TaxTMI 
TaxTMI 
2024 (1) TMI 788
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....s of Germany with its head office located at Schoneberger Ufer 1, 10785, Berlin, Germany. It operates in Rail transportation industry. The company is a tax resident of Germany as contemplated under Article 4 of the India-Germany Tax Treaty. 3.1 The assessee company along with the other consortium member entered into contracts with Delhi Metro Rail Corporation (DMRC) (Contract RS2 dated 19.07.2007, RS5 dated 06.07.2010 and RS7 dated 14.10.2011) for design, manufacture, supply, testing and commissioning of passenger rolling stock and with Mumbai Rail Vikas Corporation (MRVC) (dated 25.11.2011) for supply of propulsion control system. 3.2 During the year under consideration, onshore supplies of passenger rolling stock of INR 467 crores was made to DMRC. The rolling stock was purchased from Bombardier Transportation India Pvt. Ltd (BTIL) at the price at which it was sold to DMRC; accordingly no profit was earned thereon. Further, the appellant company also received advances in respect of offshore supply of goods made to MRVC in the subsequent years. Apart from onshore sale of rolling stock, the Appellant also made supplies of sub- assemblies of INR 30,11,72,389/- to BTIL. 3.3 Furthe....
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....dia, first in the form of BTIL and the other in the form of the project office (PO). Further, the AO made attribution of 35% of gross profits to the Indian PE at BTIL. 4. Against the above order, assessee appealed before the ld. CIT (A). Ld. CIT (A) after elaborate consideration held that AO's action of holding Bombardier Transportation India Pvt. Ltd. as fixed place of the assessee company was not correct. The concluding order of the ld. CIT (A) in this regard read as under :- "I find that the AO has not assigned any specific functions to the project office in India. Therefore, the project office gets covered under paragraph 4 of Article 5 of DTAA. As regards, the treatment of BTIN as fixed place PE of the appellant by the AO, the appellant has relied on various decisions in the case of Ion Geophysical Corporation Vs. DCIT, Circle-2, Dehradun (72 taxman.com 298) (ITAT, Delhi), Caterpillar Global Mining Europe GmbH Vs. ADIT, Hyderabad (84 taxmaan.com 72) (Hyderabad Tribunal), ishikawajima Harima Heavy industries Ltd. (288 I R 408) (sq, LG Cables, Delhi 237 CTR 438 (Delhi HC). In view of the above, I find that the decision of AO, to hold BTIN as permanent establishment of the app....
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....Spares for a period of three years, special tools, testing and diagnostic equipment. * BTG will be responsible for warranty during the Defects Liability Period (DLP) * BTG will be responsible for the transfer of production know-how to enable the local partner to produce indigenous trains. * BTG will be responsible for Transfer of Technology for Carbody & Bogies, if the option is exercise by DMRC. 13. Whereas, the scope of work of BTIL is as under: * BT India will support BTG to procure and supply trains and components manufactured in India. * BT Indian will support BTG in local procurement for components and goods as well as in testing and commissioning. * BT India will support BTG to arrange for incidental services like insurances, local and overseas transportation, clearance at port, unloading at DMRC. * BT India will support BTG to manage project site and warranty sites in Delhi during DLP. * BT India will support BTG in Training of DMRC official and Transfer of Technology, if required. 14. The payment to be made to the assessee and BTIL under the contract is in pursuance to the Cost Centre profit under the Contract. As per the Consortium Agreement between th....
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....ed. Therefore, essentially the contract is a divisible Contract. On a careful perusal of observations of learned DRP, it is observed that learned DRP has misconstrued the terms of the agreement between the DMRC and the Consortium partners as well as the terms of the Consortium Agreement. Learned DRP has erroneously assumed that the activities under Cost Centre D are also performed by the assessee. Whereas, factually and in terms of the contract, such activities falling under Cost Centre D were not only performed by BTIL but the profits from such activities have been offered to tax by BTIL. Therefore, in our view, the receipts from offshore supply of rolling stock cannot be taxable in India as the transfer of title over the goods has taken place outside India. 18. The next issue arising for considered is whether BTIL constitutes a fixed place PE of the assessee in India. As per Article 5(1) of India - Germany Tax Treaty, a fixed place PE means a fixed place of business through which the business of an enterprise is wholly or partly carried on. For construing BTIL as fixed place PE of the assessee in India, the burden is on the department to establish firstly, that the premises of ....