AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 527
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..../2014 (A.Y. 2001-02) Revenue's appeal 1) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the assessee did not have a Permanent Establishment ('PE') in relation to various contracts for supplies and services executed in India for M/s Maruti Udyog Limited ('MUL'). 1.1) The Ld CIT(A) has erred in ignoring the findings of the Assessing Officer ('AO') that the assessee had a fixed-place PE in India in relation to the contracts for supplies executed for M/s MUL in the form of a long-standing presence at M/s MUL's site in India and which operated as an effective system to know the requirements of M/s MUL, to negotiate the Purchase Orders, to procure Purchase Orders etc. 1.2) Without prejudice to the foregoing, the Ld CIT(A) has erred in holding that the assessee did not have a supervisory PE in relation to the services of installation, testing, commissioning etc of equipments 1.3) The Ld. CIT(A) has erred in mechanically following the judgment of the Hon'ble ITAT in assessee own case for Asstt Years 1992-93 to 1994-95 & 1996-97, not appreciating the fact that the issue o....
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..../s Jacabs Civil Incorporated, Mistubishi Corpn & Others [330 ITR 578, Delhi. 4.1. The Ld CIT (Appeals) has erred in not appreciating the fact the case does not lay down a general proposition of law that interest u/s 234B is not chargeable in all cases, particularly in cases where the Non-Resident assessee/payee/deductee has played a role in inducing non-deduction or short-deduction on the part of the payer/deductor. 4.2. The Ld CIT(Appeals) has erred in failing to take note of the observations of the Hon'ble High Court in the case of M/s Mitsubishi [330 ITR 578, Del] that the role of the assesse/payee/deductee in short-deduction or non-deduction of tax needs to be ascertained before claim regarding nonliability to interest u/s 234B of the Act is accepted, a proposition affirmed subsequently in the case of M/s Alcatel Lucent (judgement of Delhi High Court dated 7.11.2013 in ITA No. 327 & Ors of 2012) and followed by ITAT Delhi in the order dated 13.06.2014 in the case of Nortel Network India International Inc. (ITA No. 4766/Del/2011). 3. The assessee is a Company incorporated as per the laws of Japan under tax resident in Japan. It had a trading house and ha....
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....nt establishment in India, the profit from supply of equipment will also be taxable in India in addition to the taxation of fee for technical services rendered. From the purchase orders, the Assessing Officer observed that during the year the assessee supplied equipment and spare parts worth 47,87,00,190 Yen (Rs. 19,14,80,076). The Assessing Officer noted that the assessee did not submit the profit and loss account in respect of supplies made to MUL, neither has furnished copies of global accounts. In absence of the same, the Assessing Officer found it reasonable to estimate 10% of the supplies made as profit attributable to the permanent establishment. From the purchase orders, the Assessing Officer observed that apart from rendering supervisory services of technical nature, the assessee also provided engineering services and software. These are taxable as FTS and/ or royalty under Income Tax Act as well as DTAA between India and Japan. The Assessing Officer further held that the assessee has Permanent Establishment in India, the same will be taxable @ 20% on gross basis in terms of Section 44D r.w.s. 115A. Finally, on consideration of the entirety of the facts and circumstances o....
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....L is taxable in India. The CIT(A) is not right in holding that no operations in relation to the supplies of equipments to MUL were undertaken in India, not appreciating the fact that the assessee has PE in India in the form of long-standing presence in India in relation to the supplies being made and services being rendered to MUL for the past several years. The reliance of the decision in case of M/s Ishikawajima Harima Heavy Industries Ltd. (288 ITR 408 (SC)) was misplaced by the CIT(A) as the facts of the said case are distinguishable to the present assessee's case. 7. The Ld. AR submitted that during the year, the assessee was engaged in supply of equipment to MUL outside India. The supply of equipment was not offered to tax on the ground that the same was offshore supply, where the risks and title pertaining to the same were transferred outside India based on the purchase orders. The same was not offered to tax in the absence of any Permanent Establishment related to MUL activities in India. However, the Assessing Officer vide its order held that the assessee has PE in India under the following paras of Article 5: 2(a): Place of management 2(b): Branch ....
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..... * Each supervision purchase order is a separate contract and period stay of supervisor could not be clubbed together for computing 180 days. Period of supervision for each contract does not exceeds 6 months. Thus, there is no Supervision PE. This fact has been confirmed by Hon'ble High Court for A.Y. 1992-93 to 1996-97 in assessee's own case and SLP of revenue is dismissed by Hon'ble Supreme Court. * Even in case for any contract, supervision period exceeds 6 months, it can't impact taxability of offshore which is completed before supervision is done. * Other projects are entered with the other parties in India and are not connected to MUL income. This, has been confirmed by Hon'ble High Court for AY 1992-93 to 1996-97 in assessee's own case and SLP of revenue is dismissed by Hon'ble Supreme Court. * Contract was entered with MUL directly by Head Office in Japan, no office was involved. 8. Thus, the Ld. AR submitted that the CIT(A) after observing the above was right in holding that the assessee does not have any PE in India and offshore supply of equipment are not taxable in India. In fact such a contention raised as above has also been acc....
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....outside India. The custom clearance, inland transportation etc were done by MUL on its own. No PE was involved in the sale. Supervision was done after supply of equipment. Thus, no operation in relation to supply was carried out in India. Considering the argument of the appellant and as a matter of judicial discipline it is inferred that the appellant did not have PE in India, so far as its offshore supply of equipment to MUL was concerned. Thus, the ground of the appellant is allowed with a direction to follow the verdict of the Hon'ble ITAT, New Delhi in accordance with which supervision fees should be taxed @ 20% as per Article 12(2) of the DTAA." In the present case the goods were sold to MUL from outside India. Thus, the risk and title were also transferred outside India and no transaction took place in India. The custom clearance, inland transportation were also done by the MUL on its own and assessee at no stage involved in the said activities. There was no PE involved in the sale. In fact supervision was done after the supply of equipments. The revenue could not establish that the assessee is having fixed place PE or supervisory PE. The ratio laid by the Hon'ble....
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....y the Revenue nor have been adjudicated upon. The Tribunal after considering the facts of the case held that since in none of the POs the duration exceeds 180 days, no supervisory PE is constituted. The Ld. DR further submitted that the conclusion and findings recorded by the Tribunal are in the context of the POs as stated in Para 61 of the order dated 31/05/2007 as against this the facts of the year under consideration are distinguishable. LO has already been closed. Hence, the question of LO being PE does not exist/arises in the present Assessment Year. As regards of supervision PE, the same being based on specific duration criteria, need to be examined afresh on the facts and circumstances of the case. The factual matrix on the basis of which purchase orders were examined by the Tribunal to held that no supervisory PE exist is summarized hereunder:- (i) These purchase orders were booked by the assessee through its head office pursuant to competitive bidding on global tender floated by MUL. (ii) The terms and conditions under such purchase order were different in the sense and not linked with the other purchase orders. (iii) One purchase order was not ....
