TaxTMI 
TaxTMI 
2019 (4) TMI 1428
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....underlying facts in issues in all the five appeals are common and were heard together, they are being disposed off by this common order for the sake of convenience and brevity. 3. The common grievances of the assessee can be summarised as under: (i) Royalty Vs. Business Income; (ii) Fees for Technical Services [FTS] or business profits; (iii) Attribution of Income and allowance of expenses incurred by the Head Office; and (iv) Transit Office Facility Expenses. 4. The common grievance of the Revenue relates to the direction of the CIT(A) that interest u/s 234B of the Income-tax Act, 1961 [hereinafter referred to as 'the Act']. is not chargeable. 5. The representatives of both the sides were heard at length, the case record....
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....he assessee company had participated in the following projects:- (i) Chennai Water Supply Augmentation Project; (ii) Iron Ore Slurry Pipeline Project; and (iii) Baroda-Ahmadabad Kalol Pipeline Project. 10. As mentioned elsewhere, the assessee has bifurcated its income as Royalty Income of the head office which was offered to tax on gross basis under Article 12 of the DTAA between India and Russia. As such, Royalty Income from Chennai, Trichy and Madurai Project, Iron Ore Slurry Pipeline and the Baroda Ahmadabad Kalol Project amounting to Rs. 63,060,996/- was offered to tax @ 10% on gross basis. 11. The branch office income was shown as technical service fees from the Iron Ore Slurry Pipeline project and from the Baroda Ahmadabad Kal....
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.... and gas underground storage facilities, construction, modernization and renovation of mainline and booster compressor stations and other field facilities, exploration, development and operation of oil and gas fields, manufacturing of equipment and other industrial products. 14. The ld. AR further submitted that Reserve Bank of India [RBI] approval specifically prohibits the Branch Office to undertake any project execution in India. The ld. AR further stated that the revenue authorities have not tried to understand the industry and without appreciating how the pipeline business works, they have proceeded to draw adverse conclusions. It is the say of the ld. AR that it is an erroneous conclusion that no know-how has been provided by the Hea....
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....de project management services for this project and will depute five specialists' manpower with appropriate experience for execution of this project and finally for the commissioning of the Gas Pipeline to the satisfaction of the client GSPL. It was agreed that the appellant shall get US dollar 405.840 for sending specialist manpower which shall be payable as per the monthly rate per specialist already agreed for the actual month the specialists are deployed. It was further agreed that the appellant would be further paid for the technical expertise and technical know-how which it has gathered over the years and additional amount of US dollar 10 lakhs on which the Indian Tax component would be paid by Essar. 21. As per the Third Supplementa....
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....ects executed during the year under consideration. The decisions relied upon by the ld. AR are clearly distinguishable on facts and need no special mention. 25. To sum up, being a member of consortium, the appellant company cannot pay royalty to itself and, therefore, the share received from the execution of the three projects is business profit of the appellant company. Since there is no transfer of any technical know-how and even if the services are rendered in India by the head office and not by the branch office, then also, the revenue of the appellant company cannot be bifurcated as royalty and fees for technical services. Moreover, the entire payment received during the year has to be attributable to the PE in India, and, therefore, ....
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....portunity to the appellant company to furnish the confirmations from the Russian Embassy in this regard. Ground Nos. 12 to 14 are treated as allowed for statistical purposes. All other grounds are dismissed. The appeals of the assessee are partly allowed for statistical purposes. 29. The solitary grievance of the Revenue is that the CIT(A) erred in directing that interest u/s 234B of the Act is not chargeable in this case. 30. This issue is covered in favour of the assessee and against the Revenue by the judgment of the Hon'ble Jurisdictional High Court in the case of GE Packaged Power Inc. 373 ITR 65 wherein the Hon'ble High Court has held as under: "The primary liability of deducting tax (for the period concerned, since the la....