TaxTMI 
TaxTMI 
2024 (3) TMI 609
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....ated, the assessee is engaged in the business of building air gas separate and renewable and low-carbon hydrogen production units and supplies external customers with efficient, sustainable, customized technology and process solutions. In the year under consideration, the assessee earned Revenue from entities in India from the provision of services as well as sale of plants and equipment. The details are as under: 4. In the return of income filed for the assessment year under dispute, the assessee declared total income of Rs. 44,16,18,330/-. Undisputedly, except the amount of Rs. 89,73,88,390/- received by the assessee from sale/supply of plant and equipments to Bharat Petroleum Corporation Limited (BPCL), all other receipts were offered to tax in India. Insofar as the receipts from sale and supply of equipment to BPCL, the assessee claimed before the Assessing Officer that such sale/supply of goods having been made from offshore on Freight On Board (FOB) basis and the sale transaction having been completed outside India, there is no taxable event in India so as to bring to tax the receipts in India. The Assessing Officer, however, was not convinced with the submissions of the a....
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....e of assessment proceedings, the assessee has furnished documentary evidences to demonstrate that supply of plant and machinery was made on FOB basis from outside India and the transfer of property in goods happened outside India. Drawing our attention to copies of purchase orders, bill of lading and the invoices issued to BPCL placed in the paper-book, learned counsel submitted, the terms of delivery as per purchase order issued by BPCL clearly mentions the terms of the delivery should be FOB Seaport. The freight charges are paid at the destination only i.e. Moji Port, Japan. The value of the invoice is on FOB basis. Thus, he submitted, when the documentary evidences clearly establish that the sale event was completed outside the territory of India, the receipts from supply of plant and machinery cannot be taxed in India. 6. Proceeding further, he submitted, BPCL has entered into five separate contracts with the assessee. He submitted, the scope of work under each contract is distinct and separate. He submitted, the Indian entity has also entered into a separate contract with BPCL, wherein, the scope of work is totally different. Thus, he submitted, when there are independent c....
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....eted outside India. Apparently, the departmental authorities have not accepted the aforesaid contention of the assessee and proceeded to tax the receipts from sale/supply of equipment under section 44BB of the Act. Keeping in perspective the aforesaid factual position, following two issues arise for our consideration: (i) Situs of sale event. (ii) Applicability of section 44BB of the Act 10. Insofar as situs of sale is concerned, it is observed, the assessee has entered into the following contracts with BPCL: Contract Dated Nature of Agreement 8 July 2015 License and Guarantee Agreement 8 July 2015 Technical Advisory Service Agreement 8 July 2015 BDEP and Engineering Agreement 22 March 2016 Reactor Package Unit Service Agreement 10 June 2016 Catalyst and Proprietary Equipment Supply Agreement 11. As could be seen from the above, the assessee entered into five independent agreements with BPCL, wherein, scope of work has been specifically identified and demarcated. Insofar as agreement for supply of Catalyst and Proprietary Equipment, the purchase order clearly stipulates that the terms of delivery is FOB/FCA Japanese Seapor....
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....or production of mineral oils. The assessee has sold the plant and equipment to BPCL for setting up a plant in its facilities at Kochi. Therefore, in our opinion, the conditions of section 44BB of the Act do not apply. 15. Further, in course of hearing, a specific query was put to learned counsel for the assessee as to how the other receipts were offered to tax in India. In reply, learned counsel has specifically submitted before us that the receipts have been offered as FTS in terms with the provisions contained under India - Germany DTAA. The aforesaid contention of learned counsel for the assessee could not be controverted by the Department. If that is so, we are unable to comprehend how the department can mete out different treatments to the receipts of the assessee. In case, the Department was convinced that the assessee had a PE in India all the receipts should have been brought to tax under domestic law, either under section 44BB or section 44DA or section 9(1)(vii) of Act, as the case may be. Further, though, the departmental authorities have concluded that the assessee had a PE in India, however, they have not established how the conditions of Article 5(1) of the tax tr....