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....asurement not included in the duration of the project. Thus, the Ld. DR submitted that these are only the few examples and don't constitute the exhaustive list. 12. The Ld. DR further submitted that the Purchase Order for the relevant year when examined in the above context reveals the following:- (i) Not all the Purchase Orders are procured on the basis of Global Tenders floated by MUL and on the basis of such tendering process. (ii) The duration of Purchase Orders as contended before the ITAT were not provided to the Assessing Officer for verification. (ii) The formula for calculating the duration (days) of the Purchase Orders as stated by the assessee before the Hon'ble High Court (the number of days for supervisor was calculated by dividing 'man days' by number of 'supervisor') is not reliable and cannot be construed as the correct way of computing the duration of the project since the assessee itself has followed a different criteria to calculate the duration of the project. The Ld. AR provided Annexure 1 during the hearing wherein he has listed a few such examples where the duration as per POs as furnished before the Tribunal and duration as per ....
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....ted. The assessee also accepted the existence of such fixed place PE under Article 5(1) in the form of YE2 Project Office at the premises of MUL and has furnished audited Balance-Sheet and P&L A/c in respect of such PE. The Ld. DR further submitted that examination of the purchase orders revealed that the active involvement of the MUL PE (PO) in their procuring as well as execution. The Ld. DR submitted that not all POs are procured through HO. The fixed placed PE at MUL in the form of YE2 Project Office plays a significant role in making offices and procuring POs. There are technicians in the payroll of the PE in India established for contracts with MUL in the year ending 31st March, 1994 who have provided services even before the Purchase Order has been formally accepted. There are several rounds of negotiations both on technical aspects as well as price before the Purchase Order was issued. The assessee closed down it's Liaison Office during the year. Hence, it is the PE which was involved in these negotiations. The Ld. DR while trying to prove these observations from the analysis of the following Purchase Orders: (i) In respect of PO NO.MUL/PE/PR/30/24/MOD-1364/342 dat....
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....Phase-II/Mod-1058 was issued on 2/3/00. This was accepted and signed by Y. Fujiura on 17/3/00. This Purchase Order was amended and a fresh PO No. MUL/PE//PN/501/IMP(E)/Phase-II/Mod-1548A was issued on 28/8/00. Another MOM held at MUL works on 7/11/00 and subsequent discussions were held at MUL works, Gurgaon on 14/12/00 & 15/12/00. Another MOM held at MUL works again on 9/1/01 and the Purchase Order was amended and new PO No. MUL/PE/PN/501/IMP(E)/Phase-II/Mod-1548B was issued on 12/1/01. This was signed and accepted by S. Omori on 20/2/01. Once again another MOM was held on 18/2/00 at MUL work, Gurgaon and the original PO No. MUL/PE/PN/501/IMP (SUP)/118 dt. 15/4/99 was amended again and new Purchase Order No. MUL/PE/PN/501/IMP (SUP)/Phase-II/147 was issued on 2/3/00. This was signed and accepted by Y. Fujiura on 17/3/00. This was further amended and new PO No. MUL/PE/PN/201/IMP (SUP)/Phase-II/169 dt. 12/1/01 which was signed and accepted by S. Omori on 20/2/01. After another MOM at MUL on 5/8/00, PO No. MUL/PE/PN/501/IMP(SUP)/Phase- II/147 dt. 2/3/00 was further amended on 18/8/00 and new PO No. MUL/PE/PN/501/IMP(SUP)/Mod-A/163 was issued on 18/8/00 which was accepted by Y. Fujiura....
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....e and show the TDS deducted by MUL from the payments made by it against the purchase orders as a part of the balance-sheet of the YE2 PE in the form of 'Loans and Advances'. In view of these submissions, the Ld. DR submitted that it is not only established that there are Purchase Orders which exceeds the minimum duration test for PE under Article 5(4), even where such test is not satisfied, the involvement of the fixed place PE under Article 5(1) in the form of YE2 Project Office at the premises of MUL in procuring the Purchase Orders and assisting in the services are also established thereby attracting the provisions of Article 12(5). Accordingly, the decision of the Assessing Officer in attracting the YE2 PE and bringing into tax both the supplies made and supervision charges received by the assessee from MUL should be upheld. 15. The Ld. AR submitted that the assessee has a PE under Article 5(1) and Article 5(2) in earlier years. The Ld. AR submitted that PE was not connected directly or indirectly with supervision income. The Tribunal in earlier order for AY 1992-93 to 1996-97 has duly examined all forms of PE and in connection with supervisory activities. The same has been ....
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.... of India. In fact, it can be seen from the supervision details submitted to the Assessing Officer that all technicians are different for different supervisory activities, who have come to India on a specific date and exit on a specific date and exit on a specific date. So, they cannot be alleged to be on the payroll of PE. This argument was also taken in earlier year, mentioned in para 62 of the earlier year order of the Tribunal. The Ld. AR pointed out that the Ld. DR is relying upon payroll of PE for March 1994 while dealing with matter of AY 2001-02 without any evidence on records. The Ld. DR also noted one exceptional Purchase Order wherein Purchase Order was issued but before its acceptance, services were started. The Ld. AR submitted that this exception can be due to some commercial reason. This does not establish the fact that the technicians were on the payroll of YE2 MUL project office. If that be so, then why different technicians have come for different purchase order, which indicates that different technicians are required for different supervisory projects. Even MUL has borne the cost of air tickets from Japan to India as mentioned in the purchase order. Thus, the con....
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....s is 'One'. Thus, in order to determine number of days for the purpose of Article 5, period should be taken as 'One day' and not 10 'Man days'. * This was duly affirmed by Tribunal as well as by the Hon'ble High Court. The Ld. AR submitted that there was only one Purchase Order which has been mentioned by the Assessing Officer in his order which has crossed a period of 6 months and the same is dated 15.04.1999. The supervision services for the same were provided within a period of 26.09.1999 to 02.08.2000. Even the CIT(A) has not granted relief on such purchase order and assessee has not challenged the same before the Tribunal. 16. In respect of PO No. MUL/PE/PR/30/24/MOD-1364/342 dt. 18/9/99, the Ld. DR referred only four purchase orders out of 13 purchase orders for the subject year for alleging that supervisory service is connected to MUL project office. He has referred to various letters exchanged between the assessee and MUL. For one purchase order, there was meeting as well where people from Japan travelled to India to understand the requirement of MUL. Based on above the Ld. DR arrived at a conclusion that there was several rounds of negotiation and as Liaison....
