TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1682
X X X X Extracts X X X X
X X X X Extracts X X X X
....d bid for certain projects floated by M/s. Power Grid Corporation of India Ltd. ('PGCIL') during F.Y. 2009-10. M/s. PGCIL had called for the bids for the design, engineering, manufacturing, supply, erection, testing and commissioning of shunt reactors at its different sites in Bilaspur, Bhiwani, Fatehpur, Agra, Lucknow, Meerut, Moga and Jatikalam. The bids were called for on Global Competitive Bidding basis. TBEA had successfully bid for these projects and entered into separate agreement for the various sites. Against the single bid, two separate agreements were executed by TBEA for each of the sites. a) Agreement for Offshore supply of equipments including type testing abroad. b) Agreement for Onshore Service including inland transportation, type testing, installation, erection and commissioning in India. 3. For the purpose of executing above agreements, TBEA had set up a project / branch office in India, which constituted Permanent Establishment (PE)of the non resident TBEA in India. 4. The case of the assessee (i.e. project office or Permanent Establishment) (PO/PE) was selected for scrutiny. During the course of which, the Assessing Officer (AO) noticed that even though n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... received by the head office in China from PGCIL. The TPO, therefore, noted that the execution of the onshore service contract or offshore contract supply (either in full or in part) by the project office in India constituted an international transaction vis-à-vis head office in China since the responsibility of carrying out the contract was delegated by the head office in China to the project office in India. He, therefore, proceeded to determine the ALP of so identified international transaction between the project office and the head office in China i.e. TBEA. 6. The TPO noted that TBEA China had entered into ten contracts for eight different sites in India which are tabulated at page 16 of the TPO's order passed u/s. 92CA(3) of the Act. He also noted that while the offshore contract was to be executed / completed in F.Y. 2010-11, the onshore contract was to be executed in F.Y. 2011-12. The TPO noted that in the return of income filed by the assessee it had claimed income from offshore supply of reactors and equipments as not taxable in India since the title was transferred outside India and the consideration was received outside India. With respect to the income from on....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the project office was not compensated completely with respect to the transportation activity. 8. With respect to the sub contract entered into with M/s. Techno Electric and Engineering Company Limited, on going through the contract agreement, the TPO noted that the entire installation and civil work had been sub-contracted to M/s. Techno Electric and Engineering Company Limited for an amount of Rs. 32.50 Crores and though as per the original agreement the project office was to have earned profit from such activity, it had incurred losses at gross level continuously for successive financial years. In this background, the rate chart for various work related to installation and erection activity including civil work sub contracted was compared with the original agreement between PGCIL and TBEA and glaring differences were noted therein, more particularly the sub contract being noted to have been given at higher rates as compared to the original onshore agreement. The TPO, therefore, noted that the project office was not compensated adequately by TBEA with respect to the transportation activity and the activity of installation and erection including civil work carried out by it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gly, finding the pre-sale and postsale activities of the offshore contract carried out through the PE of TBEA in India, therefore held that profits attributable to the said activities were to be taxed in India. For this purpose, Comparable Uncontrolled Price (CUP) was chosen as the MAM for determining the ALP to be received by the project office in India. Search of comparable was done and one comparable agreement was identified, wherein, it was found that the ALP of the compensation for the work or activities carried out through the project office was 5% of the net sales. The ALP of the international transaction in relation to the offshore activity was accordingly computed by applying the said percentage to the total offshore supply contract value and ALP accordingly determined at Rs. 20,69,41,033/-. 11. Accordingly, total upward adjustment of Rs.29,50,86,132/- was proposed by the TPO to be made to the total income of the assessee, on account of determination of the ALP of international transactions undertaken by the assessee PE with its Head Office, i.e TBEA, China. 