AI Drafter 
TaxTMI 
TaxTMI 
2019 (5) TMI 2018
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....aside the impugned order dated 02.08.2011 passed by the Commissioner of Income-tax (Appeals)-VII, New Delhi qua the assessment year 2005-06 on the grounds inter alia that :- "1. That on the facts and in law, the Learned CIT(A) has erred in not adjudicating the additional grounds of appeal on its respective merits and in dismissing summarily on the principle of consistency. 2. Without prejudice to the above, principle of consistency cannot be discretionally applied only on one streak of income ignoring others. 3. That on the facts and in law, the Learned CIT(A) has erred in upholding the order of the learned AO to include purchase from India in the turnover while computing the total income attributable to the activities of the Liaison Office ('LO') in complete disregard of the provisions of Income tax Act, 1961 ("Act') which clearly states that income shall not be deemed to accrue or arise in India on account of purchase operations for the purpose of export from India. 4. That on the facts and in law, the Learned CIT(A) has erred in upholding the order of the learned AO to include purchase from India in the turnover while computing the....
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....an subsidiary was selling goods on its own account and not on behalf of the appellant. 9.3 Without prejudice to Additional Ground Nos. 9, 9.1 and 9.2, the Learned CIT(A) ought to have appreciated that since the Indian subsidiary is remunerated on arm's length, any PE which is constituted of the appellant on account of the activities of the Indian subsidiary, gets extinguished. 9.4 Without prejudice to above, if an Indian subsidiary is held to be a PE in relation to support services provided to the appellant, the commission paid to subsidiary should-be allowed as deduction. 10. That the learned CIT(A) erred in law and in facts in upholding learned AO's order and in not appreciating the cost plus methodology adopted by the appellant for offering DMRC revenue to tax (to the extent attributable to the activities performed by appellant's Project office, MC PO) in India. In doing so: * The Learned AO/CIT(A) failed to appreciate that appellant's income pertaining to activities of its project office in India has been offered to tax at cost-plus arm's length mark up basis i.e., 9 percent; and * The Learned AO/CIT(A) has erred ....
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....rned CIT(A) has failed in not appreciating that DMRC sales of Rs. 2, 348, 868, 060 includes receipts amounting to Rs. 7,458,204 in respect of CC 'J' which was suo-mote offered to tax as Fees for Technical services on gross basis by the appellant in view of the AAR ruling in Appellant's case and has thus been subjected to tax twice. 15.2 Without prejudice to Ground No. 1 0, on the facts and in law, the Learned CIT(A) has failed in not appreciating that the DMRC sales of Rs. 2,348, 868, 060 also includes the portion of receipts on the basis of which income of Rs. 41, 636, 466 has already been offered to tax by the Appellant as income from PO and has been subjected to tax twice. 16. The Learned CIT(A) has erred in law and on the facts of the case in upholding that the contract in question, i.e., RS1 contract is a 'Works' contract and not a 'Sales' contract." 3. Briefly stated the facts necessary for adjudication of the controversy at hand are : assessee filed revised return at taxable income on turnover of Rs. 61,05,41,430/- voluntarily offering income to tax from activities in India to the tune of Rs. 56,89,04,966/- (Rs. 53.82 crores a....
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....d to accrue or arise in India on account of purchase operations for the purpose of export from India. 2. That on the facts of the case and in law, the Assessing Officer has erred in taxing purchases while taxing sales and not excluding the turnover from export of goods from India while computing the total income attributable to the activities of the LO in complete disregard of the provisions of tax treaty between India and Japan which clearly states that no profits can be attributable to the purchase function. 3. Without prejudice to the appellant's mere intention to buy peace and avoid litigation in not challenging the assessment order, the Assessing Officer erred in not appreciating that the LO of the appellant handled only the Machinery Division and since LO was held to be a PE, the sales made by other divisions of Me Japan (without any involvement of LO) should not be included in the turnover for the purpose of computing the total income. 4. That on the facts of the case and in law, the Assessing Officer erred in not appreciating that the Indian Subsidiary is not a Permanent Establishment (,PE,) of the appellant. 4.1 In any case the sales mad....
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.... the instant case the Assessing Officer made original assessment orders for seven assessment years from assessment year 1998-99 to assessment year 2004-05 by taking Liaison Office (LO) to be a Permanent Establishment (PE) and bringing the entire sales of the appellant to India and also the purchases made from India (for all divisions including Machinery Division) to tax. The Gross Profit of 2.75% of total sales and purchase was taken by the Assessing Officer in all the seven assessment years which was not challenged by the appellant. From the Gross profit (2.75% of total sales and purchase), certain India related expenses were deducted i.e., expense of LO and expatriate salaries and 50% of the resultant profits were attributed to India and deduction u/s 44C was allowed. The appellant did not challenge the above action of the AO before the appellant authorities and also filed return of its income for the subsequent years including the assessment year 2005-06 on the basis of formula determined by the department in the said seven years. At no point of time in the original round of assessment proceedings the assessee raised any objection to the action taken by the Assessing Officer and....
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....troversy as per law applicable and not on the basis of principle of equity adopted in the past. 11. To repel the arguments addressed by the ld. AR for the assessee, the ld. DR for Revenue supported the order passed by the ld. CIT (A) decided on the basis of claim and arguments raised by the assessee. 12. We are of the considered view that when the ld. CIT (A) has admitted the additional grounds raised by the assessee to decide the issue on merit, the issue was not to be decided by the ld. CIT (A) on the basis of agreed settlement formula by applying the rule of consistency. The ld. CIT (A) has merely decided the issue pertaining to applicability of correct gross profit rate by applying the rule of consistency. The ld. CIT (A) has also decided the applicability of gross profit rate of 10% pertaining to DMRC project but has not decided the issue of exclusion from turnover. Ld. CIT (A) in order to test the applicability of gross profit rate of 10% has merely relied upon the order of AY 2006-07. All other grounds remained unadjudicated. 13. In view of what has been discussed above, we are of the considered view that since the assessee has set up a new case by raising additiona....