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2024 (3) TMI 1369
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.... for assessment year 2018-19 assessing the total income of the Appellant at Rs.46,93,12,952 is bad in law, void-ab-initio and therefore, liable to be quashed and/ or set aside. 2. That on the facts and circumstances of the case and in law, the assessment order passed under section 143(3)/ 144C(13) of the Act on 29.07.2022, being barred by limitation, is bad in law and void-ab-initio. Re: Offshore supply receipts of Rs.38,46,36,867 from THDC 3. That the DRP/ assessing officer erred on facts and in law in holding that receipts of Rs.38,46,36,867 from offshore supplies to THDC India Ltd ("THDC") are taxable in India under the provisions of the Act. 4. That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that the Appellant had business connection in India during the subject assessment year. 5. That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that there exists Fixed Place Permanent Establishment ("PE") of the Appellant in India. 6. That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that the Appellant has Construction PE in India. 7. Tha....
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....t appreciating that the same constituted Income from Other Sources and was already offered to tax in the return of income. 15. That the DRP/ assessing officer erred on facts and in law in making the aforesaid addition of Rs.96,45,456 to the returned income, not appreciating that the same resulted in double taxation. Re: Other grounds relating to computation of tax demand & penalty proceedings 16. Without prejudice, that the assessing officer erred in erroneously computing total receipts as 'Profits from Business or Profession' and taxing the same at 40% instead of first applying presumptive rate of 10% provided under section 44BBB of the Act to compute the income embedded in the receipts and thereafter, applying 40% tax rate to the same. 17. Without prejudice, that the assessing officer erred on facts and in law in not allowing set off of brought forward losses in the assessment order on the ground that no loss is allowed when income is taxed on presumptive basis under section 44BBB of the Act. 18. That the assessing officer erred on facts and in law in levying interest under 234B of the Act. 19. That the assessing offic....
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.... aforesaid draft assessment order before the Learned Dispute Resolution Panel ("ld. DRP"), which were dismissed. Pursuant to the directions issued by the ld. DRP under section 144C(5) of the Act, the ld. AO passed final assessment order dated 29.07.2022 under section 143(3) r.w.s. 144C(13) of the Act, assessing the total income of the assessee at Rs.46,93,12,952/-. 8. The assessee filed application u/s 154 of the Act before the ld. AO on 04.08.2022 for rectification of certain mistakes apparent from record. The said rectification application was disposed of vide order dated 24.12.2022 wherein assessed income was recomputed at Rs.9,53,13,511/-. The computation of total income after rectification is as under: S. No. Particulars Amount (in Rs.) Whether addition in dispute before the Tribunal 1. 10% of receipts from THDC for offshore supply 3,84,63,687 Yes - Ground Nos.3 to 9 2. Income from onshore activity from NHPC 3,10,53,628 No - Offered to tax in the ITR itself 3. Income from fees for technical services from GEPIL 96,45,476 No - Offered to tax in the ITR itself 4. Add: Disallowance of expenses for duty drawback claim written....
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...., Testing and Commissioning of the ElectroMechanical plant & machinery and Hydro- Mechanical plant & machinery (Onshore Services) of 4 x 250 MW Tehri Pumped Storage Plant Alstom Projects India Limited 9.2. As is evident from the above, under the THDC Agreement, the assessee is executing Contract No.3, i.e., supply of electro-mechanical plant & machinery and hydro-mechanical plant & machinery (Offshore Component). The said Contract No.3 is hereinafter referred to as "THDC Contract No.3 for Offshore Supply". As per the said THDC Contract No.3 for Offshore Supply read with Particular Conditions of Contract, the transfer of ownership, for the plants and equipment (including spares) supplied from foreign country, was done on "FOB" basis. The relevant clause is reproduced hereunder:- "Sub-Clause 7.7 Ownership of Plant and Material "The Ownership of imported material will be transfer on "FOB" basis. The ownership of indigenous material will transfer on "Ex. Work" basis" 9.3. As per the THDC Overall Agreement, the consortium members are jointly and severally responsible and liable to THDC. Separate roles and responsibilities of consortium members emanate under th....
