TaxTMI 
TaxTMI 
2016 (10) TMI 1131
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....oth the assessment years, except variation in figures, read as under:- "The appellant objects to the order dated 14 January 2015 passed by the Deputy Commissioner of Income Tax (International Taxation)-(2)(2)(1), Mumbai ('the AO') for the assessment year 201112, pursuant to the directions dated 22 December 2014 issued by the Dispute Resolution Panel ('DRP') under section 144C(5) of the Income-tax Act, 1961 ('the Act') on the following among other grounds. Ground No. 1: Income in relation to offshore supply is not taxable in India. 1.1 The learned AO/DRP erred in law and in facts in seeking to tax in India, a sum of Rs. 300,65,923 as against the income of Rs. 57,41,665 offered to tax for the year under consideration. 2. The learned AO/DRP erred in law and in facts in considering revenue from Offshore Supplies for the purpose of computing the appellant's income taxable in India, without appreciating that the same is not taxable in India both as per the Act as well as the Double Taxation Avoidance Agreement between India and Korea. Ground No. 2: Income, if any, should be taxable only to the extent it can be attri....
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.... (this contract hereafter will be referred as "DMRC Contract"). the scope of contract involved off-shore supply of equipment, on shore supply of equipment and on-shore services relating to laying, testing and commissioning. As far as amount received by the assessee towards on-shore supply and services are concerned, in the return of income filed for the impugned assessment year assessee offered it as income after claiming statutory deductions. However, as far as off- shore supplies are concerned, the assessee did not offer it to tax on the ground that title over the goods involved in off-shore supplies was transferred outside India to the contractee/employer upon loading onto the transportation medium outside India. The Assessing Officer in the course of assessment proceedings noticing that the assessee has not offered the amount received on account of off-shore supplies to tax, called upon the assessee to justify its claim. In response to the show cause notice issued by the Assessing Officer it was submitted by the assessee as under:- • Off-shore supplies were manufacturing in Korea by the Head Office. Other functions including finance general management, marketing, b....
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.... company on the basis of its credentials and expertise in relation to manufacturing cables and accessories. The said credentials and expertise were possessed by the Head Office because of which the contracts were secured and in pursuance thereto off-shores were made by the Head Office; • The project office had no role to play in making off-shore supplies. In fact, the project office had no role to play in securing the contract which lead to the obligation to make the off-shore supplies; • The installing of cables and commissioning thereof was awarded to the company owning to the employer's judgment that it would be preferable that the said activities were carried out by the suppliers. Hence, the distinct activities of installation and commissioning were awarded to the company. In connection with the distinct activities, the company established the project office since the activities could only be undertaken in India which required physical presence in India. Therefore, the project office has no role to play either in securing or in executing the activities of off-shore supplies. It was submitted by the assessee from the very beginning, the contracts for su....
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....r this purpose, assessee has set-up project office for execution of contract in India. He observed, all supplies or service, whether on-shore or 0ff-shore, are finally utilised in India for the purpose of executing the main contract with the employers viz. MRVC and DMRC. He observed, there is a profit element in off-shore supplies and it has a business connection in India as these off-shore supplies were finally utilised in India. He observed, assessee by applying a dissecting approach has bifurcated the composite contract into on-shore and off-shore supplies. He was of the view that a "Look At Approach" should be taken rather than "Look Through Approach". The Assessing Officer observed, the assessee set- up its project office in India for executing the contract. The Assessing Officer observed, as the project office is executing the contract in India, on turnkey basis the entire amount received in pursuance to the contract comes within the purview of scope of income as envisaged under section 5(2). Therefore, as the assessee is having a direct business connection in India within the meaning of section 9(1) and it has a fixed place of business in India by virtue of its project offic....
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....lues for each component of the contract, however, these values are only indicative and cannot form the basis to make the contract separable. As far as assessee's claim that the transfer of ownership over the off-shore supplies were outside the country, the DRP observed, since the assessee is responsible for supply of material purchased overseas, transportation of the material to the site, delivery, storage, security and also insurance till the cables are installed, tested, commissioned and the completed facility is handed over to employer, the transfer of ownership of the cable procured from overseas on loading to the mode of transport for delivery at Indian Ports is only notional and for the limited purpose of making insurance claim due to damage/loss in transit. Even the custom duty on such material is payable by the assessee. Delivery at the ports is to be taken by the assessee and transported to the site and assessee is responsible for the quality, security, storage, testing, performance of such cable till completion of contract and transfer of facility on completion. The DRP observed, the contract awarded to the assessee has not been split into separate parts for supply of off....