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....here are similar references in many other Purchase Orders. The assessee visited for meetings during the earlier years Project Office as well. During the earlier years also, there were such Purchase Orders which were there without any tender and worked on proposal basis. As regards the allegation of the Ld. DR that it is not only the Purchase Order exceed minimum duration test for PE under Art. 5(4), even where such test is not satisfied, the involvement of fixed place PE in terms of YE2 project office of MUL are established thereby attracting the provision of Art 12(5) of the DTAA, the Ld. AR submitted that the period of stay in all purchase order, which are not only independent to each other but also independent to any project office the assessee had in India, is less than 6 months except one purchase order. Thus, there is no PE in Art 5(4) of the DTAA. The Ld. DR alleged by referring to few Purchase Orders (4 out of 13) that YE2 project office was involved in negotiation of the purchase order for supervision services and thus, Art. 12(5) should be attracted. In this connection, the Ld. AR submitted as under: * From the submission above on various allegations by the Ld. D....
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....O was independent and did not complement each other. The MUL YE2 project would not stand concluded with execution of these purchase orders. The assessee was not the only person rendering supervisory services. The sites were located at different places viz., assembly floor, paint shop or weld shop. It cannot be said all contracts put together formed a coherent whole, commercially or geographically. Even PO's relate to different areas of manufacture of a car. How they are commercially a coherent whole is not spelt out in the order of the Assessing Officer. Such finding cannot be given without any basis. As already stated, perusal of PO's clearly indicate that the various contracts were independent and were not capable of bringing in a coherent whole commercially. Mere commonality of the principal cannot be sufficient in this regard. We therefore, held that there existed no PE within the meaning of article 5(4) of the DTAA. 80. The income in question for all these years were therefore to be brought to tax under article 12(2) of the DTAA. The assessee has offered to tax income in question in accordance with article 12(2) of the DTAA and is the same is directed to be accepted."....
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....urchase Order which has more than 180 days has been offered to tax in earlier Assessment Year i.e. 1999-00. Hence, the issue raised in the present appeal filed by the Revenue is squarely covered by the decision of the Tribunal for A.Y. 1999-00 which is now confirmed by the Hon'ble High Court as well as by the Hon'ble Supreme Court. Thus, in the present case the FTS was liable to be taxed at 20% under Article 12(2) of the DTAA. Hence, Ground Nos. 3 to 3.1 in Revenue's appeal are dismissed. 18. As regards to Ground No. 4 to 4.2, the Ld. DR relied upon the Assessment Order. 19. The Ld. AR submitted that the provisions of Section 234B of the Act are applicable in cases where an assessee who is liable to pay advance tax defaults in payment of such advance tax. Accordingly, in order to be liable to interest under section 234B of the Act, the assessee first needs to be liable to pay advance tax under provisions of section 208 of the Act. Section 208 of the Act provides that the advance tax payable during the financial year would be computed in accordance with provisions of Chapter XVIIC of the Act. Section 209 of the Act provides for a detailed computational mechanism for the calcul....
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....eduction at source. * Further, the above law laid down by the Hon'ble Jurisdictional High Court has been again affirmed by the Hon'ble Jurisdictional High Court in case of DIT vs. GE Packaged Power Inc. (ITA No. 352/2014 to 402/2014) wherein it has been held that the position of law laid down in Jacobs is correct and is not diluted and hence, the liability of the payer is absolute. * In the case of DIT vs. NGC Network Asia LLC (313 ITR 187), the Hon'ble Bombay High Court held that the assessee was a non-resident company and its entire income chargeable to tax in India was subject to TDS under Section 195 of the Act. Therefore, no interest under section 234B of the Act could be charged even if the payer had not deducted tax at source. * In CIT vs. Madras Fertilizers Ltd. (149 ITR 703, the Hon'ble Madras High Court held that the liability to pay advance tax did not arise where the income was subject to deduction of tax at source. * The Hon'ble Uttarnchal High Court in cases of CIT vs. Halliburton Offshore Services Inc. (2004) and CIT vs. Reading and Bates Exploration Co. (2005) (278 ITR 47) has held that where the employer-company has not deducted ....
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....without appreciating that this method of taxation causes discrimination and thus violates the spirit and intent of Article 24 of the Double Taxation Avoidance Agreement between India and Japan ('DTAA'). Vijjeswaram Project - Erection, Procurement and Construction ('EPC) Contract 2. That learned Commissioner of Income Tax (Appeals) has erred in law and on facts in bringing to tax the gross receipt of Rs. 1,70,00,000/- being the additional consideration for the additional work in relation to the Erection, Procurement and construction contract with M/s Andhra Pradesh Gas Power Corporation Ltd (APGPCL for 160MW Gas Turbine Cycle Power Station at Vijjeswaram as against the business income of Rs. 966,870 (NET) declared by the Project Office ('PO') of Appellant under the Erection, Procurement and Construction ('EPC) contract with 'APGPCL'. 2.1. That learned Commissioner of Income Tax (Appeals) has completely failed to appreciate that additional compensation of Rs. 1,70,00,000 received from APGPCL, was specifically towards the EPC contract, and there was no material what so ever to conclude that the additional compensations was towards O&M contract. 2.2. That lea....
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....ontractor for custom clearance and inland transportation services, hence the finding that aforesaid expenditure is contingent liability which is solely based on the finding that the additional claim made to SSNNL is not final, is wholly unsustainable. 3.2. That learned Commissioner of Income Tax (Appeals) has grossly erred in failing to appreciate that the payment to ETPI is in respect of services rendered as a subcontractor for custom clearance and inland transportation services for the appellant and hence the liability to pay to ETPL was of the appellant and such a payment was not dependent on claim made to SSNNL. 3.3. That learned Commissioner of Income Tax (Appeals) has failed to appreciate that the expenditure incurred by the appellant of Rs. 12,513,333 being the payment made to ETPL towards contractual obligation is business expenditure incurred during the normal course of business on account commercial expediency . 23. As regard to Ground No. 1 to 1.2, the Ld. AR submitted that the Vijjeswaram Project was entered into between the assessee and APGPCL after the completion of 160 MW Gas Turbine Combined Cycle Power Station. This project was towards Operatio....