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....mpany of of M/s Alstom Hydro France, having its registered office at Mumbal and Its office for correspondence at The International, V Floor, 16, Marine Lines Cross Road No. 1, Off Maharahi Karve Road, Churchgate, Mumbal. (E) It being agreed and understood that the execution of the Project under several CONTRACTS (as at "C" above) shall not in any manner dilute the respective responsibilities, obligations and liabilities of the each partner of the Consortium as defined in the sald CONTRACTS (detailed in Annexure -III) and In this Agreement to ensure completion and performance of the Project within the TIME FOR COMPLETION with the understanding that the Consortium shall be jointly and severally responsible and liable for the performance of the Project with in the Time for Completion as defined in Para 1.1.3 of this Agreement. (F) It is deemed necessary and expedient to enter into this Agreement to, inter-alla, define the scope of the WORKS and provide for the responsibilities of Alstom Hydro France as the leader of the Consortium ("the Leader") and the joint and several responsibility and liability of the Consortium in respect of the execution thereof under the seve....
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....and this Agreement. For the purposes hereof any breach by any of the Consortium partner of their respective obligations under any of the CONTRACT and this Agreement shall be deemed to be a breach by the Consortium under all the CONTRACTS and this Agreement. 3.2 Not withstanding the entering into the several CONTRACTS and the provisions contained therein, the Consortium, under the leadership of ALSTOM Hydro France shall be bound by the provisions of this Agreement and each member/partner of the Consortium shall be severally and Jointly obliged: a) To execute and perform or cause to be executed and performed the CONTRACT: b) To satisfy the obligations and liabilities of any and all members/ partners of the Consortium as set out in the CONTRACT and/or this Agreement; and c) To execute and perform the WORKS in accordance with the Master Program annexed as Annex-11 hereto and as may be modified by mutual Agreement between the Consortium and the Employer from time to time. 3.3 Nothing contained in this Agreement is intended by the Consortium nor shall be construed as creating a joint venture / Consortium, partnership, agency or associ....
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.... Hindustan Construction Company Ltd. Contract Price INR 6,61,46,91,866.00 Brief scope of Work Execution of civil works of 4X250 MW of Tehri Pumped Storage Plant which includes head race tunnels (HRT-3 and HRT-4), upstream, surge shafts, downstream surge shafts, pressure shaft, penstocks, tail race tunnels, an underground powerhouse, all more fully described in the Employer's Requirement. The detailed Scope of Works under Civil Works shall be as per section -I of Employer's Requirement and as detailed in Appendix CW-1 to Section I of Employer's Requirement and Bidding Documents. Contract No. THDC/RKSH/CD- 262/AG/03 Supply of Electro-Mechanical plant & machinery and Hydro- Mechanical plant & machinery (Off-shore Component) of 4 x 250 MW Tehri Pumped Storage Contractor M/s Alstom Hydro France Contract Price Euro 82,841,152.00 (EM Supply EURO 62,923,012.00 and HM supply EURO 19,918,140.00) Brief Scope of Work Design and Engineering of the Electro-Mechanical works and of Hydro-Mechanical Works of 4 X 250 MW Tehri Pumped Storage Plant, preparation of design criteria and technical specifications, manufacture and supply of off-shore....
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....ng & Customs clearance, Inland transportation and handling & insurance in respect of offshore supplies of Electro-Mechanical equipment). The detailed scope of Work under Transportation, Insurance, Custom clearance, Storage, Erection, Testing and Commissioning of the Hydro-Mechanical plant & machinery and Electro-Mechanical plant & machinery (Onshore Services) shall be as per section -1 of Employer's Requirement and as detailed in Appendix EM/HM-1 to Section -I of Employer's Requirement and Bidding Documents. 9.5. Based on the Overall Agreement with THDC, it was submitted that Joint and Several responsibility of the Consortium is provided and according the ld. AO alleging that assessee bears all the responsibilities and liabilities for execution of the contracts under THDC Overall Agreement has no basis. Rather assessee is jointly and severally liable along with the other consortium members under all the Agreements. It was submitted that assessee acted as a leader of the consortium for the purposes of ensuring coordination of the inter-related tasks between the members of the consortium undertaking the project but did not assume responsibility and liability (other than to....