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....project office exclusively set-up to execute the contracts and supply goods. Ultimately, the DRP observed, the off-shore supply being inextricably linked to the P.E., the entire amount received under the contract including the off-shore supplies should be taxed as business receipt of P.E. Thus, the DRP upheld the draft assessment order. In terms of the directions of the DRP, the Assessing Officer finalized the assessment. Aggrieved, the assessee is in further appeal before the Tribunal. 9. Learned Authorised Representative taking us through various clauses of the contract submitted that both the contracts are turnkey composite contract having three distinct and separate components off- shore supply, on-shore supply and on-shore services. He submitted, the total contract value has been segregated to three different parts i.e., for off-shore supplies, on-shore supplies and on-shore services. Referring to clause 31.1, the learned Authorized Representative submitted that ownership in respect of plant and equipment including spare parts from off-shore supplies shall be transferred to the employer upon loading onto the mode of transport to be utilised to convey the plant and equipment....
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..... He submitted, none of the aforesaid facts have been controverted by the Departmental Authorities. Learned Authorised Representative submitted, as off- shore supply is a distinct component of the turnkey contract and the title to the goods passed outside India, no income is received or deemed to be received or accrues or arise or is deemed to accrue or arise in India. He submitted, Explanation-1(a) to section 9(1)(i) specifies that only so much of income is taxable in India as can reasonably be attributable to the operations carried out in India. He submitted, as the only operations in India relate to on-shore supplies and on-shore services, income from these activities having already been offered to tax by the assessee, no further tax liability can arise. Therefore, income from off-shore supplies is not chargeable in India as per the provisions of section 5 r/w section 9. Learned Authorised Representative submitted, as the project office had no role to play in relation to off-shore supply, income from off-shore supply is not attributable to the P.E. in India. Therefore, as per article 7 of the treaty between India and Korea, it is not taxable in India. In support of such contenti....
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....site contract, all receipts including those attributable to the off-shore supply are to be brought to tax in India. In this context, the learned Departmental Representative relied upon the decision of the Tribunal, Mumbai Bench, in Orpak Systems Ltd., ITA no.8862/Mum./2011, dated 6^th January 2016. He submitted, in the said decision, the Tribunal, while relying upon the decision of the Hon'ble Madras High Court in Ansaldo Energia Spa (supra), had also observed that the decision in the case of Ishikawajima Harima Heavy Industries (supra). He submitted, as per these decisions, even if title in respect of off-shore supply of goods passed outside India it alone cannot decide the issue of taxability. He submitted, the AAR in case of Roxar Maximum Reservoir Performance WLL, 349 ITR 189, also observed that a contract has to be read as a whole and the purpose for which the contract is entered into by the party is to be ascertained from the terms of the contract. Relying upon the said decision, learned Departmental Representative submitted, when the contract is a composite contract, the off-shore supply of goods being inextricably linked to its utilisation in execution of contract in In....
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.... undertaken by pre-existing consortium making income from off-shore supply of goods by a specific member of consortium exempt from tax in India. However, due to misuse of the said instruction, subsequently, it was withdrawn by CBDT Instruction 9 of 2009. He submitted, in any case of the matter, as the assessee has neither executed a Hydel Power Project nor it is a consortium the instruction no.1829 of 1989 will not apply. He submitted, Explanation-4 to section 9(1)(i) retrospectively inserted by Finance Act, 2012, defines the meaning of "through" which is used in section 9(1)(i) of the Act and in Article-27 of the DTAA. 13. He submitted, as per the definition of the word "through" under explanation-4,it is not imperative to establish the fact that the P.E. played active role in the off-shore supply contract as held by the Hon'ble Supreme Court in Ishikawajima Harima Heavy Industries (supra). He submitted, as no definition of the word "through" has been provided under India-Korea DTAA by virtue of Article-3(2), the meaning of "through" provided in Explanation-4 to section 9(1)(i) is applicable to DTAA also. He submitted, even the Courts have held that Explanation inserted by ....
