TaxTMI 
TaxTMI 
2010 (1) TMI 690
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....ng that the activities of the appellant cannot be regarded as operations which are confined to purchase of goods in India for the purposes of export and, therefore, the benefit of Expln. 1 of s. 9(1) of the Act was not available to the appellant in relation to the activities of its branch in India. (iii) That the CIT(A) erred on facts and in law in alleging that the approval of RBI for setting up of branch in India was obtained by the appellant by suppressing material facts with regard to the activities of the proposed branch office in India and, therefore, the nature of activities of the appellant's branch described in RBI's approval letter cannot be relied upon to determine the true nature and character of the activities and operations carried out by the branch office of the appellant in India. (iv) That the CIT(A) erred in not holding that the activities of the appellant's branch office in India were in the nature of liaison activities and were of preparatory and auxiliary character, and did not give rise to any taxable income in India. (v) That the CIT(A) erred in facts and in law in observing that the appellant had the right to decide the appropriate suppliers for the....
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....le qualified suppliers of textile products; (b) Checking and expediting the production of merchandise; (c) Attending upon buyers and other representatives of the buyers; (d) To follow-up of orders; (e) To provide quality assurance; (f) To arrange for inspection; (g) To arrange for logistics and export. 4. A statement was recorded from Mr. Lalih Fernando, country manager on 16th Jan., 2006 in respect of the details about the organization and activity of the branch located at Bangalore. In response to the above, he stated that the assessee is having its head office in Hongkong and branches in India at Bangalore, Tirpur and Delhi and the branches are headed by office manager who is responsible for the overall working of the branches. There are about 60 employees in all, out of which 15 are at Bangalore branch. Each branch has four Departments, i.e., merchandising; quality control; administration and shipping. The company (sic-country) manager and quality managers are the two persons from Indian branch office who are responsible for operations outside India as well. The country manager of Indian branch office is designated for Colombo branch operations as well. Sim....
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....er for final acceptance. The buyer reserves the right to refuse or reject the order at this stage or accept the order with a price negotiation. If the goods are acceptable, then the supplier shall ship out the goods. Answering to question No. 3 as to whether branch office of Mondial Orient Ltd. is having any financial association (financial or functional) with Mondial Services (Hongkong) Ltd., he stated that the Bangalore branch is not having any association with Mondial Services (Hongkong) Ltd., or its branch offices. Again answering to question No. 4 as to whether any of the employees of Mondial Services (Hongkong) Ltd., is involved in any of the activities of the branch office of Mondial Orient Ltd., in India, he replied in the negative. 6. Mr. Nihal Mudalige, quality manager, India sub-continent in his statement recorded on 12th Jan., 2006 while answering to question No. 3, stated that his targets for achievement are set by head office at Brussels and Belgium to identify textile processing units/component manufacturing units in the sub-continent who manufacture chemically and physically safe products according to the prescribed standards and prepare a list to be included ....
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....tion No. 5 as to whether GCFPL had any agreement with Mondial Orient Ltd., as a quality certifying agent which was replied in the negative; but furnished a copy of inspection certificate issued by Mondial Orient Ltd. and letter of credit which certified the fact of inspection from that party for getting payment from the bank. The party also denied making any purchases by Mondial Orient Ltd. directly. It was further stated that they are only involved in quality certification and other follow-up procedures of orders placed by M/s C&A. Answering to question No. 8 as to whether there was any agreement or contract with Mondial Services Ltd. also, it was stated they have no such contact but it was admitted that in the rare instances of a quality issue arising. the samples were sent to Hongkong for testing procedures and then received the invoices from Mondial Services Ltd. 9. From the above, AO came to the conclusion that from the statements of the employees of the assessee including the country manager, it is established that the assessee has employed different sets of highly qualified people having expertise in merchandising, textile engineering etc. Assessee's activities were no....