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....f the different components has to be individually seen. The pertinent observations of the Hon"ble Supreme Court in this regard are as under: "17.............. The fact that it has been fashioned as a turnkey contract by itself may not be of much significance. The project is a turnkey project. The contract may also be a turnkey contract, but the same by itself would not mean that even for the purpose of taxability the entire contract must be considered to be an integrated one so as to make the appellant to pay tax in India. The taxable events in execution of a contract may arise at several stages in several years. The liability of the parties may also arise at several stages. Obligations under the contract are distinct ones. Supply obligation is distinct and separate from service obligation. Price for each of the component of the contract is separate. Similarly offshore supply and offshore services have separately been dealt with. Prices in each of the segment are also different. 18. The very fact that in the contract, the supply segment and service segment have been specified in different parts of the contract is a pointer to show that the liability of the appella....
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...."ble Jurisdictional High Court and other Hon"ble High Courts that if the sale is concluded outside India and the property in goods is passed outside India; the payment of consideration is received outside India; no activity in relation to such offshore supply is conducted in India, then income from such offshore supplies cannot be made liable to tax in India as assessee does not constitute "Business Connection" in India. It is also pertinent to note that under the Contract No.3 which is in dispute before us, Offshore Supply under THDC Contract, supply of plant and equipment was to take place on "FOB" basis. At the cost of reiteration, we hold that title to and property in the goods shipped by the assessee stood transferred at the port of shipment and the event of sale clearly took place outside the territory of India. In these facts, the income arising out of such sale cannot be said to have accrued or arisen in India. The accrual of income derived from offshore supplies cannot be attributed to any operation in India and therefore, no income can be deemed to accrue or arise in India. 9.9. The ld. AO had further alleged that there is a Fixed Place PE of the assessee in India. The....
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....a Construction PE of the assessee in India under the provisions of Article 5(2) of India -France DTAA. It was submitted that this conclusion has been reached by the ld. AO without discharging the primary onus of bringing on record any document, evidence or information based on which such conclusion has been reached by him. As stated earlier, in the instant case before us, in respect of offshore supplies made by the assessee, the title to the goods as per the contract had been transferred outside India, sales concluded outside India and no part of the profit with respect to the same could be attributed to the alleged PE in India. It was specifically submitted by the ld.AR before us that the ld. AO had stated in his order that this is a legacy issue and it is already covered in favour of the revenue by the decision of the Delhi Tribunal in GE Group company cases for Asst Year 2001-02. But it is pertinent to note that assessee herein became part of GE group only in the year 2015 which is also admitted by the ld. AO in his order. Hence all the findings of Delhi Tribunal in GE Group company cases relied upon by the ld. AO cannot be made applicable to the facts of the assessee herein. It....
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....nt also, there cannot be taxability of income in respect of offshore receipts in the hands of the assessee. 9.12. Since we have already held that there is no PE of the assessee in India, the other argument advanced by the ld. AR that there would be no attribution of profits in view of operational or net loss at global level, need not be gone into as adjudication of the same would become merely academic in nature. 9.13. We also find that the entire issue in dispute is already covered by the coordinate bench decision of this Tribunal in the case of UK Grid Solutions Ltd vs DCIT in ITA No. 2087/Del/2022 dated 12.4.23 for AY 2018-19 . The relevant operative portion of the said order is reproduced below:- "9. Ground no 3 to 8.Ld. Sr. Counsel for the assessee/ appellant contended that Ld. Tax Authorities below have erred in understanding the nature of three agreements entered between the assessee, its associate ALSTOM-I and employer PGCIL. It was submitted that Ld. Tax Authorities have fallen in error in concluding that there was an artificial splitting of the contract between the assessee and ALSTOM-I. Referring to the contracts executed between the assessee and PGCIL, ma....