12. The AO passed a draft order in accordance with the adjustment proposed by the TPO as above, against which the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sequently the learned AO erred in Duct and in law in holding that the Project Office of assessee in India has not been adequately remunerated for the work performed by it in respect of on-shore service provided to M/s PGCIL and thereby making an adjustment of Rs 8,81,45,099 u/s. 92. It is submitted that in the facts and circumstances of the case, no adjustment in respect of value of offshore services can be made us. 92. It be so held now. 5. Without prejudice to the applicability of provisions of Chapter X of the Income Tax Act, the learned DRP, the learned TPO and consequently the learned AO erred in fact and in law in holding that a portion of the activities in relation to off-shore supply made from China were carried out in India and therefore a portion of off-shore supply contract value is taxable in India. In the facts and circumstances, no income in respect of offshore contract is taxable in India as it has not accrued or arisen in India or is not deemed to accrue or arise in India and it is also not attributable to Permanent Establishment of assessee company in India and accordingly adjustment of Rs. 20,69,41,033 deserves to be deleted. It be so held now." 9. Your Appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ional Taxation), Vadodara ("the AO"] u's 143(3) 1440(13) invalid and void-ab-initio. In the facts and circumstances, the AO has erred in invoked provisions of section 92CA(1) without satisfying the conditions prescribed therein including applicability of Chapter X of the Income Tax Act It is submitted that it be so held now and such order may please he quashed or suitably modified. 2. The learned Deputy Commissioner of Income Tax (Transfer Pricing Officer)-2. Ahmedabad (the TPO) has erred in determining attributable profits to Permanent Establishment ("PE") of the assessee while TPO's authorization us. 92CA is restricted to determination of arm's length price of the international transactions referred to him by the AO. The sole authority to determine profits attributable to PE, if any, rests with the AO and the TPO exceeded his jurisdiction in carrying out exercise of attribution of profit to Indian PE. Transfer Pricing adjustment of Rs. 29,50,86, 132 made by the TPO essentially represents additional profit attributable to Indian PE and therefore the TPO and consequently AO has clearly erred in making such adjustment. It be so held now. 3. The learned Dispute Resolu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....after identifying the head office and the PE as two separate enterprises the Special Bench went on to deal with the aspect of whether they can be said to be associated enterprise as defined u/s. 92A of the Act. The bench noted that while Section 92A(1) of the Act provided the basic rule for treating one enterprise as associated enterprise of another, that there has to be participation in any of the three aspects of the other enterprise i.e. management, capital or control, it was however, noted that Section 92A(1) of the Act did not define the expression participation in management, capital or control and noted that the same was illustrated in Section 92A(2) of the Act with several cases of participation in management, capital and control listed therein. The Special bench held that the provisions of Section 92A(1) & (2) of the Act are to be read together to establish the existence of association between the two enterprises. Thereafter, the Special Bench went on to identify the cases listed in Section 92A(2) of the Act applicable to the facts of the issue before it i.e. between head office and its PE and it ruled out the applicability of certain cases while it held other cases to be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wholly dependent on the use of know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; or (h) ninety per cent or more of the raw materials and consumables required for the manufacture or processing of goods or articles carried out by one enterprise, are supplied by the other enterprise, or by persons specified by the other enterprise, and the prices and other conditions relating to the supply are influenced by such other enterprise; or (i) the goods or articles manufactured or processed by one enterprise, are sold to the other enterprise or to persons specified by the other enterprise, and the prices and other conditions relating thereto are influenced by such other enterprise; or (j) where one enterprise is controlled by an individual, the other enterprise is also controlled by such individual or his relative or jointly by such individual and relative of such individual;....