TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 91
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....in light of the DRP-1, Bangalore's direction in F. No. 397/DRP-1/BNG/2017-18 dt. 4.9.2017 (Assessment Year 2016-17), assessment dt. 16.05.2019 made by the ADIT, International Taxation-1, Hyderabad dt. 16.5.2019 in light of the DRP-1, Bangalore's direction dt. 30.4.2019 in F. No. 59/DRP-1/BNG/2019-20 and ADIT, International Taxation-1, Hyderabad assessment dt. 23.12.2020 consequent to DRP-1, Bangalore's direction in F. No. 51/DRP-1/BNG/2019-20 dt. 18.11.2020 (Assessment year 2017-18), involving proceedings u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 ('the Act'); respectively. Heard both the parties. Case files perused. 2. We first come to the assessee's common substantive grounds in all these cases challenging correctness of the learned lower authorities' action taxing its income from off-shore supplies; involving varying sums; respectively. We deem it appropriate at this stage to reproduce the assessee's identical pleadings to this effect read as under: "2. On the fact and in the circumstances of the case, the Ld. A.O. has erred in law and in facts in alleging that the contracts with Singareni Collieries Company Limited are composite cont....
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....e domestic operations and that the profits from offshore supply was 50% of gross revenue of offshore supply, even though no part of the activity relating to offshore supply of equipment/spares was carried out by appellant's Project Office in India." 3. We next note during the course of hearing that all the later four assessment years also raise the very issue. Case records suggest that this tribunal's co-ordinate bench order in assessee's own case itself involving ITA No. 1842/Hyd/2012 dt. 28.04.2017 has already decided the very issue of taxability of its off-shore supplies against the department as under: "15. Having regard to the rival contentions and the material on record, the following questions emerge for adjudication: (i) Whether all the three contracts are interlinked interdependent and indivisible and therefore whether they are to be considered as a single and a composite contract? (ii) Whether there was a PE of the assessee in India before establishment of project office in India and if so, since when? (i) What is the income attributable to activities in India? 16. To answer question No. (i) above, it is necessary to go through the nature of all the....
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....lity as per which the relevant responsibilities are as under: 1) Shall conduct scientific site investigations, prepare study reports, obtain DGMS approval for the mining method/technology and shall quote for these. 2) Shall supply continuous Miner, shuttle cars, Multi Roof Bolter, Mobile feeder breaker J & complete electrical equipment as one package and shall quote for these in detail for each individual item. The bidder shall quote for 2 Nos. of shuttle cars/Coal Haulers with 15 Tonne pay/load capacity or 3 Nos. of shuttle cars with 10.0 Tonne pay load capacity. (To quote for both options). 3) Shall operate and maintain the equipment with required spares and consumables for a period of 5 (five) years and to quote separately for spares and services on per tonne basis, year-wise. Note: The contract for supply, operation & maintenance of the equipment will come into force after the DGMS approvals for the scientific site investigations mining method/technology are obtained. 4) a) Shall guaranty for an average production of 1350 Tonnes/day and 0.40 Million tonnes per year. b) The guaranteed production should commence within 4 months period from date of commissioning the ....
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..... 3 come into force upon receipt of the DGMS Mining Method Approval". 19. At page 421 of the paper book is the specimen copy of the price bid submitted by the assessee in cover-C and in accordance with this bid, the assessee has divided the whole contract into three different contracts and has also apportioned the payment accordingly. Further, from the Errata issued by SCCL which is placed at Page 362 to 376 of the paper book, we find that as per the original tender document, the contract for supply portion and maintenance of the equipment will come into force after DGMS approval for the scientific site investigation/mining method/technology is obtained but as per the amended document, there can be 3 separate contracts for (i) scientific site investigation (ii) supply of equipment and (iii) maintenance of spares and services and it has also been specified that these 3 contracts shall be signed only with single agency i.e. that the successful bidder who has submitted the original offer. In accordance with this proposal of the SCCL, the assessee has entered into 3 different contracts with SCCL. Contract No. 1 is referred to as RC-222, while contract No. 2 is referred to as RC-223, ....
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....BI (d) Letter of indicative support for the Contract from a first class Indian Bank/Financial Institution as per Annexure IV. 34.2 In the event the contract does not come into force within nine (9) months from the date of signing of the Contract, either party may withdraw from the contract without any obligation there under". 21. Further, clause 3 of section-I of the contract-II, RC-223 provides that for the introduction of the Continuous Miner mining system in GDK-11A Mines of SCCL, DGMS approval for the mining method would be obtained by the SCCL and scientific investigation (scientific site investigation and obtaining DGMS approval) to be carried out for securing DGMS approval would be part of a separate contract to be awarded by SCCL and that the results of scientific investigations will be the basis of design of mining method (emphasis supplied by us) and also submission of application for DGMS approval for the mining method and also that the SCCL would put up the application with DGMS and the DBT shall provide necessary assistance for making application and obtaining DGMS approval. It was also provided in clause 3.4, that any addition/alteration of the equipment supplie....