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....en in error in considering the associate M/s. ALSTOM-I to be Agency PE. It was submitted that there was no legal and financial dependency between the assessee and its associates. 9.4 Ld. Sr. Counsel submitted that the assessee had earned revenues from offshores supplies and no activity was performed in India for earning its revenue. He specifically stressed on fact that no employee of the assessee visited India and as such there is no branch or place of business in India. 9.4.1 As with regard to Dependent PE it was submitted the Tax Authorities have not discussed any evidence and an incorrect observation is made by Ld. AO that GE India was actively involved in soliciting business for the assessee as the assessee had procured the contract by way of open bidding. 9.5 It was submitted that the Associate was engaged in independent contracts under the bid and was independent entity. Referring to the financial statements of GE T &D India Limited, available on page no. 429 to 437 for F.Y. 2017-18 and 438-445 for F.Y. 2018-19 it was submitted that related party transactions have been disclosed and it was submitted that the Indian associates has several independen....
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.... 9.8.4 He supported his contentions with regard to law on Dependent Agent Permanent Establishment ("PE") under the India-UK DTAA he referred to the Copy of India-UK DTAA and section 182 of Indian Contract Act, 1872. He also cited judgments in National Petroleum Construction Company vs DIT: 383 ITR 648 (Del), Western Union Financial Services Incvs ADIT: 101 TTJ 56 (Del Trib.),Mitsui & Co Ltd vs ACIT: ITA No.4764/Del/2016 (Del Trib.), ITO vs International Reinsurance and Insurance Consultancy & Broking Services (P) Ltd: 142 taxmann.com 509 (Mum Trib.), DCIT vs Adobe Systems Software Ireland Ltd: ITA Nos.l978/Del/2019 &Ors. dated 27.07.2022 (Del Trib.), Net App BV vs DDIT: [2017] 78 taxmann.com 97 (Del Trib.), TVM Ltd vs CIT: 237 ITR 230 (AAR) and KronesAktiengesellschaftvs CIT: ITA No.907/Del/2017 dated 30.12.2022 (Del Trib.) 9.8.5 The Ld. Sr. Counsel stressed that the onus is on Department to prove existence of PE and for that he relied CIT vs eFunds IT Solution: 399 ITR 34 (SC), DIT vs Samsung Heavy Industries Co Ltd: 426 ITR 1 (SC), DIT vs Mitsui & Co Ltd: 399 ITR 505 (Del) and AB SciexPte Ltd vs ACIT: 195 ITD 384 (Del Trib.) 9.8.6 As with regard to princip....
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....ght of termination and recovery of damages from the assessee by PGCIL, accordingly it too concluded that Associate as PE was involved throughout the contract period. DRP observed that the off-shore supply of equipments by the assessee would have been rendered meaningless in the absence of service of supervision, erection, commissioning etc. all of which was an integral and indivisible part of the contract. 13. So the key question is if this was independent contract as claimed by assessee or there was artificial spilt of one contract to the benefit of assessee, into three contracts leading to evasion of tax. The first and a very important concept that has to kept in mind is that the controversy regarding taxability event, in case of complex arrangement of contacts, may arise at several stages and with different tax incidences. The adjudication of an issue should be on basis of wholesome reading of the contract and context of terms. In regard to this principle of law the Hon"ble Supreme Court in Ishikawajma-Harima Heavy Industries Ltd. (supra) has observed in para no. 60 as follows :- "In construing a contract, the terms and conditions there of are to be read as a w....
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....om outside India, Type Test and Training to be conducted outside India (also referred to as Off-Shore Contract), "Second Contract" for Ex-works supply of Plant and Equipment including mandatory Spares from within India and Type Test to be conducted within India (also referred to as On¬Shore Supply Contract), and Third Contract" for all services to be performed in India covering, inter alia, port handling, port clearance, inland transportation, insurance, delivery at site, handling, storage, erection including associated civil works, testing and commissioning of all equipment and materials, including the equipment supplied under the First Contract end the Second Contract, Training in India etc. (also referred to as On-Shore Services Contract). WHEREAS M/s. ALSTOM Grid UK Limited in their Bid, had proposed M/s. ALSOM T&D India Limited having its Registered Office at A-18, First Floor, Okhla Noida-201301, U.P. Area, Phase-ll, New Delhi-110020 and business address as A-7, Sector-65, : ca-201301, (hereinafter referred to as "ALSTOM-l" as their Associate for the purpose of executing the OnShore Supply Contract and On-Shore Services Contract) and furnished "....