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....loyees of the assessee clearly stated that assessee was not doing any buying activity for export. The assessee was only rendering certain services and certain quality inputs and received charges for the same for the services rendered. Hence, he held that the receipt is attributable to the activity in India and accordingly taxable in India. Regarding the attribution of profit to the PE, information regarding comparable cases who were also involved as service providers on commission basis were sought from Transfer Pricing Department and the net profit in this kind of service was noticed varying from 0.28 per cent on the turnover of $ 6,04,95,000 which worked out to $1,69,386. Aggrieved by the above order assessee approached the first appellate authority. 10. It was contended before the CIT(A) that in view of Expln. 1(b) to s. 9(1)(i) of the IT Act, the income received by the assessee from Mondial Services Ltd., being essentially? per cent margin on cost incurred by the branch in India is not liable to tax in India as it cannot be deemed to accrue or arise in India, is not taxable in India as it cannot be said that the income is deemed to accrue or arise in India. It was contended ....
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.... of cl. (b) of Expln. 1 to s. 9(1)(i) apply to income from operations relating to purchase of goods in India for the purpose of export and it is not necessary that the goods are purchased by non-resident assessee carrying out such operations on its own account. It was stated the statements of the employees clearly established that the branch of the assessee was engaged in operations relating to purchase of goods for export outside India. From this, no adverse inference could be drawn. Further, an opportunity was not given to the assessee to cross-examine David D'Souza, managing director of GCFPL. It was contended that it was not the requirement of law that the assessee must be the purchaser of goods in its own name or the goods should be exported only to the assessee in order that the above Explanation to s. 9(1)(i) be applied. For the above proposition, the assessee relied on the decision of the Authority for Advance Rulings in the case of Angel Garment Ltd., In re (2006) 206 CTR (AAR) 393 : (2006) 287 ITR 341 (AAR), wherein it was held that activities in Indian branch office of a foreign company for buying goods from India do not give rise to taxable income in India. In that case....
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.... was a case wherein it was held that the branch of a foreign company did not constitute its PE in India, as the branch was prohibited from carrying on business/commercial activity in terms of the permission of RBI and was only acting as a communication channel between its suppliers and the Indian purchaser, but did not have any authority to conclude contract on behalf of the foreign suppliers. 14. The assessee also relied on the decision of the Bangalore Bench of the Tribunal in the case of Nike Inc. vs. Asstt. CIT in ITA Nos. 228 & 229/Bang/2007 [reported at (2009) 122 TTJ (Bang) 201 : (2009) 21 DTR (Bang)(Trib) 107-Ed.]. This was a case where the assessee was a US corporation having its head office in USA. That assessee had several associated enterprises/subsidiaries in different parts of the world for whom Indian party was acting as a purchase agent. Purchase orders were raised by the assessee in that case from its US office. Supplies were directly made by the manufacturer in India to the various affiliates/subsidiaries of the assessee across the world. The assessee was having the liaison office in India. It was set up only for the purpose of helping affiliate companies for b....
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....he activities of the assessee are preparatory and auxiliary in character and are relevant only in the context of DTAA which contains exclusion for such activities carried out by the branch office. He held, a branch office carrying out preparatory or auxiliary activities does not constitute a PE of its head office in India. He held since there is no DTAA between India and Hongkong, this issue is not at all relevant. 16.1 The CIT(A) noted that the assessee was engaged in providing services of supply chain management to customers of MSL, mainly the parties located in Europe. These services were being provided under the service agreement dt. 28th Feb., 2002 executed between the assessee i.e., Mondial Orient Ltd. and Mondial Services Ltd., The CIT(A) noted, the perusal of the service agreement would show that MSL was also engaged in rendering "services in various countries in the Far East in connection with purchase by such principals of textile products and accessories manufactured in such countries" and that MSL has agreed to take assistance of assessee in rendering similar services to MSL so as to enable MSL to undertake its obligation to its principals in specified territories in....
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.... contract with MSL. Further, MSL has service contract with Mondial International, Belgium who in turn has service agreement with C&A Buying KG. C&A Buying KC is the entity which buys the merchandise for all international C&A retail companies." The income earned by the assessee from provision of such services is deemed to accrue or arise in India and is accordingly taxable in India. The CIT(A) held that Expln. 1(b) to s. 9(1)(i) nowhere says that in the case of a non-resident no income shall be deemed to accrue or arise in India through or from services rendered to another non-resident who is in turn providing services in connection with purchase of goods in India as part of a supply chain management process or operation. He held that the assessee was also not a buyer or importer of goods from India. Therefore, basically the services are in the nature of provision of services or supply chain management and cannot be regarded as operations which are confined to the purchase of goods in India for the purpose of export. For the above reasons, he confirmed the finding of the AO that Expln. 1(b) to s. 9(1)(i) of the Act does not apply to the assessee. 17. The CIT(A) further noted i....