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; there exist an association between the two enterprises. Clause (g) of 92A(2) of the Act is reproduced hereunder again for clarity: "92A. Meaning of associated enterprise. ................................... ................................... the manufacture or processing of goods or articles or business carried out by one enterprise is wholly dependent on the use of know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; or" In view of the above, we hold that the head office and its Indian PE are associated in terms of a clause (g) of Section 92A(2) of the Act. 26. Coupled with the above is the fact that the assessee undisputedly being the "Permanent Establishment"(PE) of TBEA, which term has been defined by section 92F(iiia)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee to have returned losses from onshore activities. He further noted that both the onshore activities had been further sub-contracted by the head office i.e. TBEA China to Indian entities and the assessee project office had no role to play in the same. He noted that the assessee had incurred losses from the carrying out of the onshore activities. Further on inquiring into the cause of losses, he found that with respect to onshore activity of transportation, the assessee project office had not been completely compensated by the head office. With respect to the civil construction activities of installation and commissioning of shunt reactors, he found that the work had been sub-contracted to Indian sub-contractors at a much higher rate than of originally agreed between head office TBEA China and PGCIL. He also found that there was no one to one correspondence between the Revenue recognized for particular work and expenses incurred for executing such work. Based on the above, he held that the assessee project office had not been adequately and fairly compensated for the onshore activities delegated to it for execution and he went on to determine the ALP of the said activity by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt company that CUP is the most appropriate method for determining ALP in the given set of facts in view of availability of CUP of APL & JPL with HO. Further, I hold that transaction of APL & JPL with HO of the appellant can be treated as CUP being functionally comparable uncontrolled transactions in terms of Rule 10B(2) & (3) of the IT Rules and more particularly in view of the fact that entire income from the transaction is offered for tax in India. Accordingly, I hold that on this count also the transfer pricing addition is unsustainable and is hereby deleted." 17. Learned CIT(A) further observed that the transfer pricing addition was incorrectly made by selecting functionally incomparable transactions by observing as follows:- "10. I have perused the above submission of the appellant company. The appellant has pointed out various shortcomings in -application of filter while selecting comparable companies and also emphasized that the comparable transactions selected by the AO for benchmarking the deemed international transactions for determining ALP are not comparable uncontrolled transactions in terms of Rule 10B & Rule 10C of the IT Rules r.w Section 92C of the IT Act. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fferences, if any, between the international transaction and the comparable uncontrolled transaction or between the enterprises entering into such transactions; (f) the nature, extent and reliability of assumptions required to be made in application of a method." 19. In view of the above provisions and examining the facts of the instant appeal, we find that there is no difference in the terms of functions performed, assets employed and risk undertaken, the price charged, incomparable uncontrolled transactions entered in the contracts between the parties APL & JPL to Shandong HO vis-a-vis the contract awarded to Shandong PO by the Shandong HO. Further, it is also not disputed at the end of the Revenue that the price at which the contracts were awarded by APL and JPL- Indian parties - to Shandong HO - Chinese entity - is a same price at which transactions price between Shandong PO, i.e. appellant in India and Shandong HO, a Chinese entity, as agreed upon. When the total value of the contract awarded to the Chinese HO has been offered as gross revenue by the Shandong PO, i.e. foreign entity incorporated in India, then how can there be any shifting of profits. This view further get....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e ALP using TNMM method, the contention of the Ld. Counsel for the assessee is that the CUP method was the most appropriate method and the agreement entered into between the head office/ TBEA and PGCIL was to be treated as comparable since the entire onshore agreement between the two non associated entities, i.e TBEA and PGCIL, had been offloaded to the assessee project office for execution purposes on the same terms and conditions as agreed between the head office & PGCIL. 33. We have considered the facts of the case, the arguments of both the sides, the findings of the authorities below and we do not find any merit in the contention of the Ld.Counsel for the assessee that the CUP was the most appropriate method for determining the ALP of the international Transaction of onshore activity carried out by the assessee PE, and that the onshore contract between HO/ TBEA & PGCIL ought to have been treated as a comparable for the said purpose. 34. The reason being that the said comparable, we find, fails the strict test of comparability for CUP to be applied as the Most Appropriate Method, on account of the fact noted by the TPO that the terms and conditions of the contract between TBE....