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....d by the P.E. in the transaction and the Court had given a finding that P.E. had not played any part in respect of off-shore supply of goods. He submitted, the decision in DIT v/s Xelo Pty. Ltd. (supra), would also not apply for the reason for which Ishikawajima Harima Heavy Industries (supra) is not applicable. He submitted, the decision of the Hon'ble Delhi High Court in L.G. Cables Ltd. (supra), is not applicable as the non-resident company was awarded two separate contracts one for off-shore supply of goods and services and another for on-shore erection, installation, etc. He further submitted that in the case of L.G. Cables Ltd. (supra), the Hon'ble High Court did not discuss the decision of Roxar Maximum Reservoir Performance WLL (supra) and Ansaldo Energia SPA (supra). He submitted, the Hon'ble High Court also did not have the benefit of the Hon'ble Supreme Court's decision in the case of Vodafone International Holdings B.B. (supra). Thus, it was submitted by the learned Departmental Representative the consideration received towards off-shore supply of goods was rightly taxed in India. 14. In the rejoinder, the learned Authorised Representative submitted, even in ....
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....oses and related issues arising and, that too, specifically for power projects. He submitted, in many of the decisions wherein it has been held that off- shore supply is not taxable, instruction no.1829 (supra) is not at all being referred to. As far as contention of the learned Departmental Representative regarding applicability of Explanation-4 to section 9(1)(i), learned Authorised Representative submitted, though, Explanation-4 of section 9(1)(i) was inserted by Finance Act, 2012, much before the draft assessment order, as well as final assessment order, however, none of the Departmental Authorities including DRP have referred to the said Explanation. He submitted, even otherwise also, Explanation-1(a) to section 9(1)(i), would apply and not Explanation 4. He submitted, in Explanation 1(a), the word "through" does not appear. Therefore, by virtue of Explanation 1(a) to section 9(1)(i) territorial nexus is required for taxing the income in India as held by the Hon'ble Supreme Court in Ishikawajima Harima Heavy Industries (supra). He submitted, even assuming Explanation 4 is to be considered for the purpose of section 9(1)(i), however by virtue of said Explanation 4, off-shor....
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.... as the allegation of the Department that consideration is heavily skewed in favour of off-shore supply of goods, the learned Authorised Representative submitted, such allegation is without any basis and it is neither a case of Assessing Officer nor the DRP. He submitted, even otherwise also, the contention of the learned Departmental Representative is factually incorrect which is very much evident from the contract value. The learned Authorised Representative finally submitted, though, the learned Departmental Representative has tried to distinguish the decision of the Hon'ble Supreme Court in Ishikawajima Harima Heavy Industries (supra) as well as other decisions relied upon by the assessee, however, the assessee's case is fully covered by these decisions. 16. Learned Authorised Representative submitted, though, in the case of L.G. Cables Ltd. (supra), two separate contracts were executed even then the Hon'ble High Court held, assuming that both the contract needed to be read together as a composite contract, still then, the issue is covered by the decision of the Hon'ble Supreme Court in Ishikawajima Harima Heavy Industries (supra). The learned Authorised Representati....
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....and 2 above exclude materials used for civil, building and other construction works. All such materials shall be included and priced under schedule no.4, Installation Services." 18. As per clause 11.4, the bidder is required to furnish the details and break-down of their prices as under:- 11.4 In the schedules, bidders shall give the required details and a breakdown of their prices as follows: (a) Plant and equipment to be supplied from abroad (Schedule no.1) shall be/quoted on a CIF port-of-entry, CIP border point basis or CIP-named place. In addition the FOB price (or the FCA price, as the case may be) shall also be indicated. (b) Plant and equipment manufactured or fabricated within the Employer's country (Schedule No.2) shall be quoted on an EXW (ex-factory, ex-works, ex-warehouse or off-the-shelf as applicable) basis, and shall be inclusive of all costs as well as duties and taxes paid or payable on components and raw materials incorporated or to be incorporated in the facilities. (c) Local transportation, insurance and other services incidental to delivery of the plant and equipment (Schedule No. 3). (d) Installation Service....