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....Operation and Maintenance (O&M) Contract of the Vijeshwaram Project Office. The above conclusion by the CIT(A) by invoking provisions contained in Article 7(3) of DTAA read with section 44D of the Act is neither based on proper appreciation of the facts of the case and, nor the correct interpretation of the provisions of the DTAA and the Act. Article 7(3) of the DTAA provides that expenses have to be allowed. The DTAA along with the protocol provides that, deduction allowable should not be less than that provided under the Act and, not that no deduction is allowable at all. This is also limited to expenses, in respect of general administrative expenses and, no more. The Article 7(3) doesn't provide that the deduction has to be allowed as per any specific provision of local law unlike DTAA between India-US. The Ld. AR submitted that in the present case section 44D of the Act is not applicable since 9(1)(vii) applies to a case where person is not carrying on business - DCIT vs. Schlumberger Seaco Inc. (50 ITD 346) and Circular No. 202 dated 5.7.1976 (105 ITR 25 (statutes)). Also, once supervisory fees has been characterized as business profits, section 44D of the Act will not apply. ....
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....s received by the assessee does not fall under FTS and has to be considered as service in relation to construction, assembly of project. As the income is not in the nature of FTS, Section 44D will also not apply. Thus, the amount received under O&M agreement is business income and taxable under Article 7(3) of DTAA on net basis. Hence, Ground No. 1 to 1.2 are allowed. 26. As regards to Ground No. 2 to 2.5 of the assessee's appeal, the Ld. AR submitted that during the year, the assessee and APGPCL entered into an agreement to execute two contracts. As per terms of the contract, the assessee has made an extra claim to APGPCL additional work done in the course of the Erection and Commissioning and additional resource used to ensure timely completion of the project in spite of delays caused by APGPCL. The extra claim was accepted by APGPCL and they made a partial settlement of Rs. 1,70,00,000. Accordingly, the assessee offered the income to tax on Net basis claiming the relevant expenses pertaining to such contracts. However, the Assessing Officer held that receipts are in nature of FTS and hence taxable on gross basis u/s 44D. The Assessing Officer erroneously considered EPC contra....
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..... In addition, the Tribunal in assessee's own case for AY 1999-00, wherein after going through the facts of O&M contract, held that the services received by the assessee does not fall under FTS and has to be considered as service in relation to construction, assembly of project i.e. business income. Thus, the amount received under O&M agreement is business income and taxable under article 7(3) of DTAA on net basis. 27. The Ld. DR relied upon the Assessment order and the order of the CIT(A). 28. We have heard both the parties and perused all the relevant material available on record. This issue is covered by the order of the Tribunal in assessee's own case for AY 1999-00, wherein after going through the facts of O&M contract, held that the services received by the assessee does not fall under FTS and has to be considered as service in relation to construction, assembly of project i.e. business income. Thus, the amount received under O&M agreement is business income and taxable under article 7(3) of DTAA on net basis. Hence Ground Nos. 2 to 2.5 are allowed. 29. As regards to Ground Nos. 3 to 3.3 are concerned, the Ld. AR submitted that the assessee incurred an expenditure in....
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....tly paid by SSNNL to ETPL, which sum is like an expenditure incurred by the assessee of Rs. 1,25,13,333/- and paid by SSNNL towards transportation. The Ld. AR submitted that the Assessing Officer has failed to appreciate that in the similar manner what had been paid in the preceding year AY 2000-01, by SSNNL to ETPL which had not been disallowed, could not have been disallowed in AY 2001-02 also; whereas without disputing that there was an expenditure incurred on transportation which was the liability of the assessee has even been disallowed i.e. of Rs. 1,25,13,333/-. The CIT(A) failed to appreciate that disallowance made in the preceding year of similar nature and character had been allowed. However, the Ld. AR submitted that the assessee has not as such made any effective claim of an expenditure of Rs. 1,25,13,333/-, since what has been paid by SSNNL has been credited to the account of 'Sale Revenue' and what has been paid by SSNNL directly to ETPL has been debited in 'Cost of sales'. For AY 2000-01 what had been disallowed by the Assessing Officer was an entirely different sum i.e. the character of the expenditure incurred and claimed in that year was different than the nature a....
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.... the material supplied which was an existing & ascertained liability and was allowed as business expenditure. Under Article 5 of the agreement between assessee and ETPL, however, the assessee had authorized, which merely entitled ETPL to collect & receive contract price from SSNNL for each portion. The Ld. AR rightly submitted that there is a difference between accrual of income and incurring of expenditure. Under the agreement entered by assessee with ETPL, it has incurred a liability and in fact paid the said sum on transportation to ETPL. It is not denied that the assessee under the contract with SSNNL could have recovered the amount. However, in the absence of any agreement with SSNNL, to pay the extra amount due to escalation of cost, no income has either accrued or was received by the assessee. There is no a finding given by the Assessing Officer that assessee has not honored the commitment. Thus, the assessee has paid to ETPL under its contractual liability even though the same could not be recovered from SSNNL. Therefore, the disallowance made of the expenditure incurred of Rs. 1,25,13,333/- which has been physically paid by the assessee is to be allowed by the Assessing Of....
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....e has a PE in India in the form of long-standing presence in India in relation to the supplies being made and services being rendered to MUL for the past several years. Therefore, the reliance by the Ld CIT(A) on the judgment in the case of M/s Ishikawajima Harima Heavy Industries Ltd [288 ITR 408 (SC)] was misplaced as the facts of the case are distinguishable. 3. Whether on the facts and in the circumstances of the facts, the Ld CIT(A) erred in holding revenues received by the assessee from M/s MUL on account of supervisory services is chargeable to tax at the rate of 20% under Article 12(2) of the India-Japan DTAA as against the rate of 30% applied by the AO. 3.1) The Ld CIT(A) has erred in not appreciating the fact that the provisions of Article 12(2) are not applicable where Fee for Technical Services has been received on account of services rendered through a PE in India and since in the case of assessee, the Fee for Technical Services are effectively connected with its PE in India, the said revenue is liable to tax @30% under section 115A of the Act, read with the provisions of Article 7 and Article 12(5) of the India- Japan DTAA. 4) Whether on the....
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....no stage involved in the said activities. There was no PE involved in the sale. In fact supervision was done after the supply of equipments. The revenue could not establish that the assessee is having fixed place PE or supervisory PE. The ratio laid by the Hon'ble Apex Court in case of M/s Ishikawajima Harima Heavy Industries Ltd. (supra) is applicable in the present case. Therefore, Ground Nos. 1 to 1.4 and 2 to 2.1 of the Revenue's appeal is dismissed. 37. As regards to Ground No. 3 to 3.1 of the Revenue's appeal, the Ld. DR submitted that the issues are identical to the Revenue's appeal for A.Y. 2001- 02 as ground Nos. 3 to 3.1. The Ld. AR also submitted that the issue is identical and in fact factual aspects also remain the same. 38. We have already decided this issue in the above para no. 17 of this order. We once again find that in the present assessment year 2002-03 also, the purchase orders mentioned therein are separate and have distinct element of work and will not constitute any PE in India. From the various purchase orders, the identical features emerge that in all the purchase orders, supervisors were to come from Japan and MUL bears the cost of their Air ticket ....