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..../HVDC-1489/7/G10/CA-II/4336 and CC- CS/156-WR1 /HVDC-1489/7/G10/CA-l11/4337 between the Employer and the Contractor"s Associate - ALSTOM-I has also been made on 17.08.2012, respectively for the On-Shore Supply Contract (also referred to as the "Second Contract") and On-Shore Services Contract (also referred to as the Third Contract"). The scope of 'Second Contract' includes Design, engineering, manufacture, testing at manufacturer"s works and Ex-works supply of all the equipment and materials including mandatory spares from within India and Type Testing, as detailed in the Contract Documents of said contract, required for the complete execution of +/-800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under "National Grid Improvement Project". The scope of "Third Contract" includes all services to be performed covering, inter alia, port handling, port clearance, inland transportation, insurance, delivery at site, handling, storage, erection including associated civil works, testing and commissioning of all the Plant and Equipment including mandatory Spares supplied under the Off- Shore Contract and ....
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....a Limited) shall be your Associate for the purpose of executing the OnShore Supply Contract and On-Shore Services Contract (refer para 2.2 below) and furnished ALSTOM INDIA"S written unequivocal consent vide their letter dated 26.11.2011. ........................... 12.1 We confirm having accepted your Bid referred to at para 1.3, 1.7 & 1.8 above) read in conjunction with all the specifications, terms & conditions of the Bidding Documents (referred to at para 1.2, 1.2.1, 1.2.2, 1.2.3 & 1.6 above) and your confirmations as per the documents referred above, and award on you the "Off-Shore Contract" (also referred to as the "First Contract") covering inter-alia supply on CIF Indian Port of Entry of all equipment and materials, mandatory spares including Type Testing to be conducted outside India, Training to be imparted abroad for the complete execution of the +/-800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under "National Grid Improvement Project", as detailed in the Bidding Documents referred hereinabove. The scope of work inter-alia includes the following: Design, engineering, manufa....
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....d the Second Contract, Training in India etc. required for the complete execution of +800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under "National Grid Improvement Project" Notwithstanding the award of work under three separate Contracts in the aforesaid manner, you shall be overall responsible to ensure the execution of all the three Contracts to achieve successful completion and taking over of the works under the package by the Employer as per the requirements stipulated in the Bidding Documents. It is expressly understood and agreed by you that any default or breach by your Associate , M/s. ALSTOM T&D India Limited under the "Second Contract" and/or the Third Contract" shall automatically be deemed as a default or breach of this "First Contract" also and vice-versa, and any such default or breach or occurrence " giving us a right to terminate the 'Second Contract" and/or 'Third Contract", either in full or in part, and/or recover damages under those contract(s), shall give us an absolute right to terminate this Contract, at your risk, cost and responsibility, either in full or in p....
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..... This of-shore contract specifically mentions that ALSTOM-I shall be "independent contractor" of PGCIL on the terms and conditions as laid down in the bidding document. Article 6 of this document dated 17.08.2012 specifically makes reference to ALSTOM-I"s "written unequivocal consent to work as the independent contractor of PGCIL" and that separate contracts have been entered between PGCIL and Indian Associate of the assesse, ALSTOM- I, on the same date 17.08.2012 for the second and third contract. 18. The aforesaid discussion of the relevant clauses leave no doubt in the mind of this Bench that at the stage of bid itself ALSTOM-I had joined the assessee in terms of the requirement of the bid. These clauses and stipulations go on to establish that there was a collaborative effort of the assessee and the Indian associate and as such there was not actually a consortium to which one contract was awarded with bifurcation at level of the members of Consortium. The award of separate off shore contract by the PGCIL to assessee and on shore contracts to the permitted associate ALSTOM-I, which was classified as independent contractor of employer, coupled with the execution of sepa....
