TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 1137
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....d-ab-initio, without jurisdiction and untenable in law. 3. On the facts and in the circumstances of the case and in law, Ld. CIT erred in passing the order under Section 263 of the Act in gross violation of the principles of natural justice. 4. On the facts and in the circumstances of the case and in law, Ld. CIT has erred in directing the Assessing Officer to make enquiries regarding existence of PE which issue was already examined by the Ld. Assessing Officer to his satisfaction in the course of assessment proceedings. 5. On the facts and in the circumstances of the case and in law, Ld. CIT erred in directing the Ld. Assessing Officer to make verification of items contained in Paras (10) to (13) of his order which items were already examined by the Ld. Assessing Officer in the course of regular Assessment Proceedings. 6. On the facts and in the circumstances of the case and in law, the notices issued by Ld. CIT are vague, cryptic and confusing resulting into roving inquiries which is against the settled law in this regard. 7. Each of the grounds above is to the exclusion of each others. 8. The appellant craves the right to add, amend, alter, modify or substitute any o....
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....the assessee furnished the necessary details as well as submissions from time to time. Ultimately, the Assessing Officer completed the assessment under Section 143(3) of the Act vide order dated 01.12.2016 accepting the income returned by the assessee. Subsequent to the completion of assessment, learned CIT, in exercise of powers conferred under Section 263 of the Act, called for and examined the assessment record and while doing so was of the view that the assessment order is erroneous and prejudicial to the interest of the Revenue as the Assessing Officer has not carried out necessary inquiries and investigation on certain issues. Accordingly, she issued a show-cause-notice, purportedly, under Section 263 of the Act to the assessee seeking response on the following four issues: a) Why shouldn't Contract A (Offshore supply ) & Contract B (Onshore services ) be regarded as one composite contract and assessment be framed accordingly. b) That in light of the GSA why shouldn't the presence of business PE be presumed to be in India and the income be brought to tax accordingly. c) That why shouldn't the Surety Commission and other such receipts be brought to ax in India. d) That....
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....the assessee had any transaction with its Indian AEs and accordingly failed to examine the case from the point of view of transfer pricing issue. 7. Thus, on the aforesaid premises, she ultimately concluded that the assessment order passed is erroneous and prejudicial to the interest of Revenue and accordingly cancelled and set aside the assessment with a direction to make a proper enquiry on the issue enumerated in the revision order and frame a fresh assessment order. 8. Before us, learned counsel appearing for the assessee submitted, none of the issues on which learned CIT has held the assessment order to be erroneous and prejudicial to the interest of the Revenue are valid issues for invoking jurisdiction under Section 263 of the Act. He submitted, the amount received against offshore supply of plant and equipment cannot be made taxable in India, as, in terms of the contract, the material and equipments were supplied to DMRC from outside India and the sale consideration was paid to the assessee outside India in foreign currency. Thus, he submitted, the sale transaction having completed outside the territory of India, the income is not taxable in India. He submitted, the concl....
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....ceipts from offshore supply of plants and equipment by calling for copies of contracts, invoices raised and various other details. In this context, he drew our attention to notice dated 13.07.2016 issued under Section 142(1) of the Act. He submitted, in response to the notice issued, the assessee furnished his reply on 12th October, 2016 with all the details called for. He submitted in the reply, the assessee had very clearly and categorically submitted that it is a non-resident company and its entire control and management is situated outside India. He submitted, after considering the nature of contract, various other details and the submissions of the assessee, the Assessing Officer completed the assessment accepting the claim of the assessee. Thus, he submitted, it cannot be said that the assessment order is erroneous and prejudicial to the interest of the Revenue for non-examination of taxability of amounts received towards offshore supply of plants and equipment having reference to the PE. He submitted, in any case of the matter, taxability of amounts received towards offshore supply of goods/material is a highly debatable issue in view of the decision of the Hon'ble Supre....
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....ed counsel submitted, the issue was never confronted to the assessee either in the show cause notice issued under Section 263 of the Act or in course of the revisionary proceedings. Thus, he submitted, powers under Section 263 of the Act having been erroneously exercised,, the revision order should be declared as invalid and the assessment order be restored. 12. Strongly supporting the observations of the learned CIT in the revision order, learned Departmental Representative submitted that even during the pendency of proceeding before AAR, the Assessing Officer can proceed with the assessment and complete assessment, as, the exception provided under Section 245RR applies only to the resident applicant. Proceeding further, She submitted, as per Explanation 2(a) to section 263 of the Act, the revisionary authority can revise the assessment order, if, he is of the opinion that the order was passed without making inquiry or verification which should have been made. She submitted, while entering into contracts with DMRC, a composite contract has been artificial split to two to derive maximum tax benefit. She submitted, though, the assessee was very much part of execution of both the co....
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....onsigned directly to DMRC from Korea. Thus, facts and material on record, prima facie, establish that offshore supply of plants and equipments concluded outside the territory of India. It is observed, the assessee had moved an application before AAR seeking a ruling on taxability of receipts under offshore supply contract. The specific issue admitted by the AAR is whether offshore and onshore services contract can be treated as composite contract. While the issue was pending before AAR, the Assessing Officer proceeded to complete the assessment under Section 143(3) of the Act, though, he was conscious of the fact that the issue relating to taxability of offshore receipts from offshore supply contract is pending before AAR. Probably, the Assessing Officer proceeded to complete the assessment under a misconception that the assessment is getting barred by limitation, being oblivious to the exception provided under Section 153(1)(vii) of the Act. Be that as it may, the report of the Assessing Officer in response to the application filed by the assessee before AAR is suggestive of the fact that the Assessing Officer was very much aware of the issue relating to taxability of the receipts....
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....the copies of contract invoices, the nature of work executed under the contract, details of AEs and subsidiaries in India, details of work executed by AEs/subsidiaries. 19. In response to the queries raised by the Assessing Officer, the assessee furnished a detailed reply with supporting evidences. In so far as receipts from offshore supply contract, the assessee specifically submitted that the transfer of goods having taken place outside the territory of India, receipts are not taxable. Thus, the allegation of learned CIT that the Assessing Officer has not examined the issue is not borne out from the facts and material on record. In any case of the matter, whether the receipts from offshore supply contract are taxable in India or contracts are in the nature of composite contract or whether such receipts are linked to the PE are highly debatable issues which cannot be considered for exercising jurisdiction under Section 263 of the Act. Even, on the issue of existence or otherwise of PE in India, not only before the Assessing Officer, but, in reply to the notice issued under Section 263 of the Act, the assessee had categorically submitted that it has no PE in India. Except making v....