AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 98
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....thout affording opportunity of personal hearing as mandated under Section 263 of the Act. 2. That on the facts and in circumstances of the case and in law, the CIT erred in exercising revisionary powers under Section 263 of the Act on the incorrect premise that income from offshore supplies was not brought to tax by the Assessing Officer in the assessment order dated 17.02.2020 passed under Section 143(3)/144(3) of the Act ("assessment order"). 3. That on the facts and in circumstances of the case and in law, the CIT had erroneously alleged in the impugned order that the Assessing Officer failed to verify the remittances received by the assessee. 4. That the Impugned Order is based on a fundamentally incorrect assumption of law that Section 44BB applies even in the absence of a permanent establishment ("PE") of a nonresident in India and that as per Section 44BB entire profits from offshore supplies are taxable in India without applying the principle of attribution prescribed under Article 7 of the India-Singapore DTAA. 5. That on the facts and in circumstances of the case and in law, the CIT erred in exercising revisionary powers under Section 263 of the Act without apprec....
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....assessment year under dispute on 31.10.2017, the assessee offered income of Rs. 1,37,85,751 computed under Section 44BB of the Act. The income so offered was in respect of revenue earned from rental/leasing of equipment and provisions of services and repairing. However, in so far as revenue earned on offshore supply of equipments, the assessee claimed it to be not taxable in India, as, the title to the goods were transferred outside India and payment was received outside India. In support, the assessee relied upon the decision of Hon'ble Supreme Court in case of Ishikawajima Harima Heavy Ind. Ltd. Vs. DIT (Exemption) - 288 ITR 408. The assessing officer did not accept the aforesaid claim of the assessee. He was of the view that the offshore supply of equipments is connected with the activities of the Permanent Establishment (PE) of the assessee in India being in the nature of service PE, hence, profit computed @ 10% of the revenue earned on offshore supply of equipment would be taxable in India, being attributable to the service PE. Accordingly, he issued a show cause notice to the assessee. Objecting to the proposed action of the assessing officer, the assessee filed a detaile....
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....nd after examining them was of the view that the assessment order passed is erroneous and prejudicial to the interest of the revenue for the reason that instead of applying the rate of 10% on the gross receipts on offshore supply of equipment as profit attributable to the PE, the assessing officer has determined the profit at 1%. He observed, while completing the assessment in the aforesaid manner, the assessing officer simply accepted assessee's claim without making any inquiry as well as looking at the legal position. He observed, even, in respect of offshore supply of equipment, income should have been computed under section 44BB of the Act. Based on the aforesaid premises, learned CIT issued a show cause notice to the assessee to explain why the assessment order should not be revised. In reply to the show cause notice, the assessee submitted that there is no error in the order of the assessing officer, as, he has completed the assessment by adopting the same approach adopted in the preceding assessment years. 7. In course of revisionary proceedings, learned CIT issued one more show cause notice to the assessee on 14.03.2022 calling upon the assessee to show cause as to why....
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....3(3) of the Act in assessment year 2010-11 onwards, the assessing officer has assessed income from onshore activities by applying the provisions of section 44BB of the Act. However, in respect of offshore supply of equipment, the assessing officer has followed consistent practice of 1% of gross receipts as profit attributable to the service/installation PE. In this regard, he drew our attention to the assessment orders passed for assessment years 2010-11 to 2016-17. He further submitted, the assessment orders for the assessment years 2010-11 to 2016-17 have become final. Thus, he submitted, if in the impugned assessment year the assessing officer has completed the assessment by following the consistent approach adopted by the assessing officers in past assessment years, it cannot be said that the assessment order is erroneous. 10. Further, he submitted, as per Article 7(6) of India-Singapore DTAA, the method of attribution of profit of PE of an entity shall be the same year by year, unless, there is good and sufficient reason to the contrary. He submitted, since, the assessing officer has taken a possible view based on the past history of the assessee, it cannot be held as erroneo....
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....sed the material on record. As discussed earlier, the assessee is a tax-resident of Singapore and is engaged in the business of supply of equipment, plant and machinery as well as services in connection with prospecting for, extraction or production of mineral oil. 14. Undisputedly, the income earned by an assessee from the aforesaid activities falls within the special provision enacted under Section 44B of the Act, hence, taxable on a presumptive basis by applying a profit rate of 10%. It is a fact on record that during the year, the assessee had earned revenue from onshore activities as well as offshore activities. In so far as the revenue earned from onshore activities is concerned, undisputedly, the assessee has computed the tax liability by applying provisions of section 44BB of the Act. As regards the revenue earned from offshore activities, the assessee had claimed that, since, sale was completed in Singapore and payments were received in Singapore, no part of such income can be taxed in India. In course of assessment proceedings, the assessing officer issued notice dated 01.02.2019 under Section 142(1) of the Act with a detailed questionnaire seeking various informations i....
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....ment years. Thus, in the aforesaid context, it can be very well said that the view adopted by the Assessing Officer is a possible view based on past assessment history of the assessee. That being the factual position emerging on record, it cannot be said that the assessment Order is erroneous. Therefore, one of the conditions of section 263 of the Act is not fulfilled. The revisionary authority cannot impose his view only because the view taken by the Assessing Officer is not acceptable to him. While exercising powers under section 263 of the Act, the Revisionary Authority must demonstrate that the order sought to be revised is both erroneous and prejudicial to Revenue. In the facts of the present appeal, neither the revisionary authority in his order nor learned Departmental Representative was able to demonstrate before us any change in the factual position between the impugned assessment year and the past assessment years. Therefore, in our considered view, the decision taken by the assessing officer in bringing to tax 1% of the gross receipts from offshore supply by attributing to the PE, being consistent with the approach adopted in the past assessment years, cannot be held to ....