X X X X Extracts X X X X
X X X X Extracts X X X X
....BEA with PGCIL, for the five sites executed by the assessee was at Rs. 16.24 Crores, and the same was sub contracted to Cosco Logistics Ltd. for 10.24 crs, however as per the accounts of the assessee, revenue recognized in relation to the said activity was only 12.40 Crs against payment of 11.58 Crs to the sub-contractor. The TPO also noted lack of one to one correspondence between Revenue and Expenses incurred as recorded in the Books of the assessee. 39. The assessee, we have noted, was asked to furnish detailed project report prepared by the head office estimating the profit margin for the onshore activity separately for each year. However, no such details were furnished by the assessee. 40. The TPO has recorded the above discrepancies/ inconsistencies at para 9.15 of his order, while rejecting assesses contention of treating CUP as the MAM at para 9.17 of his order as under: "9.15 In view of the discrepancies as discussed above, the revenue recognized in the books of account of the Project Office is not at Arm's Length for the reasons as summarized below: a) Even though the transportation activity for Bhiwani R1/R2 site would have been completed in FY:11-12, the corre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....seek commensurate compensation for a piece of work executed by it. However, in the present case, all the contract agreements including sub-contract agreement were executed by the Head Office and were forced upon the Project Office. In view of this, the terms at which the work was executed by the Project Office were not at Arm's Length. 8) Even though the entire civil works was sub-contracted to M/s Techno Electric and Engineering Co, the total scope of work as per the agreement with M/s Techno Electric and Engineering Co was all together different from the scope of work originally agreed upon in the contract executed with PGCIL. No explanation whatsoever has been offered by the assessee in this regard. The scope of work originally agreed in contract with PGCIL was much wider than the scope of work specified in the sub-contract with M/s Techno Electric and Engineering Co. When and how the remaining work not covered in the agreement with M/s Techno Electric and Engineering Co was executed is not known. h) Though the Project Office was supposed to have profit at Gross level, it incurred huge losses at Gross level from installation, erection and civil work, the reason for which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n as significant portion of the said activities are sub-contracted and the role of Project Office is more in form of supervision and co-ordinating various activities. Whereas the comparable companies selected by your office performs full fledge infrastructure set-up activities including designing, engineering, manufacturing, procurement, construction, assembly, erection, installation, etc. Thus, the role of Project Office is much smaller as compared to the activities performed by the companies considered as comparable by your office. (c) We would further like to submit that the Operating Margin over Cost computed by your office is erroneous. The correct Operating Margin over Cost works out to 6.5% (instead of 7.6% as computed by your office). The computation of margin as per the data available in Prowess database is enclosed herewith as Annexure-31. (d) In case your office still considers to benchmark the transaction based on above said comparable companies, we submit that since the activities performed and risks assumed by Project Office is very limited as compared to the companies considered as comparable by your office, mark-up to be applied in such case should be much lower....
X X X X Extracts X X X X
X X X X Extracts X X X X
....affects the Indian tax base. For this purpose, it was very important to examine the detailed project report which must have been prepared by the THEA China at the time of bidding the project at a fixed price. However, no such details have been furnished by the assessee. In the absence of such critical information, the use of comparable uncontrolled price CUP method becomes unreliable. Even though the two transactions may pass the test of "uncontrolled" nature, they do not pass the test of "comparability" and consequently CUP method cannot be applied on the facts of the case. In this regard it is appropriate to mention very relevant discussion made in the judgement delivered by the Special bench in case of Aztec Software reproduced below: "134 There would be cases, where taxpayer does not cooperate and fails to furnish ALP or disclose full information, relevant for determination of ALP when called upon to do so by taz authorities. The taxpayer fails to discharge burden placed on the taxpayer. In similar enactments of other countries, it is provided that burden on the revenue authorities in such a case would be reduced. We have not come across similar provision in Chapter X of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion at all for treating that agreement as a comparable for applying CUP method for determining ALP for the transaction. The onshore agreement surely was not at arms length since no independent entity would agree to carry out work at losses/ without being adequately compensated for it. The argument of the Ld.Counsel for the assessee in this regard is, therefore, rejected. 