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....s to C&A. From this, the CIT(A) held it gives an impression that he is working for C&A Group having its headquarters at Brussels rather than the assessee which has its head office in Hongkong. It was the assessee who was discussing the price and delivery period with the supplier and communicate the same directly to the buyer with a copy marked to SPM (sourcing product manager). If the terms are acceptable, the order is confirmed to the supplier. It was stated that at this stage the order placing is completed. Thus, the CIT(A) held the activities of the branch office of the assessee in India with its rights to decide the appropriate suppliers for the buyers and enter into price negotiations with the suppliers etc., constitute its substantial business activity giving rise to income that accrues or arises or is deemed to accrue or arise in India. The assessee has produced some correspondence with the clients of MSL pointing out the real nature of activities carried out by the assessee, narrated vide para 5.3.4 of the CIT(A)'s order, briefly as under: (i) Initial communication is received by email from various foreign parties, mainly C&A entities located in Germany, Switzerland and ....
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....arious orders and the reasons for delay in any of the shipments, if any. (ix) Export invoice is raised by local manufacturer in India on the foreign buyers directly (mainly C&A entities) and the name of the appellant does not figure anywhere on the export invoices as a buying agent of the foreign buyers/C&A affiliates. (x) The appellant issues a certificate of inspection for the shipped goods to the effect that these have been "inspected and released for shipment to the order of the customer" subject to the buyers' final inspection and approval. From the above CIT(A) came to the conclusion that the activities of the assessee branch in India including the authority to enter into negotiations with local exporters/manufacturers would constitute course of dealing or continuity of relationship which can be said to contribute directly or indirectly to the earning of income by the assessee outside India. Consequentially, this activity of the branch would tantamount to a "business connection" in India. It is not a casual connection or a stray nexus comprising of a few isolated transactions. It is rather a real and intimate relation which contributes directly or indirectly to the e....
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....he local suppliers through its branch office in India and hence its income from such activities would be liable to tax in India. 22. Similarly the CIT(A) distinguished the decision in the case of Nike Inc. and held the assessee is neither purchasing agent for its subsidiaries or associated enterprises nor a parent company. The branch office set up by the assessee in India was providing supply chain management services to customers of MSL i.e., C&A entities located in different parts of the world. In the case of Nike Inc, the purchase order was raised by the assessee from its US office and supplies were made directly by the manufacturers in India to various affiliates/subsidiaries of Nike Inc. across the world. Coming to the instant case, no purchase order is issued by the assessee or even by MSL to whom the assessee provides services. In the case of Nike Inc., the liaison office was opened on the condition that it will not charge commission, fee or remuneration for the services rendered by it in India whereas the assessee is charging service fees from MSL @ cost + 5 per cent in respect of its branch office in India. Nike's agreements with manufacturers in India in writing spelt ....
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....describes the activities which reads "buying services for export of readymade garments. accessories and other merchandise from various countries including India." 27. Again our attention was drawn to cl. 4(iii) which gives the particulars of the proposed branch/liaison office as under: (a) Details of the activities/ Buying services for export of services: proposed to be readymade garments, accessories undertaken/rendered by the and like merchandise primarily office from India. In addition the branch may render buying services for export of the ....
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....a 7, which is reproduced hereunder: "7. He submitted that the assessee carried out all the activities such as designing, marketing and distribution of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Its products are sold worldover through subsidiaries and other distributors also. The assessee does not carryon any manufacture by itself. It engages various manufacturers all over the world on a job to job basis and has arrangement with its subsidiaries for purchasing the manufactured goods directly and pay for the same to the respective manufacturers. With a view to ensure quality of its various products in India through its liaison office, it employed various people like merchandiser, product analyst, quality engineer, apparel product integrity manager, fabric controller, transport specialist, etc., In order that from every point of view the quality is maintained, supply of the merchandise is made as per schedule as are concerned with the selection of the fabric, mixture of threads, manufacturing process, cleanliness, cleaning and many more, the various staff attached to the liaison office create awareness in the....