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....467 3. Agent commission on CIF INR 11,11,082 4. Total of (ii) & (iii) INR 5,68,12,549 5. Total payable USD 12,59,445 & INR Rs. 5,68,12,549 USD one million two hundred fifty nine thousand four hundred forty five only And Rupees five crore sixty eight lakh twelve thousand five hundred forty nine only 21. Schedule-1(A) specified the goods/equipment to be supplied from abroad; Schedule-1(B) specified the goods/equipments to be supplied from employer's country (India); Schedule-1(C) lays down the structure of taxes; Schedule-1(D) provides for inland transportation, insurance and other incidental charges. The grand summary of price schedule incorporated in the contract is as under:- Item Description Total Cost (Rs.) 1A Supply from abroad $ 1,259,445 = INR 55,554,119 1B Supply from within the employer's country INR 29,984,210 1C Structure of taxes INR 19,845,316 1D Inland transportation, insurance and other incidental charges INR 5,871,941 Agent Commission on CIF INR 1,111,082 Total: INR 112,366,668 (Rupees Eleven Crore Twenty Three Lakh Sixty Six Thousand Six Hundred Sixty Eight ....
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....charged in the invoice is in dollar. Thus, as could be seen, in terms of clause 31.1 of the contract, ownership over the plant and equipments got transferred to the name of MRVC once the plant and equipments were loaded on the mode of transport from the country of origin to India. It is also not disputed that payment for offshore supplies were made outside India. On a reading of the IFB and the contract as a whole it appears that from the very beginning, the intention of the parties to the contract is to treat the off-shore supplies as a distinct and separate component of the contract. It is not disputed that in pursuance to the contract, assessee has supplied the goods not only from Korea but other countries to India. The issue before us is whether the price received towards supply of plant and equipments from abroad is taxable in India by virtue of a business connection through its P.E. It is the case of the Department that as the assessee is executing a turnkey project and the contract is a composite one and since the work of laying, testing and commissioning is executed through the P.E. in India, the assessee has a territorial and economic nexus with India, therefore, profit ar....
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....o such authority, but habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident; or (c) habitually secures orders in India, mainly or wholly for the non-resident or for that non-resident and other non-residents controlling, controlled by, or subject to the same common control, as that non-resident:" 25. Thus, the legal position which can be deduced from reading of the aforesaid statutory provisions are, in case of a non-resident, firstly any income accruing or arising outside India will not come within the purview of total income in terms of section 5(2) and secondly, as per section 9(1)(i) r/w Explanation-1, income shall be deemed to accrue or arise in India through or from any business connection in India and in a case where all the operations are not carried out in India, only such part of the income as is reasonably attributable to operations carried out in India can be deemed to accrue or arise in India. Keeping in view the aforesaid statutory provisions, if we examine the facts of the assessee's case, it would be seen that though the contract entered with MRVC by the assessee i....
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....the parties to the contract was to treat the off-shore supplies of plant and equipment as a distinct and separate component of work having no connection with the on-shore supply and services. Thus, if we examine these facts vis-à-vis provisions contained under section 5(2) and 9(1)(i), firstly, it cannot come within the scope of total income under section 51(2) of the Act as the sale relating to off-shore supply were not only completed outside India with the transfer of ownership over the goods but the payments were also received outside India. Secondly, income cannot be deemed to accrue or arise in India through or from any business connection in India in terms of section 9(1)((i) because the income relating to off-shore supplies cannot be attributable to the operations carried out in India. Admittedly, off-shore supplies were made outside the territorial jurisdiction of India and also the transfer of ownership over the goods was also outside the territorial jurisdiction of India. Moreover, the income relating to off-shore supply cannot be considered to be through any business connection in India because none of the conditions of Explanation-2 to section 9(1)(i) are fulfill....
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....utable to that permanent establishment. 2. Subject to the provisions of paragraph (3), where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred 'whether in the State in which the permanent establishment is situated or elsewhere, which are allowed under the provisions of the domestic law of the Contracting State in which the permanent establishment is situated. 4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent esta....
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....d natural gas receiving storage and degasification at Dahej, Gujarat. The scope of contract involved off-shore supply, off-shore service, on-shore supply and onshore service. As far as off-shore supply and off-shore service are concerned, payments are to be made in U.S. dollar, whereas ,for on- shore supply and on-shore service and construction and erection, payment is to be made partly in U.S. dollar and partly in Indian rupee. As far as on-shore supply and on-shore service, construction and erection are concerned, the assessee accepted its liability under the income tax Act, however, as far as payment received towards off- shore supply and off-shore service, dispute arose between the assessee and the Department in relation to its taxability under the Income Tax Act. While the assessee claimed that the amount received towards 0ff-shore supply and off-shore service being outside the territorial jurisdiction of India is not taxable under the Income Tax Act, however, the Department was of the view that as the assessee was having a P.E. in India, it has a business connection and, therefore, the amount received towards off-shore supplies and off-shore services will also be taxable unde....