43. The decision of the coordinate Bench in the case of Shandong (supra) is of no assistance to the assessee since in the facts of the said case there was no finding of the assessee not being adequately compensated in terms of the original sub contract. Therefore, as rightly pointed out by the Ld.DR the said decision is rendered in different facts and circumstances and has no applicability to the facts of the present case before us. 44. Ground of appeal no.4 is accordingly dismissed. 45. Ground No.5 raised by the assessee relates to the transfer pricing adjustment made in the international transaction of offshore contracts alleged to be executed by the PE/project office TBEA China in India resulting in an adjustment of Rs.20,69,41,033/- to the same. 46. The said ground reads as under: "5. Without prejudice t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... All such discussions with respect to all the projects floated by PGCIL at its various sites were noted by the TPO to have been attended by Mr. Jagdish Lal. He further noted that subsequently TBEA China had registered its subsidiary M/s. TBEA Energy India Ltd. on 07.07.2010 with Mr. Jagdish Lal and Chen Zhijin as its director, for executing its contract with PGCIL. The TPO noted that though the project office of TBEA China, the assessee before us, was registered in India w.e.f. 1/12/2010, it neither had any infrastructure nor any employee and the project related activities were noted to be carried out by the employees of M/s. TBEA Energy India Ltd. using infrastructure of TBEA Energy India Ltd. and all expenses so incurred on behalf of the TBEA China were simply charged in the books of accounts of project office of TBEA China. Noting the above facts, the TPO held that Shri Jagdish Lal initially and M/s. TBEA Energy India Ltd. subsequently had acted as PE of TBEA in India whose activities fell in the domain of pre sale and marketing support activities and the portion of income attributable to presales and marketing support activities carried out by the PE was accordingly held to acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee against the same before us was that: i. the TPO had no power to attribute profit, the exercise of attribution of profits being different from the determination of ALP of international transaction in terms of TP provisions. Reference was made to para 20 of the decision of the order of Special Bench in this regard: "20. Article 7(2) of the India China DTAA leads to the conclusion that determination of profits under the hypothesis of the PE being a distinct and separate enterprise, dealing wholly independently with the enterprise of which it is a PE, is nothing but adherence with the arm's length principles. The underlying philosophy of TP provisions and Article 7(2) is same wherein both try to analyse as to how third parties would have dealt with each other under uncontrolled conditions. Thus, contention of the learned AR that there is conflict between Article 9 of the DTAA and domestic TP provisions is rejected." We have gone through the decision of Special Bench more particularly para 19 & 20 of the order, which was referred by the Ld. Counsel for the assessee before us in support of his contention that for the offshore activities the TPO could have carried out exer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....spect to Shri Jagdish Lal not constituting PE, his contention was that he had no authorization on behalf of the TBEA China. That it was not the case of the Revenue that Shri Jagdish Lal had the authority to conclude contracts on behalf of the TBEA China. That in terms of Section Explanation 2 to section 9 (1) of the Act, Shri Jagdish Lal should not be treated as PE of TBEA. 52. With regard to VEL, the contention was that the same did not constitute PE of TBEA China in India since MOU entered into with VEL for providing repair facilities to the transformers supplied to the PGCIL and there was no presence of TBEA China in India in any way through VEL. That in any case no activities, as such, had been carried out by VEL regarding repair and maintenance, the carrying out of such activity being only contingent to the occurring of any event requiring service of repair and maintenance to the shunt reactors supplied by the TBEA China to PGCIL. 53. With regards to TBEA Energy India Ltd. constituting PE of TBEA China, the contention of the Ld. Counsel for the assessee was that TBEA had been incorporated on 07.07.2010, by the said date contracts already stood awarded to TBEA China, therefor....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., GM (CS) 2. Mr. Fred Song, Representative - India 3. Sh. M. M. Goswami, GM (Engg .- S/Stn.) 3. Mr. Jagdish Lal, Country Representative 4. Sh. Gopal Gupta, GM (QA&I) 5. Sh. Ranjan Srivastava, AGM (Fin.) 6/ Sh. Abraham Oomen, AGM (Fin.) 7. Sh. Subhankar Das, DGM (QA (1) 8. Sh. Sudhir Agarwal, DGM (Engg .- S/Stn.) 9. Sh. C. S. Gupta, Chief Manager (CS). 10. Sh. Rajesh Birla, Chief Manager (CMG). 11. Sh. Vikas Bagadia, Chief Manager (QA&I) 12.Sh. S. K. Nalini, Manager (CS) 13.Sh. V. V. Ratna Babů, Dy.Manager (Fin.) 14.5h. Pradeep Saxena, Dy. Manager (QA&) - 15. Sh. Kaushalendra Singh, Sr. Engineer (CS) From the above document, it is clear that TBEA China had appointed Jagdish Lal to be the country representative of the company in India. The assessee vide its submission dated 11/01/16 has rightly pointed out that bids for such a large projects involve large team from the side of bidders and such team put up days/month together to determine the whole bid together. The assessee was again right in pointing out that multiple post discussions relating to technical, financial....
