in appeal ....
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....as not within their knowledge or could not after the exercise of due diligence be produced by him at the time when the decree appealed against was passed and the appellate court requires the said evidence to be produced to enable it to pronounce the judgment. Similarly, in the case of Ram Kumar cited by the learned counsel for the assessee, it was held by the Hon'ble Punjab & Haryana High Court that additional evidence cannot be claimed as a matter of right in the appellate court and it has to be shown by the litigants that the proposed additional evidence was not in their power or possession or was not in their knowledge. 33. It is also well-settled that once additional evidence is taken into consideration, it has to be read as part of the record and before drawing any inference on the basis of contents of that document admitted as additional evidence, an opportunity has to be given to the other side to explain or rebut the same. As held by Hon'ble Madras High Court in the case of R.S.S. Shanmugam Pillai & Sons, if the Tribunal finds that the documents filed are quite relevant and for the purpose of deciding the issue before it, it would be well within its powers to adm....
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....could be well appreciated and both the sides also agreed with the same as noted in the order sheet entry recorded on 22-5-2006. Accordingly, the arguments of both the sides were heard on merits in the light of evidence already available on record as well as the additional evidence sought to be filed by the revenue elaborately and they were also given an opportunity to place on record all their submissions in writing. Availing the said opportunity fully, the learned representatives of both the sides have made elaborate submissions before us, inter alia, on the main issue relating to PE, the point-wise gist of which is given below:- Point - UOPIPL and/or UOP Asia Limited (Liaison Office) as a dependent agency PE of the assessee in India as per Article 5(4) of the Indo-US DTAA. Contentions raised on behalf of the assessee-company:- (1) UOPIPL was principally formed with the object of rendering technical and engineering services on its own account to Indian customers. It was also to procure orders and sell proprietary equipments of the assessee-company on its own account in India. It was also entrusted the job of promoting the process technology of the assess....
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....UOPIPL was remunerated for services rendered by it at arm's length price and as such, there was no case of attributing any additional profits to the assessee-company in India. Reliance is placed on Circular No. 23 [F.No. 7A/38/69-IT(A-II)] dated 23-7-1969, Circular No.5 of 2004, dated 25-9-2004 and Morgan Stanley & Co., USA, In re [2006] 152 Taxman 1 (AAR - New Delhi). (vi) UOP Asia Limited is a company, incorporated in USA and after obtaining permission from RBI, it established a liaison office in India at New Delhi in May, 1996. UOP Asia Limited is thus a separate legal entity and the activities carried on by its liaison office in India were purely of a preparatory or auxiliary nature. As per paragraph 4 of the OECD Model Commentary 2005, an enterprise of one State carrying on activities of such nature in other State is not liable to tax in the other State. By virtue of this paragraph 4, the maintenance of fixed place of business solely for the purpose listed therein which, inter alia, includes preparatory or auxiliary services, is deemed not to constitute a PE in terms of paragraph 5 of Article 5. It is to be noted here that as per the approval given by the RBI, the....
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....was further evident from the copy of the sale promotion agreement between assessee and UOPIPL that the latter had an authority to submit bid on behalf of the former and was also authorized to negotiate contract on its behalf. (iii) All the expenses incurred by UOPIPL and UOP Asia Limited (LO) were reimbursed by the assessee and it is matter of record that all the customers of the assessee with whom technology agreement was entered into had necessarily signed agreement for supply of equipment etc. with UOPIPL. These subsidiaries thus did not have any independent existence and they were dealing only with the products of the assessee. Even the assessee has failed to cite even one example showing that these two concerns had dealt in a product other than its own product. (iv) Additional evidence impounded subsequently during survey clearly prove that employees of UOPIPL and UOP Asia Limited (LO) were wholly engaged in negotiating contracts on behalf of the assessee with various customers in India and were also engaged in securing orders virtually acting as agent of the assessee-company. The orders so secured from the Indian customers after completing all the formalitie....
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....ame signed from the Indian customers, final agreements were sent to USA for the signature of the assessee. These documents thus clearly corroborate the deposition made by Mr. K.J. Aspray in his statement recorded by the Assessing Officer wherein it was clearly stated by him that UOPIPL was acting as interface with customers in India at pricing, terms and conditions set by the assessee and it was also interacting with the said customers under the guidelines given by the assessee. It was thus proved beyond doubt that both the subsidiaries had actually acted as dependable agent of the assessee which clearly represent its PE in India as per Article 5(4) of DTAA. Reliance in support of this contention is placed on the decision of Authority of Advance Ruling in the case of TVM Ltd. v. CIT [1999] 237 ITR 230 (New Delhi). (vii) The technical qualification and experience possessed by the employees posted in UOPIPL and UOP Asia Limited (LO) were sufficient to show that they were not capable of liaison work but were technically specialized to negotiate contracts and render technical services to the Indian clients on behalf of the assessee-company. The claim of the assessee that these....