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....d AO nor it is in dispute that ETPL has rendered services as a sub-contractor for custom clearance and inland transportation services, hence the finding that aforesaid expenditure is contingent liability which is solely based on the finding that the additional claim made to SSNNL is not final, is wholly unsustainable. 1.2 That learned Commissioner of Income Tax (Appeals) has grossly erred in failing to appreciate that the payment to ETPL is in respect of services rendered as a subcontractor for custom clearance and inland transportation services for the appellant and hence the liability to pay to ETPL was of the appellant and such a payment was not dependent on claim made to SSNNL. 1.3 That learned Commissioner of Income Tax (Appeals) has failed to appreciate that the expenditure incurred by the appellant of Rs. 1,73,16,892 being the payment made to ETPL towards contractual obligation is business expenditure incurred during the normal course of business on account commercial expediency The assessee has debited in the account of 'Cost of sales' an aggregate sum of Rs. 1,73,16,890/- on transportation of material supplied to SSNNL. The Assessing Officer disa....
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....tion of cost, no income has either accrued or was received by the assessee. There is no a finding given by the Assessing Officer that assessee has not honored the commitment. Thus, the assessee has paid to ETPL under its contractual liability even though the same could not be recovered from SSNNL. Therefore, the disallowance made of the expenditure incurred of Rs. 1,73,16,892/- which has been physically paid by the assessee is to be allowed by the Assessing Officer. We direct accordingly. Hence, Ground No. 3 to 3.3 are allowed. 46. In result, ITA No. 3676/Del/2014 is allowed. 47. Now we are taking up ITA No. 3713/Del/2014 A.Y. 2003-04 filed by the Revenue. 3713/Del/2014 1) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that no portion of the the income of the assessee from 'offshore' supply of plant & equipments to M/s Sardar Sarovar Narmada Nigam Limited ('SSNNL') is taxable in India. 1.1) The Ld CIT(A) has erred in not appreciating the fact that the contract with M/s SSNNL was a integrated/composite contract involving supply/procurement, transportation, supervision of erection commissioning....
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....g, commissioning etc of equipments 2.4. The Ld. CIT(A) has erred in mechanically following the judgment of the Hon'ble IT AT in assessee own case for Asstt Years 1992-93 to 1994-95 & 1996-97, not appreciating the fact that the facts having a bearing on the issue of existence or constitution of the PE are different this year and that, in any case, the issue of existence/constitution of PE is always year-specific and therefore the finding with regards to the existence of PE has to be examined afresh in each year. 2.5 Without prejudice to the foregoing, the issue of constitution of PE in those years has not yet achieved finality as the Revenue has filed a Miscellaneous Application ('MA') before the Hon'ble ITAT to the effect that there are mistakes apparent from record regarding assumption of facts on the basis of which decision was rendered by Hon'ble ITAT. 3) Whether on the facts and in the circumstances of the case, the Ld CIT(A) has erred in holding that no portion of the assessee's income from the activity of supplies of equipments to M/s MUL is taxable in India 3.1) The Ld CIT(A) has erred in holding that no operations ....
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....ly in the case of M/s Alcatel Lucent (judgement of Delhi High Court dated 7.11.2013 in IT A No. 327 & Ors of 2012) and followed by ITAT Delhi in the order dated 13.06.2014 in the case of Nortel Network India International Inc [ITA No. 4766/DEL/2011]. 48. Likewise in AY 2001-02, the Assessing Officer vide Assessment order concluded that the Assessee has PE in India on various grounds. The Assessing Officer also held that Sumitomo Corporation India Private Limited i.e. the subsidiary of the assessee was also engaged in negotiation and signing of purchase order of the assessee. Thus, the Assessing Officer has taken 5.38% as global profit margin to compute profit from sale of equipment and attributed 50% of such profit amounting to Rs. 12,266,873 to the Indian operations. The CIT(A) allowed the grounds of assessee on similar lines as in the case of AY 2001-02. 49. As regards to Ground No. 1 to 1.3, in respect of the SSNNL project, the Assessing Officer held that the income earned by the assessee from offshore supply of the plant and equipment to SSNL from Japan is taxable in India. The Assessing Officer determined 50% of the gross trading profit ratio @ 5.38% in AY 2003-04 and 5.....
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.... no income could be deemed to arise to the non-resident from such supply from outside India. The Ld. AR relied upon the following decisions: i. Ishikawajima Harima Heavy Industries Limited 288 ITR 408 (SC) ii. Hyundai Heavy Industries Company Limited 210 CTR 178 (SC) iii. CIT vs. Toshoku Ltd. 125 ITR 525 (SC) iv. DCIT vs. Alcatel 47 ITD 275 v. CIT vs. Fried Krupp Industries 128 ITR 27 vi. Carborandum Co vs. CIT 108 ITR 335 As regards the risk and responsibility, the Ld. AR submitted that it is evident from both the Bill of Entry and Bill of Lading as both were executed in the name of SSNNL as the consigner. This read with the provisions of Article 24.1 (Transfer of Ownership), clearly exhibits the intention of the contracting parties. Merely by stating that assessee was responsible for risk and responsibility of the equipment, does not, in any way effects the intention of the parties. The parties agreed to transfer of title 'FOB' which has been executed as such. Without prejudice to the above, the Ld. AR further submitted that the Assessing Officer erroneously adopted the gross profit rate instead of operating profit rate and....
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.... Hon'ble Apex Court in case of M/s Ishikawajima Harima Heavy Industries Ltd. (supra) is applicable in the present case. Therefore, Ground Nos. 2 to 2.5 and 3 to 3.1of the Revenue's appeal is dismissed. 55. As regards to Ground Nos. 4 to 4.1, the Ld. DR submitted that the issues are identical to the Revenue's appeal for A.Y. 2001-02 as ground Nos. 3 to 3.1. The Ld. AR also submitted that the issue is identical and in fact factual aspects also remain the same. 56. We have already decided this issue in the above para no. 17 of this order. We once again find that in the present assessment year 2003-04 also, the purchase orders mentioned therein are separate and have distinct element of work and will not constitute any PE in India. From the various purchase orders, the identical features emerge that in all the purchase orders, supervisors were to come from Japan and MUL bears the cost of their Air ticket and provides for their boarding and lodging in India. The period of supervision in case of individual contracts did not exceed a period of 180 days except the one purchase order mentioned hereinabove and they did not constitute supervisory PE in terms of Article 5(4) of the DTAA. ....
