2013 (1) TMI 936 - HC - Income Tax

Summary

Issues involved:
1. Taxability of profit from offshore supply contract under u/s 9 of Income Tax Act, 1961
2. Computation of profit for project executed in India

Taxability of profit from offshore supply contract:
The Tribunal held that income from offshore supply contract cannot be taxed in India as it did not accrue or arise in India. The Tribunal's decision was based on previous cases like Siemens Aktiengesellschaft and M/s.Xelo Pty. Limited, which were upheld by the High Court. The Revenue argued that in this case, no documents were submitted to determine the location of supply. However, the Tribunal found that the supply was made outside India based on contract clauses. Without any contrary evidence from the Revenue, the Tribunal's finding was accepted. Therefore, the question of taxability of offshore profit cannot be entertained.

Computation of profit for project executed in India:
Both the Commissioner of Income Tax (A) and the Tribunal found that the assessee maintained regular books of account, which were submitted for verification. The assessing officer verified the accounts, and there was no justification for rejecting them without explanation. As the finding was not shown to be perverse by the Revenue, the application of Rule 10 of the Income Tax Rules to estimate income was deemed unnecessary. Since this is a factual finding and not challenged by the Revenue, the question regarding the computation of profit for the project in India cannot be entertained.

Judgment:
The appeal by the Revenue for the assessment year 1997-1998 was dismissed with no order as to costs.