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....rance that at advance stage after the bid is accepted and before the contract is actually executed the bid is not frustrated. In any case when the three contract stand executed on 17.08.2012, the issues discussed in the meeting between 03.07.2012 and 05.07.2012 became superfluous but Ld. DRP has unnecessarily stressed upon the same to draw a conclusion that primary commitment in all the three contracts was of the assessee. 20.2 Further in para 5.2, the Ld. DRP has reproduced para 3.2 of the notification of award dated 21.06.2012 without understanding the context in which the same was made. As for the convenience para 5.2 of the order of DRP is reproduced as below :- "5.2 It has also been clarified at para 3.2 therein that- "3.2 Notwithstanding the break-up of the Contract Price, the Contract shall, at all times, be construed as a single source responsibility Contract and any breach in any part of the Contract shall be treated as a breach of the entire Contract. " As a matter of fact that this para 3.2 is part of clause 3.0 in notification of award, which makes reference to contract price and it will be beneficial to reproduce the whole of it, fro....
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....r to conclude there is no separate delineation of work. 21. Lastly, the major focus of tax authorities below and Ld. DR has also been on the fact that under the bid and the three contracts the ultimate responsibility of execution and liability in case of breach remained with the assessee. In this context, the Bench is of considered opinion that the business prudence involving such major infrastructure projects cannot be examined and questioned by the revenue authorities attributing bare motives and to assume that the different contracts under one bid are with only intention to escape taxation. Such arrangements are more out of business prudence and usually for the safeguard of the rights of Indian entity, like PGCIL, which negotiates and gets executed such infrastructural facility contracts. The intention being successful commissioning of the project and that it is not abandoned or frustrated due to involvement of many parties, each performing some part, by shouldering any delay or latches, on other unrelated party. 21.1 In this context, reliance can be placed on the judgment of Hon"ble Delhi High Court in Linde AG, Linde Engineering Division (supra) wherein deali....
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....r a Designer provides the detailed drawings that a civil contractor can commence construction. Similarly, it is only after the civil construction is commenced and progressed to a certain level that space for electrical contractors is available for them to perform their work. The work of Interior finishing can take place only after the civil works are complete. The fact that each of the aforesaid agencies, namely, the architect, the civil and electrical contractors are required to complete their work in a pre¬determined sequence and are required to cooperate with each other in providing the necessary information and adhering to a specified schedule would not necessarily imply that the architect, civil contractors and electrical contractors had formed an Association of Persons. In this illustration each one of the participants works towards a common project with a certain level of cooperation. However, since the said participants do not act as a single cohesive entity, but perform their independent allocated works, they cannot be considered as an Association of Persons. In order to consider independent agencies as an Association of Persons, it is necessary that they form a joint ....
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....s, the bench is of considered opinion that the Ld. Tax Authorities below have fallen in error in concluding that there was an artificial split of a contract and that there was one inseparable, indivisible and composite contract. 24. On the basis of aforesaid discussion the question of assessee having a permanent establishment (PE) can be examined. Ld. AO has not given any substantial reason on the basis of evidence while what weighted heavily in the mind of Ld. DRP was that the supply of equipment on the basis of off-shore contract would have been rendered meaningless in the absence of services of supervision, erection commissioning etc. all of which was an indivisible part of the contract. 25. The Bench is of considered opinion that when the allegation of the Revenue about an artificial split of contract is not sustained and it is established that the assessee has entered into the "First Contract", in its independent capacity, there is no force in the finding of Ld. AO that GE India ( Alostom-I) was actively involved in soliciting business for the assessee. In fact, there is substance in the contention of Ld. Sr. Counsel that in the bidding structure of present n....
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....plies and wherein property in the goods transferred outside Indian, therefore as Section 44BBB does not speak of engagement of a foreign company for "supply" in connection with the turnkey Power Project, the provisions of Section 44BBB are not applicable. Thus Ld. DRP has fallen in error in sustaining application of Section 44BBB of the Act, on premises that the assessee is involved in the end to end execution of the project in India. The revenue derived by the assessee were on the basis of offshore supplies and not out of any construction, erection, testing or commissioning activities of a turnkey power project in India. Thus, the application of section 44BBB to such revenue, which is not per se taxable India, is not sustainable. 28. It also appears that the Revenue is not disputing the fact that under the "First Contract" assessee was only supposed to make off shore supplies. Otherwise too it is appearing from the recitals of "First Contract" that the procurement by PGCIL, was on the basis of, "CIF Indian Port of Entry supply". The title in property had passed out side India. The payments were also made outside India in terms of this contract. The settled proposition of ....