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....im made to SSNNL is not final, is wholly unsustainable. 1.2. That learned Commissioner of Income Tax (Appeals) has grossly erred in failing to appreciate that the payment to ETPL is in respect of services rendered as a subcontractor for custom clearance and inland transportation services for the appellant and hence the liability to pay to ETPL was of the appellant and such a payment was not dependent on claim made to SSNNL. 1.3. That learned Commissioner of Income Tax (Appeals) has failed to appreciate that the expenditure incurred by the appellant of Rs. 16,80,400 being the payment made to ETPL towards contractual obligation is business expenditure incurred during the normal course of business on account commercial expediency. 61. As regards to Ground No. 1 to 1.3 of the assessee's appeal in respect of the claim of deduction of Rs. 16,80,400/-, the fact of AY 2003-04 is similar to the facts of 2000-01, wherein the Assessing Officer disallowed the amount paid by the assessee on the ground that liability doesn't relate to the assessee. 62. The Ld. AR submitted such a conclusion is entirely misconceived. In fact the entire liability is that of assessee and not....
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....ith SSNNL could have recovered the amount. However, in the absence of any agreement with SSNNL, to pay the extra amount due to escalation of cost, no income has either accrued or was received by the assessee. There is no a finding given by the Assessing Officer that assessee has not honored the commitment. Thus, the assessee has paid to ETPL under its contractual liability even though the same could not be recovered from SSNNL. Therefore, the disallowance made of the expenditure incurred of Rs. 16,80,400/- which has been physically paid by the assessee is to be allowed by the Assessing Officer. We direct accordingly. Hence, Ground No. 1 to 1.3 are allowed. 65. In result, ITA No. 3677/Del/2014 for A.Y. 2003-04 filed by the assessee is allowed. 66. Now we take up ITA No. 3714/Del/2014 for A.Y. 2003-04 filed by the Revenue. 3714/Del/2014 1) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that no portion of the income of the assessee from 'offshore' supply of plant & equipments to M/s Sardar Sarovar Narmada Nigam Limited ('SSNNL') is taxable in India. 1.1) The Ld CIT(A) has erred in not appreciati....
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....2.3) Without prejudice to the foregoing, the Ld CIT(A) has erred in holding that the assessee did not have a supervisory PE in relation to the services of installation, testing, commissioning etc of equipments 2.4) The Ld. CIT(A) has erred in mechanically following the judgment of the Hon'ble ITAT in assessee own case for Asstt Years 1992-93 to 1994-95 & 1996-97, not appreciating the fact that the facts having a bearing on the issue of existence or constitution of the PE are different this year and that, in any case, the issue of existence/constitution of PE is always year-specific and therefore the finding with regards to the existence of PE has to be examined afresh in each year. 2.5) Without prejudice to the foregoing, the issue of constitution of PE in those years has not yet achieved finality as the Revenue has filed a Miscellaneous Application ('MA') before the Hon'ble ITAT to the effect that there are mistakes apparent from record regarding assumption of facts on the basis of which decision was rendered by Hon'ble ITAT. 3) Whether on the facts and in the circumstances of the case, the Ld CIT(A) has erred in holding that no porti....
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....-deduction or non-deduction of tax needs to be ascertained before claim regarding non-liability to interest u/s 234B of the Act is acceptei a proposition affirmed subsequently in the case of M/s Alcatel Lucent (judgement of Deih; High Court dated 7.11.2013 in ITA No. 327 & Ors of 2012) and followed by ITAT Delhi in the order dated 13.06.2014 in the case of Nortel Network India International Inc [ITA No. 4766/DEL/2011]. 67. As regards to Ground Nos. 1 to 1.3, in respect of the SSNNL project, the Assessing Officer held that the income earned by the assessee from offshore supply of the plant and equipment to SSNL from Japan is taxable in India. The Assessing Officer determined 50% of gross trading profit ratio @ 5.46% in AY 2004-05 as per the global balance sheet of the assessee as income accruing to the assessee on supply of equipment in India. The CIT(A) observed that the assessee has already offered to tax the income which is taxable in India for the work done in India. The CIT(A) further observed that the offshore supply was made from outside India where the risk and title was transferred outside India. Thus, the sale was completed outside India. Accordingly, the addition on of....
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....i Heavy Industries Company Limited 210 CTR 178 (SC) iii. CIT vs. Toshoku Ltd. 125 ITR 525 (SC) iv. DCIT vs. Alcatel 47 ITD 275 v. CIT vs. Fried Krupp Industries 128 ITR 27 vi. Carborandum Co vs. CIT 108 ITR 335 As regards the risk and responsibility, the Ld. AR submitted that it is evident from both the Bill of Entry and Bill of Lading as both were executed in the name of SSNNL as the consigner. This read with the provisions of Article 24.1 (Transfer of Ownership), clearly exhibits the intention of the contracting parties. Merely by stating that assessee was responsible for risk and responsibility of the equipment, does not, in any way effects the intention of the parties. The parties agreed to transfer of title 'FOB' which has been executed as such. Without prejudice to the above, the Ld. AR further submitted that the Assessing Officer erroneously adopted the gross profit rate instead of operating profit rate and has made high attribution of 50% considering significant operation of such alleged PE in India for offshore supply. 70. We have already decided this issue in the above para no. 9 of this order while deciding A.Y. 2001-02. We once ....
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....s. 4 to 4.1, the Ld. DR submitted that the issues are identical to the Revenue's appeal for A.Y. 2001-02 as ground Nos. 3 to 3.1. The Ld. AR also submitted that the issue is identical and in fact factual aspects also remain the same. 74. We have already decided this issue in the above para no. 17 of this order. We once again find that in the present assessment year 2004-05 also, the purchase orders mentioned therein are separate and have distinct element of work and will not constitute any PE in India. From the various purchase orders, the identical features emerge that in all the purchase orders, supervisors were to come from Japan and MUL bears the cost of their Air ticket and provides for their boarding and lodging in India. The period of supervision in case of individual contracts did not exceed a period of 180 days except the one purchase order mentioned hereinabove and they did not constitute supervisory PE in terms of Article 5(4) of the DTAA. In fact, these Purchase Orders are very much independent and separate from each other and thus, does not constitute the supervisory PE or fixed PE. Hence, the issue raised in the present appeal filed by the Revenue is squarely cover....