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....eived are only to cover the expenses of the liaison office, as in that case the assessee was not purchasing the goods from the manufacturers. It accepts the claim of the assessee that the goods are exported to various buyers who are the subsidiaries or affiliates of the assessee. There was a submission which says, "the assessee, Nike Inc. is getting service charges on FOB value of exports." 31. The counsel further brought our attention to para 22 which dealt with the agreement concerning the manufacturing terms and conditions that were entered with Karle International. The fundamental arrangement is brought out in the preamble and this is reproduced as under: "This agreement concerning manufacturing terms and conditions ('agreement') is entered into effective as of the 4th day of October, 2002 (the 'effective date') by and between Nike Inc., an Oregon corporation, having its principal place of business at 1, Bowerman Drive, Beaverton, Oregon 970 005, USA, acting as buying agent for its affiliates (as defined below) and Karle International, and Nike Corporation having its principal place of business at Karle International, 73, Nagasandra Village, Tumkur Road, Bangalore ('manuf....
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....nour at the last hearing a sample of a typical purchase contract between any two parties and had highlighted the fact that a contract of purchase of goods possessing technical specifications (as opposed to purchase of standard off-the-shelf products) attaches certain rights and obligations, both on the buyers as well as the sellers. We invite your kind attention to the said submissions and highlight herewith certain salient features as are contained in that agreement. It is evident that there are various activities that are ancillary, incidental and confined to the purchase of goods. In particular, we would like to highlight the following clauses in the contract: (1) In p. 1 of the contract (as highlighted), it is stated that all 'supplies and services' which are incidental and ancillary to the activity of purchase and sale are covered by the agreement. This clearly postulates that the operation of purchase entails additional 'services' which are necessary in a logical conclusion to the contract. (2) Para 1.3 states that the products supplied by the seller shall be furnished in accordance with all terms and conditions of this agreement and any subsequent engineering change or....
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....se director. It is therefore evident that all functions that are carried out in the liaison office are parts or sub-parts of the purchase function itself. Considering the nature of the goods in the present case, the purchasing function becomes that much more complex and entails more than one activity. All such activities are, therefore, nothing but an integral part of the entire purchase function itself." 35. The learned counsel again brought our attention to p. 239, para 27 of the above citation wherein the Tribunal reproduced the findings of the CIT(A) which read as under: "I have gone through the submissions of the Authorised Representative, remand report thereon and the rejoinder. It is an admitted fact that the appellant is not involved in the purchase of goods in India for the purpose of export. Purchase involves transfer of title of goods purchased from the seller to the purchaser. In this sense, the Nike Inc. India can at no point of time be said to be a purchaser. In his own words: The contract for the purchase of goods is entered into directly between Nike Inc., USA, and third party manufacturers. The liaison office's activities are restricted to merely identifyi....
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.... 38. On the premises of the above facts the learned counsel again brought our attention to the finding of the Tribunal at para 43 of the order in Nike Inc., particularly to the portion which reads as under: "The affiliates are responsible enough to receive the apparels and make payment to the manufacturer directly and in fact the payments are made directly by those affiliates. No invoice may be raised on the assessee, but every invoice contains a reference of the assessee invariably as the agent of the affiliates and in accordance with the instructions and approval by the assessee that the goods are being shipped at the price agreed to with the assessee. So it is a case of the assessee purchasing the goods for the purpose of exports. In the absence of there being any prima facie contract between the assessee and the local manufacturer, the only relationship is that of buyer's agent and the local manufacturer knows the assessee only as the agent of the buyers. The local manufacturers know that the agent of the buyer, viz., the assessee, has placed the orders on it with a view to buy the goods in the course of export and as directed exported it to various affiliates of the assesse....
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....rting goods to MSL or its customers, it is not disputed that the branch office of the assessee is set up for the purpose of purchase of goods for as per the RBI's approval. It is the submission of the assessee that it is not the requirement of law that the assessee must purchase the goods in its own name or the goods should be exported only by the assessee in order to avail the benefit of Expln. 1(b) to s. 9(1)(i). 41. The learned counsel further submitted that the finding of the Revenue authorities that, having a PE for the Indian branch is to be treated as such, is a finding without merit. India does not have any DTAA with Hongkong and, therefore, in the absence of DTAA between India and Hongkong, the concept of PE cannot be imported to the section and the branch office in India cannot be treated as PE of the head office. Without prejudice to the above, the learned counsel further submitted the aforesaid activities of the Indian branch do not tantamount to business in India and do not result in a PE of the assessee in India. The branch office, it will be appreciated, operates only as a communication channel and it does not secure orders for its customers in any manner, directl....