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....ny length of time thus would not result in PE. The inference drawn by the revenue authorities on the basis of receipt of huge amounts by the assessee from the Indian customers that such huge amounts could not have been earned without performing part of its activity in India are based on mere surmises and conjectures without any substance or supporting evidence. Even if it is assumed that there were some site visits made by the employees of the assessee-company for gathering of information for the design of the process, the same would constitute "included services" only irrespective of the duration of these visits and would not create a permanent establishment of the assessee in India since the furnishing of included services has been specifically excluded from the purview of clause I of Article 5(2). Same is the position as regards imparting of technical training which again constituted "included services" under paragraph 4(a) of Article 12 of the Indo-US DTAA. Contentions raised on behalf of the Department:- (i) The assessee-company offers a wide range of services to a global array of companies within the hydrocarbon process industries. It provides such services ....
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.... of ITAT in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269, the revenue is not entitled to enlarge the scope of enquiry in an appeal filed by the assessee without having filed any cross-appeal. (ii) Without prejudice to the aforesaid objection and on merits, there was no place of business in India which could be said to be available to the assessee-company for its disposal so as to create a fixed place PE situation. As held by Hon'ble Andhra Pradesh High Court in the case of CIT v. Visakhapatnam Port Trust [1983] 144 ITR 146, the PE postulates the existence of a substantial element of an enduring or permanent nature of a foreign enterprise in another country which can be attributed to a fixed place of the business in that country. (iii) As stated in the OECD Model Convention, in order to constitute a fixed place PE, there should be distinct "situs in India" and the word "fixed" refers to a distinct place with a certain degree of permanence. The mere fact that the employees of the assessee-company at times sat in the office of UOPIPL/UOP Asia Limited (LO) during their visit to India does not satisfy this requirement. For such occupations, the permission....
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....on shifted to Gurgaon. UOPIPL and UOP Asia Limited thus represented a fixed place of business of the assessee-company in India. (iii) UOP Asia Limited was maintaining the so-called liaison office at the premises of UOPIPL and the same was headed by Mr. K.P. McCormick, a Chartered Chemical Engineer. From the duties assigned to him during the year under consideration as admitted in his statement, it could be seen that the said liaison office actually acted as a communication centre of the assessee-company in India which carried out commercial negotiations for the contracts entered into between the assessee-company and the Indian customers. This conclusion was further corroborated by statement of Mr. K. J. Aspray, Managing Director of UOPIPL as well as the details of persons involved in concluding contract furnished by the assessee at pages 364, 394 and 395 of Paper Book volume-2. The said liaison office thus played an important role in concluding the transactions and also acted as communication centre on behalf of the non-resident company and the same, therefore, was the PE of the assessee-company in India as held in the case of UAE Exchange Centre LLC, In re [2004] 268 ITR ....
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....s. It was further stated in the said letter that since service tax was introduced under Indian Tax Laws, UOP nonresident group companies filed service tax returns and settled their respective service tax liabilities on the basis that they each had an office in India for service tax purposes. It was also stated that the Indian liaison office of UOP Asia Limited is the office acting as an office of the UOP group companies for service tax purposes. As regards the applicability of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, it was stated that the said Rule only effected non-resident service providers which did not have any office in India and did not effect non-resident companies which did have an office in India for service tax purposes. It was thus admitted in the said letter by the assessee-company that it did have an office in India for service tax purposes and it was also mentioned in this context that the Reserve Bank of India has given permission to the liaison office of UOP Asia Limited to collect and pay the service tax component of the invoices issued by all the UOP companies including the assessee in a letter dated 17-11-2000. Although the permission so granted by RBI u....
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....India if the INR order is placed on UOPIPL. Although this communication was pertaining to NV, another entity belonging to UOP Group and not to the assessee-company as pointed out by the learned counsel for the assessee, the modus operandi being followed to split the contracts between the different entities belonging to UOP Group apparently to avoid PE issue was reflected therein and the same, therefore, seems to be relevant to decide a similar issue relating to PE involved in the case of the assessee. This aspect of arrangement/adjustments between the various entities belonging to U0P Group to serve the desired purpose was also reflected in the copy of another e-mail received by Keith Aspray on 28-9-2005 which is placed at page 15 of Annexure-B along with the original message sent by Mr. Aspray wherein it was mentioned that the UOPIPL had in the past taken low to zero margins on several projects to the benefit of UOP on a global basis. There are other communications also between Keith Aspray of UOPIPL and employees of UOP group of companies including the assessee-company sent through e-mail placed at pages 16 to 21 giving feedback about the various meetings held with the Indian cus....