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....ly been offered to tax for assessment, and was in accordance with the accepted method of computation of total income and as such no further income could be held to be attributable to Permanent Establishment. 2. That the learned AO has erred in making addition of Rs. 1,27,32,484/- in respect of an amount stated to be an income attributable to Maruti Udhyog Limited (MUL) project (i.e. the estimated and assumed sum) on the supplies made by it from Japan could validly have been made. The learned AO, has erred in not appreciating that such income, as has been held to be attributable on the supplies made, since was not attributable to its permanent establishment has been misconceived and the addition so made be thus held untenable and deserves to be deleted. 2.1 That the Hon'ble DRP/learned AO has erred in holding that the profit of supplies of equipment by the assessee to MUL are taxable in India even knowing that title of equipment and supplies had been made by the appellant outside India and no income thus had accrued to the assessee in India. 2.2 That the Hon'ble DRP/leaned AO has erred in holding that the assessee has a PE in India under Article 5 of the D....
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.... activities could have been directly performed by Original equipment manufacturer (OEM) or a company other than the Appellant is based on no material and is contrary to terms of the agreement with MUL under which it was the Appellant alone to provide such services and could not be performed by anyone else. Thus, the findings of the learned AO are arbitrary and untenable. 4.3. That the Hon'ble DRP/learned AO has erroneously assumed and held without any basis that the appellant has admitted that it constitutes a service PE as under Article 5 of the India - Japan DTAA. 4.4. That the Hon'ble DRP/leamed AO without prejudice to above ground that supervision income is not taxable, has erred in taxing supervision income @10% gross when the same should have been taxed in the similar manner in which she has taxed the equipment supply income. 5. That the finding recorded by the learned AO that the receipts from MUL., are held to be taxable as fee for technical services u/s 9(l)(vii) read with section 115A of the Income Tax Act as per Article 12 of Double Taxation Avoidance Agreement between India and Japan is misconceived and is not based on the proper appreciation ....
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....est by the Assessing Officer to submit complete computation of Income. Thus, there is no infirmity in the draft order of the Assessing Officer on this issue. 80. The Ld. AR submitted that during the assessment proceeding, the assessee submitted revised return of income filed on 30th March, 2009 vide efiling acknowledgment in which the interest income was disclosed and tax was paid on it. Inadvertently, the income was not captured in the head of 'income from other sources', however, the same was duly included in the tax payable and tax was paid on it. Further, the assessee filed submission on 8th September, 2009 with the Assessing Officer informing about the revised computing of income wherein interest income was disclosed in the computation of income. The Assessing Officer has held that the assessee has not disclosed the interest income earned in the original return of income and also the revised return of income. Further, the Assessing Officer held that the interest income was disclosed only when enquiry was made during assessment proceeding, hence income was concealed. The Ld. AR submitted that the assessee completely disclosed the interest income in Schedule S1 of the revised....
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....round Nos. 2 and 3 to 3.6, the Ld. AR submitted that likewise AY 2000-01, the Assessing Officer vide Assessment order held that assessee has PE in India, and the supplies in question have been made through the said PE. Hence, the operating profit @ 1.93% was applied to compute the sale of equipment and attributed @ 25%. The DRP panel also held that assessee has PE in India and the supplies in question have been made through the said PE. Further, DRP enhanced the attribution for 25% to 50% on the basis of other Japanese Company without application of mind. 84. The Ld. DR also submitted that the issue is identical with the issue decided in respect of Ground No. 1 to 1.4 and 2 to 2.1 for A.Y. 2001-02 as this involves offshore supplies and equipments to MUL. The Ld. AR also submitted that the issue is identical. The Ld. AR further submitted that the title in the equipment was transferred to MUL outside India. The assessee was not responsible for any custom clearance and transportation of the equipment. This responsibility belonged to MUL and the same is also evident from the Purchase Orders. 85. We have already decided this issue in the above para no. 9 of this order while decidi....
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....Ground No. 8, the Ld. DR submitted that the issues are identical to the Revenue's appeal for A.Y. 2001-02 as ground Nos. 4 to 4.2. The Ld. AR also submitted that the issue is identical and in fact factual aspects also remain the same. 89. We have already decided this issue in the above para no. 20 of this order. We once again find that in the present assessment year 2007-08 also, this issue is identical and covered in favour of the assessee by the jurisdictional High Court in case of Mitsubishi Corporation (supra) and Jacobs Incorporated wherein it is categorically held that interest is not leviable on the assessee since its entire income is subject to tax deduction at source. Hence, Ground Nos. 8 is allowed. 90. In result, ITA No. 5964/Del/2014 in A.Y. 2007-08 filed by the assessee is allowed. 91. Now we are taking up ITA No. 1114/Del/2015 in A.Y. 2010-11 filed by the assessee. 1114/Del/2015 Based on the facts and circumstances of the case, the Appellant respectfully submits: 1. That the learned Assessing Officer has erred both on facts and in law, in computing the total income of the Appellant company at Rs. 93,50,29,200/-, against an aggregate total....
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.... holding and that to without any basis, that the Appellant has entered into integrated contract for supply of equipment and commissioning, and PE was established to undertake the contractual obligation. In-fact the assessee did not carry out any activity in India in respect of such offshore supplies. Thus, the allegation of the learned AO is totally baseless. 3.5 Without prejudice and in the alternative even if it is held that the Appellant had a PE in India then also, no amount of the alleged profits from supply of equipment to MSIL could be taxed in India, since no such alleged profits could be attributed to such PE in India as per Article 7 of the DTAA. 3.6. That the Hon'ble DRP/leamed AO has erred in attributing 50% of the profit in respect of offshore supplies to the alleged PE of the Appellant in India without any basis such a conclusion is arbitrary and is untenable. 3.7. Without prejudice to above that offshore supply is not taxable in India, the authorities below have erred in not allowing set-off of the brought forward business losses against income from supply of equipment. 4. That the authorities below have erred in holding that the a....
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....rds to Ground Nos. 2 and 3 to 3.5, the Ld. AR submitted that the issue is identical. The Ld. AR further submitted that the title in the equipment was transferred to MUL outside India. The assessee was not responsible for any custom clearance and transportation of the equipment. This responsibility belonged to MUL and the same is also evident from the Purchase Orders. The Ld. DR also submitted that the issue is identical with the issue decided in respect of Ground No. 1 to 1.4 and 2 to 2.1 for A.Y. 2001-02 as this involves offshore supplies and equipments to MUL. 94. We have already decided this issue in the above para no. 9 of this order while deciding A.Y. 2001-02. We once again find that in the present assessment year 2010-11 also, this issue is identical. In the present case the goods were sold to MUL from outside India. Thus, the risk and title were also transferred outside India and no transaction took place in India. The custom clearance, inland transportation were also done by the MUL on its own and assessee at no stage involved in the said activities. There was no PE involved in the sale. In fact supervision was done after the supply of equipments. The revenue could not ....