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....0 per cent weightage will be attributed to Hongkong office and 50 per cent to Indian office. Managerial expertise: For any business to succeed, it has to be run by effective managers. Here in this business, the identification of customers, knowing their requirement, conveying the price of the commodities, price negotiations etc., is done in India even though with some guidance from Hongkong. Hence, 35 per cent weightage is given to this segment and out of the 35 per cent of the weightage, 10 per cent will be attributed to Hongkong and the remaining 25 per cent will be attributed to India. Capital cost: Capital is the main requirement for any successful business. A weightage of 15 per cent is attributed as a factor for earning the income since no capital cost is involved in India and hence the entire 15 per cent is attributed to Hongkong and no attribution to India. With this, 75 per cent of the total income arising or accruing to the assessee is attributed to its Hongkong office and 25 per cent is attributable to India." 43. It was contended before the CIT(A), the database relied upon by the AO was not confronted to the assessee in terms of requirement of the provisions....
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....h existed for many years now having huge assets in Hongkong. MSL is engaged in the business of rendering services to various buyers in connection with purchase by the buyers of textile products and accessories manufactured in various countries in the Far East. The functions performed by MSL include business planning, marketing research, supplier selection, sales preparation, setting up quality inspection standards, bank payment arrangement etc. For this purpose MSL has employed many people in Hongkong. MSL also bears the risk related to the capability/capacity of the suppliers, risk of cancellation of the orders, risk relating to system failure, risk relating to the quality of the products supply etc. Service agreement between the assessee and MSL for rendering services was entered on 28th Feb., 2002 and on account of this agreement assessee was required to provide buying services to MSL not only in respect of Indian territory but also in respect of territories like Indonesia, Korea, Malasia, Philippines, China, Singapore, etc. As far as India is concerned, the agreement became operative only from 1st Aug., 2002 after getting approval to establish branch in India. For the above ser....
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....g the traditional transaction method should be preferred over other methods namely, transactional net margin method which has been applied by the AO. 48. The learned counsel for the assessee also submitted detailed arguments so as to identify the appropriate comparables, a detailed review of "Prowess" database of CMIE in his written submissions to reiterate the submissions made hereinabove which has been elaborately discussed in the order of the CIT(A). 49. Replying to the above, the learned Departmental Representative made the following written submissions briefly as under. The assessee is a Hongkong based company which is engaged in the business of providing services to customers of an associated enterprise i.e., M/s Mondial Services Hongkong Ltd., involving export of readymade garments/accessories like merchandise from India, opened its Indian branch obtaining RBI approval. Returns were filed for the asst. yrs. 2003-04, 2004-05 and 2005-06 declaring nil income, for the reason that assessee's operations are confined to purchase of goods for the purpose- of export and is not liable for tax in India in relation to its activities, in the light of the provisions of Expln. 1(b) ....
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....rt of ready made garments, accessories and like merchandise from India. Though primarily the export will be from India, the branch may also be involved in providing services in connection with export of the aforesaid items from neighbouring countries like UAE, Nepal and Maldives." Para 2 of the application even lists the nature of the services to be undertaken by the assessee for the purpose of export, namely, identification of local suppliers, assistance to the local suppliers in development, of samples and merchandise and quality control, co-ordinating timely delivery and timely payment to local suppliers. The application column No. 4(iii)(a) of the Form FNC-1 enclosed, reiterates the service proposed to be undertaken by the branch office which merely states buying services for export of readymade garments, accessories like merchandise primarily from India, but also from neighbouring countries like UAE, Nepal and Maldives. Merely because the approval of RBI was obtained for export of readymade garments/accessories from India and neighbouring countries i.e., UAE, Nepal and Maldives, does not take away the undeniable facts that the assessee is a service provider and not a buyer ....
