TaxTMI 
TaxTMI 
2008 (7) TMI 459
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....ppeals may be adjourned and blocked for sometime to await the COD approval. He submitted that SAIL is a pubic sector undertaking and COD approval is to be taken before pursuing the appeals, in terms of the judgment of the Supreme Court in the case of Oil & Natural Gas Commission vs. CCE (1994) 116 CTR (SC) 643 : (1995) Supp 4 SCC 541. The learned CIT-Departmental Representative however drew our attention to the recent judgment of the Madras High Court in CIT vs. Combustion Engineering Company Inc. (USA) (2008) 218 CTR (Mad) 71 : (2007) 295 ITR 70 (Mad) and submitted that the clearance from the COD is necessary only where there is a dispute between a public sector undertaking and the Ministries of the Government of India and if the assessee is a non-resident, represented for IT assessments by representative assessee or an agent, the requirement of COD approval cannot be extended to such a case. In the case before the Madras High Court, the appeal was filed by the Revenue against the assessee who was a non-resident but represented by an agent which was a PSU. It was held by the Madras High Court that in such a case, the COD approval is not necessary to be taken. In our view, this jud....
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....that it has valuable and specialized knowledge and expertise for designing, engineering, providing training and supervision of erection and commissioning of the slab casting shop. According to cl. (g) of preamble, MDS has agreed to "undertake the basic and detail design and engineering as per Sch. 8, layout engineering, co-ordination, training services, supervision of manufacture of Indian equipment and supervision of erection, testing and successful commissioning of the package and demonstrate the performance guarantees under the terms and conditions mentioned hereinafter". In the various articles of the contract, the responsibilities of MDS have been described in detail. They need not detain us. Suffice to note that arts. 1.4 and 1.5 are as under: "1.4 The scope of services to be performed by the principal contractor shall include (i) design and engineering for all plant and equipment on a fully integrated and co-ordinated basis and supervision of civil work, of erection, of commissioning and of performance guarantee tests and demonstration of performance guarantees (ii) providing training to purchaser's personnel, and (iii) other technical services as per terms and conditions....
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....------------------- 3. Providing 0.592 0.592 0.506 - 0.338 2.028 training to purchaser's personnel in plant operation and maintenance in similar operating plant abroad -------------------------------------------------------------- Total 24.291 15.782 8.049 1.421 7.901 57.444 -------------------------------------------------------------- Clause 3.6.1 of the schedule says that the services of the MDS shall include supply of drawings and documents to SAIL suitably and securely packed on free delivery basis at Calcutta airport. 5. The assessee (MDS) filed a return of income declaring receipts of Rs. 11,88,17,159 on account of "fees for technical services". The aforesaid receipts were offered for taxation @ 10 per cent in accordance with art. 12 of the DTAA between India and Germany. The return was first processed under s. 143(1)(a) but was later on taken up for scrutiny. In the course of the assessment proceedings under s. 143(3), t....
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....al ground, it has been stated that in the light of the fact that the IT authorities did not dispute the fact that the designs and drawings were sent from the assessee's head office located at Germany to Calcutta airport in a packed condition, the aforesaid additional ground may be admitted and adjudicated upon. It was submitted that this fact was already on record (as part of the contract) and no further investigation is required and the additional ground is a pure legal ground. It was further contended that since the drawings and design engineering have been received from Germany in a packed condition and nothing further was to be done in India, there was no role for the PE in India and hence no profits can be attributed to the same. The learned CIT-Departmental Representative on the other hand pointed out that there was no finding of fact by the Departmental authorities that the drawings and designs constitute plant and, therefore, it cannot be said that the additional ground does not require investigation into facts. On a careful consideration of the argument, we are of the view that the additional ground requires to be admitted. Even in the cl. 3.6.1 of Sch. 3 to the contract (....
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.... is, therefore, clear that the assessee (MDS) had also supplied plant and equipment to SAIL for installation in the slab casting shop. Contract No. 3 was, therefore, entered into for providing engineering and design services in connection with the machinery to be installed in the slab casting shop at the Rourkela Steel Plant. Therefore, the mere fact that the drawings and designs were sent to SAIL by the assessee from Germany in a packed condition on free delivery basis at Calcutta airport does not make it a plant. The plant is what the assessee supplied to SAIL under contract No. 1. The design and engineering and other services described in contract No. 3 are technical services rendered by the assessee, though from Germany to SAIL. In this connection, we must refer to an argument of the learned counsel for the assessee based on Chapter 98 of the Customs Duty Rules. It was submitted by him that Heading No. 98.01 applied to all goods imported in accordance with the regulations made under s. 157 of the Customs Act, 1962. It was submitted that it was under this entry that the customs duty was charged and the relevant entry described such articles as under: "All items of machinery i....
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....kage (g) Training of purchaser's personnel (h) Deputation of foreign experts for supervision of design and manufacture of plant and equipment as well as for supervision of erection, cold tests, commissioning, guarantee tests, etc. (i) Consultancy services, if any, obtained by the contractor from elsewhere 2.3.2 The contractor shall be responsible for supply of the drawings and technical documents and information in respect of the plant and equipment, commissioning spares and also for recommended spares for two years normal operation and maintenance as well as for insurance spares. The contractor shall deliver the drawings, technical documents and information to the purchaser and his consultant." In addition to the above, the assessee was also to render other technical services as part of the work on an integrated basis and such services have been described in detail in the schedule. Clause 2.8 of this schedule further provides for the training of SAIL's personnel for operation and maintenance of the plant and equipment supplied by the assessee. Thus, in our opinion, these are technical services rendered by the assessee and as rightly pointed out by the learned CIT-De....