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....sessee filed all the details before the Assessing Officer and therefore, the non granting of credit of tax deducted at source is uncalled for. Therefore, we direct the Assessing Officer to grant the credit of tax deducted at source in consonance with the details filed by the Assessing Officer. Thus, Ground No. 6 is allowed. 101. As regards to Ground No. 7, the Ld. DR submitted that the issues are identical to the Revenue's appeal for A.Y. 2001-02 as ground Nos. 4 to 4.2. The Ld. AR also submitted that the issue is identical and in fact factual aspects also remain the same. 102. We have already decided this issue in the above para no. 20 of this order. We once again find that in the present assessment year 2010-11 also, this issue is identical and covered in favour of the assessee by the jurisdictional High Court in case of Mitsubishi Corporation (supra) and Jacobs Incorporated wherein it is categorically held that interest is not leviable on the assessee since its entire income is subject to tax deduction at source. Hence, Ground Nos. 7 is allowed. 103. In result, ITA No. 1114/Del/2015 in A.Y. 2010-11 filed by the assessee is allowed. 104. Now we are taking up ITA No. 6....
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....ter confronting the same with the assessee for their rebuttal. Thus, assessment made is bad in law. 3.4 Without prejudice to above that offshore supply is not taxable in India, Ld. DRP/Ld. AO has erred in not allowing set-off of the business losses against income from supply of equipment. 4. That the Ld. DRP/Ld. AO, even after observing that the Appellant does not have supervisory PE in India and thus supervision fees are taxable under Article 12(2) of DTAA, has erred in applying the rate @ 20% on aggregate supervision income of Rs. 36,97,27,985 thereby ignoring the fact that correct rate as per Article 12(2) of the DTAA for AY 2011-12 wherein tax cannot be levied more than is 10% gross. 5. That the Ld. AO has erred in applying surcharge and education cess on the aggregate supervision fee of Rs. 36,97,27,985 offered to tax by the appellant under Article 12(2) of the DTAA completely ignoring the directions of Ld. DRP that the supervision fee was to be taxed only under Article 12(2) of the DTAA. 6. That the Ld. AO, without any basis, erred in levying surcharge and education cess on the interest income of Rs. 1,13,46,300 already offered to tax in th....
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....s were sold to MUL from outside India. Thus, the risk and title were also transferred outside India and no transaction took place in India. The custom clearance, inland transportation were also done by the MUL on its own and assessee at no stage involved in the said activities. There was no PE involved in the sale. In fact supervision was done after the supply of equipments. The revenue could not establish that the assessee is having fixed place PE or supervisory PE. The ratio laid by the Hon'ble Apex Court in case of M/s Ishikawajima Harima Heavy Industries Ltd. (supra) is applicable in the present case. Therefore, Ground Nos. 3 to 3.4 of the assessee's appeal is allowed. 108. As regards to Ground No. 4, 5 and 6, the Ld. DR submitted that the issues are identical to the Revenue's appeal for A.Y. 2001-02 as ground Nos. 3 to 3.1. The Ld. AR also submitted that the issue is identical and in fact factual aspects also remain the same. 109. We have already decided this issue in the above para no. 17 of this order. We once again find that in the present assessment year 2011-12 also, the purchase orders mentioned therein are separate and have distinct element of work and will not co....
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.... up ITA No. 6385/Del/2015 in A.Y. 2012-13 filed by the assessee. 6385/Del/2015 Based on the facts and circumstances of the case, the Appellant respectfully submits: 1. That the learned Assessing officer ('Ld. AO') has erred both on facts and in law, in computing the total income of the Appellant Company at Rs. 33,00,06,004/-, against an aggregate total income declared of Rs. 29,19,97,155/- including the fee for supervision. Further addition made of Rs. 3,81,38,635/- is highly misconceived and the Learned Dispute Resolution Panel ('Ld. DRP') has also erred in not directing the said sum to be deleted. 2. That the Ld. DRP/Ld. AO has failed to appreciate that the appellant is a tax resident of Japan and was required to be assessed in accordance with the provisions of Double Tax Avoidance Agreement between India and Japan (DTAA). 3. That the authorities have failed to appreciate that the assessee had no permanent establishment (PE) in India and that the supplies made to Maruti Suzuki India Limited ('MSIL') were made from outside India and hence no income could be held to be taxable in India as no such income accrued in India. 3.1. That the....
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....) of the India - Japan DTAA wherein tax cannot be levied more than 10% gross. 7. That the Ld. AO has erred in granting short credit of Tax deducted at source (TDS) claimed by the appellant in its return of income. 8. That the Ld AO has erred in levying and computing interest u/s 234B and 234C of the Act amounting to Rs. 2,71,40,350 & Rs. 57,170 and holding that the Appellant had committed a default in payment of advance tax whereas the entire tax demand is covered by tax deducted or deductible. Further, interest under section 234C is leviable only on returned income and not on assessed income. 9. That the learned AO has erred in initiating the penalty proceeding under section 271 (l)(c) of the Act where the Appellant has not concealed any income or has furnished any inaccurate particular of income. The above grounds are independent and without prejudice to each other. The Appellant craves leave to add, alter, supplement, amend, vary, withdraw or otherwise modify the ground mentioned herein above at or before the time of hearing. 120. As regards to Ground No. 1 and 2, the same are general hence not adjudicated. 121. As regards to Gr....
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.... not constitute supervisory PE in terms of Article 5(4) of the DTAA. In fact, these Purchase Orders are very much independent and separate from each other and thus, does not constitute the supervisory PE or fixed PE. Hence, the issue raised in the present appeal filed by the Revenue is squarely covered by the decision of the Tribunal for A.Y. 1999-00 which is now confirmed by the Hon'ble High Court as well as by the Hon'ble Supreme Court. Thus, in the present case the FTS was liable to be taxed at 20% under Article 12(2) of the DTAA. Hence, Ground Nos. 4, 5 and 6 in assessee's appeal are allowed. 124. As regards to Ground No. 7, the Ld. AR submitted that the Assessing Officer erred in not granting the credit of tax deducted claimed in the return of income. The Ld. AR submitted that the Assessing Officer has not given any reason as to the non granting of the credit of tax deducted at source despite giving details. 125. The Ld. DR relied upon the Assessment Order. 126. We have heard both the parties and perused all the relevant material available on record. From the perusal of record it can be seen that the assessee filed all the details before the Assessing Officer and ther....