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....rmed that "as we are into sourcing of garments and shoes to the clients (C&A retailer located in Europe), we are not making any purchases in India". From the above it is clear that the assessee is not making purchases for the purpose of export but it is a service provider. This fact has been specifically upheld by the first appellate authority vide para 5.3.1. He held that the assessee is basically providing services of supply chain management. The assessee is also doing price negotiations independently with its suppliers. Therefore, the service rendered by the assessee is neither in the nature of liaison activity nor of preparatory and auxiliary character as argued by the learned counsel. It constitutes substantial business activity giving rise to income accruing or arising or deemed to arise or accrue in India. 55. Coming to ground No.3 of the assessee that the CIT(A) erred on facts and in law by holding that the approval of RBI was obtained by the assessee by suppressing the facts, the learned submitted there is no mention about the service agreement dt. 28th Feb., 2002, in assessee's application made to the RBI. Therefore, this finding of the CIT(A) is to be upheld. 56....
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.... wide and varied including carrying out of price negotiations with local suppliers which is tantamount to having a 'business connection' in India, the income from which is liable to tax in India under s. 9(1)(i). (iv) Reliance on the decision of the Tribunal, Bangalore Bench in the case of Nike Inc. vs. Asstt. CIT for asst. yrs. 1999-2000 to 2002-03 (ITA Nos. 60 to 63/Bang/2007, dt. 28th May, 2008) by the appellant is misplaced as it is clearly distinguishable on facts. In the said case Nike Inc. established the LO to support its global purchase requirements. The LO was part and parcel of the organization and indistinguishable from it. In these circumstances, the Hon'ble Tribunal held that the purchase by the agent tantamount to purchase by the principal and therefore upheld the applicability of Expln. 1(b) to s. 9(1)(i). I would submit, Your Honours, that the facts in the instant case are quite different. The appellant, in this case, is a third party relative to the purchaser and is a contract service provider for the purchaser. I would, therefore, strongly argue that the decision in the case of Nike Inc. cannot be mechanically applied to this case." 58. The learned Represen....
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....lsely obtaining the permission now the assessee cannot go back and say that the assessee is not rendering services. 61. According to the assessee, since there is no DTAA between India and Hongkong, the question of PE does not arise and, therefore, no income arises or accrues in India. The learned Departmental Representative is objecting to the above point as well. As noted above, according to the Revenue, the provision of s. 5 r/w s. 9 is applicable. The learned Departmental Representative's submission is that the question of preparatory/ancillary character of the Indian branch office is relevant only if a DTAA exists between the two countries. In this case, there is no DTAA between Hongkong and India. Therefore, this argument by the assessee is irrelevant. 62. Before coming to the conclusion let us go through the relevant provisions. Sec. 9 deals with income deemed to accrue or arise in India: "9. (1) The following incomes shall be deemed to accrue or arise in India- (i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of inc....
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.... Explanation 3: Where a business is carried on in India through a person referred to in cl. (a) or cl. (b) or cl. (c) of Expln. 2, only so much of income as is attributable to the operations carried out in India shall be deemed to accrue or arise in India. The persons referred to in Expln. 2 are brokers, general commission agents or any other agent having an independent status. In the instant case of the assessee there is no case that the branch office is having an independent status. 64. Now coming to the cl. (a) of Expln. 2 which clears any doubts as to the words "business connection", it includes any business activity carried out through a person who, acting on behalf of the non-resident has and habitually exercises in India, an authority to conclude contracts on behalf of the non-resident. In the instant case, no doubt the branch office has no authority to conclude contracts. The assessee only passes information collected by it to its head office. Coming to cl. (b) of Expln. 2 which states a person acting on behalf of non-resident has no such authority, but habitually maintains in India stock of goods or merchandise from which he regularly delivers goods or merchandis....
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....p. 239 of the decision in the case of Nike Inc. There is no difference between the facts to this point as well. The liaison work carried out in that case was almost similar to that of the assessee which included factory training; product development; factory evaluations; price negotiations; technical services, i.e., fabric testing, garment testing etc., was also doing quality assurance activities and shipping co-ordination. In the instant case of the assessee, the activities performed are mentioned at para 3 at p. 4 of the order hereinabove. In the case of Gutal Trading Est., it was held by the Authority for Advance Rulings that liaison office, is only providing information about technology received during feedback and passed on information to the head office but was not entitled to do negotiations by itself and in such case there is no income deemed to accrue to arise to non-resident in India. One of the arguments advanced by the learned Departmental Representative is that assessee is carrying out price negotiations. However, except negotiations, assessee had no, right to conclude the contact. Therefore, this point is also not relevant as far as the instant case of the asses....