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.... it cannot be held to be a composite contract. The Hon'ble Supreme Court held, a contract must be construed keeping in view the intention of the parties. Though, the applicability of tax would depend upon the nature of the contract but the same should not be construed keeping in view the taxing provisions. The Hon'ble Supreme Court referring to Klaus Vogel on double taxation conventions observed that the distinction between the existence of a business connection and income accruing or arising out of such business connection is clear and explicit. Where the P.E. is not involved in the disputed transaction, in any way, the P.E. would be excluded from being a part of the cause of income itself, hence, there would be no business connection. The Court observed, when the off-shore supply and services were rendered outside India and the P.E. has no role to play in respect of earning of income thereto, the income arising therefrom cannot be attributable to the P.E. so as to bring it within the charge of tax. For attracting the taxing statute, there has to be some activities of the P.E. Even under the DTAA, the tax liability in respect of overseas transaction would not arise in Indi....
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....acity to tax an event, has to be followed. (4) The fact that the contract was signed in India is of no material consequence, since all activities in connection with the offshore supply were outside India, and therefore cannot be deemed to accrue or arise in the country. (5) There exists a distinction between a business connection and a permanent establishment. As the permanent establishment cannot be said to be involved in the transaction, the aforementioned provision will have no application. The permanent establishment cannot be equated to a business connection, since the former is for the purpose of assessment of income of a non-resident under a Double Taxation Avoidance Agreement, and the latter is for the application of section 9 of the Income-tax Act. (6) Clause (a) of Explanation 1 to section 9(1)(i) states that only such part of the income as is attributable to the operations carried out in India, are taxable in India. (7) The existence of a permanent establishment would not constitute sufficient 'business connection', and the permanent establishment would be the taxable entity. The fiscal jurisdiction of a country would not exten....
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....ITR 320 (Bom.) 30. At this stage, it is necessary to deal with some of the propositions advanced by the learned Departmental Representative. 31. Learned Departmental Representative observed, in terms of provisions of section 5(2) r/w section 9 of the Act, source rule applies as per which if there is an economic or territorial nexus with the income received by non-resident outside India, it is deemed to accrue or arise in India as per the provisions of section 9 as well as DTAA. In this context, learned Departmental Representative has relied upon certain decisions. Hereinafter, we will briefly deal with the decisions relied upon by the learned Departmental Representative and their applicability to the facts of the case. 32. One of the decision relied upon by the Ld. Departmental Representative is in the case of Orpak System Ltd. vs. ADIT (176 TTJ 655) On a careful reading of the said decision we find that it is factually distinguishable. Factual analysis of the order indicate that separate bills raised by the assessee in dollar terms for supply of equipments and in rupee terms for the work relating to installation was to suit its convenience and was not contemplated by the ....
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....t of taxation. The subject matter of taxation was not the Contract between the parties but the income that the petitioner derived from the Contract. Thus, the situs of the object of the Contract would not be as relevant as determining the situs where the income of Linde had accrued or arisen. By virtue of Section 4 of the Act, income tax is charged in respect of the total income of a person. By virtue of Section 5 of the Act, the scope of total income of a non-resident is limited to income which is received or deemed to be received in India and income which accrues or is deemed to accrue or arise in India. It, therefore, follows that the object of inquiry would have to be to determine whether any income of Linde accrued or arose in India or whether any income could be deemed to accrue or arise in India. The fact that the contractual obligations of Linda were not limited to merely supplying equipment, but were for due performance of the entire Contract, would not necessarily imply that the entire income which was relatable to the Contract could be deemed to accrue or arise in India. 85. The principle of apportionment of income on the basis of territorial nexus is now well a....
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.... asset was sold by a non-resident non-resident company to another non-resident company. The Revenue contended that the capital gain arising from this transaction was exigible to tax under the Act by virtue of Section 9(1)(i) of the Act as the transaction also implied transfer of control and assets of the Indian subsidiary of the overseas company, whose share had been sold and purchased. The Supreme Court observed that the last sub-clause of Section 9(1)(i) of the Act referred to income arising from "transfer of capital asset in India". The Court further explained that Section 9(1) of the Act created a legal fiction which had a limited scope and could not be expanded. Accordingly, transfer of capital asset situated outside India could n t be taxed by virtue of Section 9(1)(i) of the Act, The expression "look through" had been used by the Supreme Court in this context. The relevant extract of the judgment is as under:- "90. We have to give effect to the language of the section when it is unambiguous and admits of no doubt regarding its interpretation, particularly when a legal fiction is embedded in that section. A legal fiction has a limited scope. A legal fiction cannot be....