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....able in the instant case. Hence we hold that the addition made by the ld. AO by bringing to tax receipts from offshore supply is hereby directed to be deleted. Accordingly, the Ground Nos. 3 to 9 raised by the assessee are allowed. 11. The ground No. 12 raised by the assessee is challenging the disallowance of deduction of claim on account of write off of duty draw back. 11.1 We have heard the rival submissions and perused the material available on record. During AY 2018-19, the assessee had an ongoing contract with NHPC for which it had opened a Project Office in India. In the assessee"s opinion, the said project was eligible for Deemed Export benefits under the Foreign Trade Policy 2004-09 and Foreign Trade Policy 2009-14 (hereinafter together referred to as "FTP"). In view of the benefits available under the FTP, the assessee opted to claim drawback of the excise duty levied on the supplies made by the assessee to NHPC under the Chamera Project. Accordingly, the assessee filed an application with the Joint Director General of Foreign Trade ("JDGFT") for claiming refund of the said excise duty. The assessee was of the view that the excise duty deposited by it from its own p....
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....uction as a trading loss u/s 28 of the Act itself. In the instant case, the assessee had duly proved that the said duty drawback is irrecoverable from the Govt. Similar issue arose before the coordinate bench of this Tribunal in the case of NEC Technologies India Pvt Ltd Vs. Additional CIT in ITA No. 6982/Del/2019 for AY 2014-15 dated 16.06.2023 wherein, it was held as under:- "8. In the facts of the instant case, During AY 2015-16 Assessee Company has Written off amounting to Rs 9,081,394/-. The amounts were earlier parked in Input service tax receivable account pertaining to revenue expenditure in the nature of rental, clearing and forwarding charges, security expenses etc. however, on service tax audit, such amounts were reversed due to technical points i.e. held as common inputs and not direct cost and therefore reversed under a formulae prescribed under the service tax law. However, there is no questioning on the nature and bonafide of these payments. As is evident, the input cost is revenue in nature and accordingly service tax paid on such revenue costs is also eligible to be claimed as revenue expenditure. Further, the matter is covered as the Assessee Compan....
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....May, 1946, and April, 1947. The amount actually embezzled in the relevant accounting year 1st April, 1947, to 31st Mach, 1948. The assessee therein claimed deduction in the assessment year 1947-48. The learned Bench of this court was pleased to hold that as the assessee wrote of this amount in the year of account, the court was entitled to presume that the amount became irrecoverable when the assessee wrote it off in its books of account and that, therefore, the assessee was entitled to claim the amount. In our opinion, therefore, even if duty drawback was available for the previous assessment year, what will be relevant was when the same is treated as bad debt by the assessee in his books of account. Considering the ratio of that judgment, in our opinion, there is no infirmity in the view taken by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. That question, therefore, would not arise. In so far as the second question is concerned, merely because there was no income in the course of assessment year 1999-2000 would not disentitle the assessee from claiming the business expenditure in the said assessment year. We find no infirmity with the view taken....
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....he shortfall if any in the taxes due cannot be attributed to the assessee and for such default no interest chargeable, u/s 234B of the Act. 33. Under the provision of section 209(1)(d) of the Act, it is provided that against the income tax calculated under the provision of Act then amount of income tax which would be deductible or collectible at source during the said Financial Year from any income would be deducted. The provisions of section 234B of the Act deals with payment of Advance tax, whereas in the present case, this does not amount to default of payment of Advance tax, but amounts to default in deduction of tax at source. Hence, the provisions of section 234B of the Act are not applicable and so also the proviso under section 209(1)(d) of the Act." 12.1 Respectfully following the same, we hold that interest u/s 234B of the Act is not chargeable in the instant case. Accordingly, the Ground No. 18 raised by the assessee is allowed. 13. With regard to chargeability of interest u/s 234C of the Act, the law is well settled that the said interest should be charged only on the returned income and not on the assessed income. Accordingly, the Ground No. 19 raised by....