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....essee-company and UOPIPL and past exposures. The possibility of exposing past years to such potential tax implications was also mentioned therein keeping in view that position taken up till then was based upon some old opinion/advice which was needed to be reviewed. A concern was also expressed in the said letter about this issue opening a big can of worms in UOPLLC, the exposure of which as apprehended therein could be very high. The remaining pages of Annexure-C except page Nos. 65 and 66 are mainly the communications between the employees of UOPIPL and the employees of the assessee-company as well as the drafts of Memorandum of Understanding between the assessee-company and its Indian clients found from the office of UOPIPL which apparently suggest that the agreements were being drafted and finalized in India by the employees of UOPIPL. Pages 65 and 66 give a list of suggestions given by Delhi office in connection with preparation, distribution and execution of legal agreements and one of the suggestions so made at serial No. 11 is with regard to improvement of agreement turnaround time for execution which reads as under:- "11. How do we improve agreement turnaround tim....
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....) 44. Pages 81 and 82 of Annexure D is the printout of pages downloaded from the official website of the UOP Group. It gives information about the various locations of the group companies of UOP Group under the title "Company Overview" and the location in India as given under the heading "Asia" clearly indicates the office address of UOP India Pvt. Ltd./UOP Asia Limited at New Delhi. Pages 83 and 84 are a copy of news release issued by the assessee-company with the header "UOP India's new location strengthens ties to customers". It mentions in paragraph 1 that UOP India Pvt. Ltd., a fully owned subsidiary of UOPLLC, has relocated its office to the Unitech Trade Centre in Gurgaon, Haryana to better serve the customers in India's growing market. It also mentions Mr. Keith Aspray, Managing Director of UOP India as saying that UOP India has grown into one of UOP's major overseas operations and has more than doubled its staff in three years. He is also stated to have said that UOP India is committed to further growth of its Indian operations and this move brings us closer to our customers. 45. At this juncture, it is relevant to once again refer to the issue involved i....
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....h is involved for consideration and decision in the present appeal. 47. As already observed, some of the documents are related to the earlier period including the year under appeal. Moreover, there is a specific mention in some of the documents about the possibility of tax implications of the earlier years due to affairs arranged within the group companies in the particular manner. As rightly pointed out by the learned CIT-DR this evidence in any case would be available to the revenue while deciding the issue relating to PE in the subsequent years and if the same is not allowed to be used in the year under consideration involving a similar issue on technical ground, it will result in an anomaly giving rise to inconsistency. It is, therefore, all the more necessary in the interest of justice that the said additional evidence is allowed to be produced and relied upon for deciding the present appeal. 48. As already noted, the additional evidence would be relevant to consider and decide the case already made out by the revenue and it is, therefore, not a case of tendering of fresh evidence by the department to support a new point or to make out a new case. According to us, the ad....
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....y much obtained in the present case. As held by Hon'ble Andhra Pradesh High Court in the case of Mandala Madhava Rao, additional evidence can be adduced, inter alia, where the party seeking to produce additional evidence establishes that notwithstanding exercise of due diligence, such evidence was not within their knowledge or could not after exercise of due diligence be produced by him at the time when the decree appealed against was passed and the appellate court requires the said evidence to be produced to enable it to pronounce the judgment. To the similar effect is the decision of Raj Kumar's case wherein it was held by Hon'ble Punjab & Haryana High Court that additional evidence cannot be claimed as a matter of right in the appellate court and it has to be shown by the litigants that the proposed additional evidence was not in their power or possession or was not in their knowledge. 50. In the present case, the documents being sought to be produced by the Department as additional evidence were not in its possession or power at the relevant time when the matter came to be decided by the authorities below and the same having come to their possession as a result o....
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....th law. Since the other issues raised in this appeal related to the main issue of PE, we deem it appropriate to restore these issues also to the file of the Assessing Officer for fresh decision along with the main issue. Insofar as the issue relating to levy of interest under section 234B is concerned, the learned counsel for the assessee has contended before us that the same is squarely covered in favour of the assessee by the decision of Delhi Special Bench of ITAT in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269. We, therefore, direct the Assessing Officer to decide the issue relating to levy of interest under section 234B in the light of the decision of Special Bench in the case of Motorola Inc. The impugned order of the learned CIT(A) on all the issues involved in the present appeal is accordingly set aside and the matter is restored to the file of the Assessing Officer for fresh decision as per the directions given hereinabove. 53. Before we part with our order, it would be appropriate on our part to deal with another objection raised by the learned counsel for the assessee as regards the application moved by the revenue for admission of additional evidence statin....