X X X X Extracts X X X X
X X X X Extracts X X X X
....if his stay in India during FY 09-10 exceeded 183 days, such stay would constitute service PE of TBEA in India. Accordingly, such component of the sale price of 'offshore supply' which relates to pre-sales activity carried out by such permanent establishment of TBEA is taxable in India." 56. On going through the order of the TPO, we find that for arriving at his finding of Shri Jagdish Lal representing the PE of TBEA, China, in India for pre-sales onshore activities, he noted the fact that Shri Jagdish Lal was the country representative of TBEA China in India at the time of negotiation of the bids, which, activity took place in India and finally contract signed between TBEA China and PGCIL in India. He has noted from the minutes of the post-bid discussion mentioning Shri Jagdish Lal to be the country representative of TBEA China. The TPO has noted that his name appeared in all post-bid discussions. The TPO has accordingly noted that Shri Jagdish Lal was involved in the dayto-day bid relating activities of TBEA China and was privy to sensitive technical and financial detail of the project. Noting that Shri Jagdish Lal participated in post-bid discussions pertaining to all s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 07/07/10, M/s TBEA Energy India Ltd acted as the Permanent Establishment of M/s TBEA China. Though, a separate Project Office of M/s TBEA China was registered in India w.e.f 01/12/10, it neither had any infrastructure nor any employee. All project related activities were carried out by the employees of TBEA Energy India Ltd using infrastructure of TBEA Energy India Ltd. The related expenses were simply charged in the books of account of Project Office of TBEA Shenyang, China. The price at which the plant and equipment was sold to the PGCIL by TBEA also contained component pertaining to defect liability, functional guarantees and equipment performance guarantee. Such components are discussed in the subsequent paragraphs." 60. The TPO has noted TBEA Energy India Ltd. to constitute the PE of the TBEA China noting the fact that all project related activities were carried out by employees of TBEA Energy India Ltd. using its infrastructure and expenses so incurred were charged in the books of accounts of project office of TBEA China. Further, in para 10.2 of the order, the TPO has noted that TBEA Energy India Ltd. was incorporated by the TBEA China and agreement entered into with it t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that TBEA Energy India Ltd. had entered into an agreement with TBEA China to execute its contract with PGCIL and agreed to act as an agent of the foreign company in this regard. The TBEA Energy India Ltd. was also noted as a matter of fact to have incurred expenses for the project executed by TBEA China with PGCIL and had charged those expenses to the head office of TBEA China. Thus, the fact remains that TBEA Energy India Ltd. constituted business connection/PE of TBEA China in India. The contention of the Ld. Counsel for the assessee is accordingly rejected. 62. With respect to VEL not constituting PE of PBEA China, the findings of the TPO in this regard are contained at para 10.4 of his order as under: "10.4 The Offshore supply contract agreement between TBEA China and PGCIL categorically specified that the equipments/materials supplied under the said contract should give satisfactory performance in accordance with the provisions of offshore supply contract when installed and commissioned under the onshore service agreement. Thus, the responsibility was cast upon the Project Office in India for ensuring satisfactory performance of such equipments when installed. In addition, ....