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....sy which involves lifting of the corporate veil or "looking at" any scheme to find whether a transaction is a sham or has any substance. Both the Revenue and Linde are accepting the Contract as it stands and the controversy only revolves around the situs of the income accruing or arising from the contract. To our minds the Authority as read the principles applied by the Supreme Court in Vodafone International Holdings B.V'S. case (supra) completely out of context." Thus, as could be seen from the aforesaid decision of Hon'ble Delhi High Court, principle laid down in case of Ishikawajima Harima Heavy Industries (supra) has not been diluted by the decision of Vodafone International Holdings & BV (supra) and still continues to be good law. The same view was again expressed by Hon'ble Delhi High Court in the case of DIT vs. Nokia NetworksOY(358 ITR 259). The decision of Sedco Forex International (supra) relied upon by the learned Departmental Representative is also not applicable due to difference in facts. As far as decision in case of Verizon Communications Singapore Pte. Ltd., v/s ITO, (361 ITR 575) (Mad.) is concerned in that case the decision of Ishikawajima Harima Heavy In....
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....ould squarely apply to assessee's case. Therefore applying the ratio laid down therein we hold that the amount received towards offshore supply is not taxable in India. As far as contract with DMRC is concerned it is evident from the observations of the departmental authorities that the nature of contract is similar to MRVC. Therefore our aforesaid observations will equally apply to the offshore supplies made by assessee in relation to this contract also. In the aforesaid view of the matter we hold that the amount received by the assessee in respect of offshore supplies would not be taxable in India. Ground no.1, is allowed. 35. In ground no.2, assessee has challenged the estimation of income on presumptive basis on the total revenue earned including off-shore supplies. 36. As is evident on record, the assessee had filed its return of income for the impugned assessment year offering income received towards on-shore supplies and services. However, while completing the assessment, the Assessing Officer has not only included the revenue earned from off-shore supplies as taxable in India, but he taxed the entire income derived by the assessee both from on-shore supply and service....
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....st under section 234B of the Act before the DRP, the assessee had submitted that such interest cannot be levied against a non-resident as the obligation to deduct tax is on the payer. However, the DRP did not accept the contention of the assessee and sustained levy of interest. 42. Learned Authorised Representative reiterating the stand taken before the Departmental Authorities submitted, interest under section 234B cannot be levied on the non-resident company as the obligation to deduct tax on the payer at the time of making payment to the non-resident entity is absolute. For such proposition, the learned Authorised Representative relied upon the following decisions:- i) NGC Network Asia LLC, 222 CTR 85; ii) G.E. Package Power Inc., 373 ITR 65; iii) DIT v/s Xelo Pty Ltd., 203 taxmann.com 475; and iv) Satellite TV Asia Region Ltd. v/s DDIT, 117 TTJ 249 (Mum.). 43. The learned Departmental Representative on the other hand justified the levy of interest by relying upon the decision of the Hon'ble Delhi High Court in DIT v/s Alcatel Lucent USA Inc., 264 CTR 240 (Del.). 44. We have considered the submissions of the parties and perused th....
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.... it can be attributed to operations in India. 2.1 Without prejudice, the learned AO I DRP erred in treating the profit from Offshore Supplies (arrived at on a presumed basis of 10% of revenue from Offshore Supplies) as taxable in India without undertaking an attribution thereof to the Permanent Establishment/alleged business connection in India. 2.2 The learned AO I DRP erred in disregarding the submissions made and the grounds of(objections raised by the appellant. Ground No. 3: Disallowance of expenditure in relation to contract with Transmission Corporation in India. 3.1 The learned AO 8 DRP erred in law and facts in disallowing in the year under consideration, expenses of Rs. 2,20,05,206 incurred by the Project Office in relation to Onshore Supplies and Onshore Services for the Contract entered into with Transmission Corporation of Andhra Pradesh Limited. Ground no.4: Levy of interest under section 234B of the Act: 4.1 The learned A.O. has erred in law and in fact, in levying interest under section 234B of the Act disregarding the fact that the appellant is a non-resident whose income is subject to tax deduction at source (w....