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....d up to the point of delivery of the goods on board the nominated ship shall be paid by the DBT and the DBT shall be liable for all expenses, including dead and extra freight, demurrage of vessels etc, arising from delay in shipment due to lack of shipping opportunities, or delay in providing documents, which are for any cause attributable to the DBT and it is also agreed that the risk of the goods shall remain with DBT until delivery has been effected free on board (FOB). 26. Clause 11 of the contract provides that SCCL shall take insurance cover for equipment on a full replacement cost basis from FOB, port of shipment, till the time the equipment is successfully commissioned underground at the Mine Site on the basis of shipping advice given by DBT as per Clause 10 of the agreement. It is further provided that SCCL shall take insurance cover in USD with DBT as the beneficiary for Spares on a full replacement cost basis from FOB, port of shipment to the Mine Site and these insurance costs shall be to the account of SCCL. 27. Clause 14 provides for warranty period, while clause 17 provides for passing of the risk and title to the goods to SCCL upon delivery effected FOB at the f....
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....ion to 10 MMTPA capacity at the specified temperatures. Thus, the activities of the assessee involved both off-shore supply, offshore services and on shore supply and services. The contention of the revenue before the Hon'ble Supreme Court was that the contract being a composite and integrated one, the assessee was liable to tax on the offshore supply and services also. The Hon'ble Supreme Court has held that A contract must be construed keeping in view the intention of the parties. Even in the case before us, though SCCL had issued a single tender document for whole of the project, the intention of the assessee to segregate the contract into three contracts was clear from the beginning. It negotiated with SCCL who ultimately agreed to execute three separate contracts with specific scope of work for each of the contracts and different time frames. Thus, the intention of the parties to have three different contracts is proved. In such circumstances, the findings of the authorities below, that all the three contracts are part of a single and composite contract are not sustainable. The question No. 1 is accordingly answered in favour of the assessee. The consequential finding ....
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....o play in any of the above activities. The AO and DRP had relied upon some case law to hold that the income contract No. II is taxable in India. In the case of Ansaldo Energia SPA (cited supra) there is a specific finding by the department that the price of Contract No. 1 was loaded to take in a portion of the contract price for contract No. II to IV and while discount was offered for contract Nos. II to IV, with regard to Contract No. I no discount was offered. Further, there is also a finding that the assessee therein, a foreign company, had set up a subsidiary company in India, namely ASPL, which was alter ego of the assessee and that ASPL was its PE in India as the site office was jointly occupied by assessee and ASPL. Therefore, this case is distinguishable from the facts of the case before us. In the case of Samsung Heavy Industries Co. Ltd., the issue before the tribunal was whether the project office set up by the assessee therein is a fixed place of business of the assessee in India to carry out wholly or partly the impugned contract in India within the meaning of art. 5.1 of the DTAA and in the case Raytheon Company Vs. Deputy CIT, Reported in (2011) 142 TTJ (Del) 137, th....
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.... emphasized that the corresponding liability on account of customs duty has crystallized only in these twin relevant assessment years. Learned counsel invited our attention to page 3 in the assessment order dt. 20.02.2015 for Assessment Year 2011-12 involving the corresponding vouchers between 31.08.2010 to 30.10.2011. We thus find prima facie merit in the assessee's argument indicating the impugned expenditure which have been crystallized much later in these assessment years and direct the Assessing Officer to verify the corresponding factual position and allow the same as per law in consequential proceedings. This identical later substantive ground in assessment years 2010-11 and 2011-12 is accepted for statistical purposes. 7. Learned counsel next invited our attention to the assessee's identical additional grounds in Assessment Years 2010-11 and 2011-12 that both these assessments are non-est since the Assessing Officer had finalized the same without issuing the corresponding draft assessment order u/s. 144C(1) of the Act. 8. The Revenue has vehemently opposed admission of the assessee's instant additional substantive ground as a mere afterthought plea only. This ....
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....ction w.e.f. 1.4.2002. Suffice to say, the Transfer Pricing Officer (TPO) decides the corresponding reference made by the Assessing Officer u/s. 92CA(3) of the Act to determine arm's length price (ALP) in relation to the international transactions and sends a copy of his order to both the assessing authority as well as the tax payer concerned. It is at this stage that section 144C(1) of the Act comes into play reading as under: ["144C. (1) The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee."] Section 144C(1) of the Act herein envisages that the Assessing Officer shall "Notwithstanding anything to the contrary contained in this Act", in the first instance, forward a draft of the proposed order of assessment i.e. a draft assessment order to the eligible assessee...... We thus observe that there would be hardly any denial to the fact that this secti....
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....and a fortiori judgments of Benches consisting of more judges than one. So also, a Division Bench of a High Court is bound by judgments of another Division Bench and Full. A single judge or Benches of High Courts cannot differ from the earlier judgments of co-ordinate jurisdiction merely because they hold a different view on the question of law for the reason that certainty and uniformity in the administration of justice are of paramount importance. But, if the earlier judgment is erroneous or adherence to the rule of precedents results in manifest injustice, differing from the earlier judgment will be permissible. When a Division Bench differs from the judgment of another Division Bench, it has to refer the case to a Full Bench. A single judge cannot differ from a decision of a Division Bench except when that decision or a judgment relied upon in that decision is overruled by a Full Bench or the Supreme Court, or when the law laid down by a Full Bench or the Supreme Court is inconsistent with the decision. 38. It may be noticed that precedent ceases to be a binding precedent - (i) if it is reversed or overruled by a higher court, (ii) when it is affirmed or reversed on a dif....