9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 2023 - AT - Income TaxIncome deemed to accrue or arise in India - Income taxable in India - Receipts of amount of offshore procurement - business connection must be established - whether the amount received by the assessee on account of was taxable in India as per the provisions of section 44BBB of the Act ? - HELD THAT - The sums included under the head offshore procurements included the sums payable towards supply of equipment and machinery procured from outside India. There is no doubt that there was a clear demarcation in the work and cost between the members of the JV i.e. the assessee and PLL. We are of the opinion that the facts of the case under appeal and of Ishikawajima 2007 (1) TMI 91 - SUPREME COURT are almost similar as observed by the FAA. Therefore, confirming his order, we hold that the income earned by the assessee on account of offshore procurement, is not taxable u/s.44BBB of the Act. Appeal filed by the AO stands dismissed.
Issues Involved:
1. Deletion of the addition of Rs. 2.77 crores by the CIT(A). 2. Taxability of income from offshore procurement under section 44BBB of the Income Tax Act. Issue-wise Detailed Analysis: 1. Deletion of the Addition of Rs. 2.77 Crores by the CIT(A): The Assessing Officer (AO) challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 30/03/2015, which deleted the addition of Rs. 2.77 crores. The AO had determined the total income of the assessee-company, incorporated in the UK, at Rs. 43.07 crores, including the amount for offshore procurements, which the assessee claimed was not taxable in India. The AO argued that the contract with Ratnagiri Gas and Power Private Ltd. (RPPGL) was a composite contract and the total consideration could not be broken into separate parts. The AO held that the entire contractual revenue, including offshore procurements, should be taxed under section 44BBB of the Act. However, the CIT(A) deleted this addition, relying on Supreme Court judgments in similar cases, stating that the consideration for offshore procurement was not chargeable to tax in India. 2. Taxability of Income from Offshore Procurement under Section 44BBB: The key issue was whether the amount received by the assessee for offshore procurement was taxable in India under section 44BBB. The contract with RPPGL specified different components, including design, engineering services, and procurement of equipment/material. The assessee offered income from onshore/offshore services for taxation but excluded offshore procurements, arguing these were handled entirely outside India. The AO contended that the entire contract value, including offshore procurements, should be taxed in India as it was part of the same EPC contract. The Tribunal referred to the Supreme Court judgment in the case of Ishikawajima Harima Heavy Industries Ltd., where it was held that income from offshore supply and services, handled outside India, was not taxable in India. The Tribunal noted that the AO did not provide evidence linking the offshore procurement to the Permanent Establishment (PE) in India. The Tribunal concluded that the income from offshore procurement was not attributable to the operations carried out in India and thus not taxable under section 44BBB. Conclusion: The Tribunal upheld the CIT(A)'s order, confirming that the income earned by the assessee from offshore procurement, amounting to Rs. 2.77 crores, is not taxable under section 44BBB of the Income Tax Act. The appeal filed by the AO was dismissed.
|
