9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 1808 - AT - Income TaxInstallation PE in India - Gulf of Kuchch (GOK) Project - Held that - Consideration received in respect of offshore supply of equipments and services and profits attribution @ 10% on the same should not be added in the hands of the assessee construing it as Installation PE in India. ONGC AMC Project - Held that - We find that these grounds had been adjudicated by this tribunal in assessee s own case for the Asst Year 2011-12 2018 (4) TMI 504 - ITAT KOLKATA wherein it was held that the maintenance actvities carried out by the assessee does not constitute any PE in India and accordingly in the absence of any PE no attribution of profits could be done in India. With regard to the aspect of AMC services being considered as FTS we hold that these services do not make available any technical know how or knowledge to the personnel of the customer as per Article 12(5) of the India- Netherlands DTAA AIRPORTS AUTHORITY OF INDIA (Mumbai Chennai and Kolkata Project) - Held that - Respectfully following the aforesaid decision of this tribunal in assessee s own case for the Asst Year 2011-12 we uphold the action of the ld AO in treating the assessee as an Installation PE in respect of AAI Project but however restrict the profit attribution thereon to 10% of gross receipts. ONGC- ADDITIONAL (SAGAR LAXMI) PROJECT - Held that - We are inclined to accept the arguments of the ld DR that the number of days taken by the assessee for executing the installation work is not on records and even before this tribunal no details whatsoever in that regard were filed by the assessee. Hence we dismiss the plea of the ld AR that the assessee cannot be treated as an Installation PE. We hold that the assessee is to be treated as an Installation PE in as much as there is no evidence produced by the assessee to prove the time duration taken for the project carried out by the assessee for executing the installation work. However in line with various judicial decisions on the issue we hold that only the onshore provision of services and onshore supply of equipments should be considered at 10% on gross basis as profits attributable to such Installation PE in India Charging of interest u/s 234B - Held that - We find that the income of the foreign enterprise is to be governed by the provisions of section 195 of the Act wherein any payment made to foreign enterprise would be subjected to full deduction of tax at source. The ld DRP by placing reliance on the decision of Hon ble Delhi High Court in the case of GE Packaged Power 2015 (1) TMI 1168 - DELHI HIGH COURT and by observing that the proviso to section 209(1) of the Act is applicable only from Asst Year 2013-14 onwards had directed the ld AO not to charge interest u/s 234B of the Act. Similarly the ld DRP had also directed the ld AO not to charge surcharge and cess in view of specific provisions contained in India-Netherlands DTAA. We find that the directions of Hon ble DRP are binding on the ld AO as per provisions of section 144C(10) Grant of short credit of TDS - Held that - We find that the assessee had claimed credit of taxes deducted at source of 1, 52, 12, 219/- in its income tax return for the Asst Year 2012-13. The ld AO in the final assessment order granted credit for the same only to the tune of 1, 51, 39, 418/- thereby leading to short credit of TDS by 72, 801/-. The assessee stated that it had produced the TDS certificate for the same before the ld AO which has been ignored. Hence we direct the ld AO to verify the veracity of the said TDS certificate and grant credit for TDS as per law
Issues Involved:
1. Existence of Installation PE in India. 2. Attribution of profits to the alleged PE. 3. Taxability of offshore activities. 4. Taxability of AMC services as business profits or FTS. 5. Computation of profits for AAI project. 6. Computation of profits for ONGC Sagar Laxmi project. 7. Levy of interest u/s 234B. 8. Levy of surcharge and cess. 9. Grant of short credit of TDS. Issue-wise Detailed Analysis: 1. Existence of Installation PE in India: The tribunal adjudicated that the assessee constituted an Installation PE in India based on Article 5(3) of the India-Netherlands DTAA, which defines a PE as a building site or construction, installation, or assembly project lasting more than six months. The AO concluded that the contract for the establishment of Vessel Traffic Services (VTS) involved installation activities, thus constituting an Installation PE. 2. Attribution of Profits to the Alleged PE: The tribunal held that only the onshore supply of equipment and onshore services rendered by the assessee would be considered for taxing the onshore receipts at 10%. Offshore supply of equipment and services were not attributable to the PE as these activities were carried out outside India. 3. Taxability of Offshore Activities: The tribunal cited the Supreme Court's decision in Ishikawajima Harima Heavy Industries Limited vs DIT, holding that offshore supply and services performed outside India could not be taxed in India. The tribunal followed this precedent, ruling that offshore activities should not be attributed to the Installation PE in India. 4. Taxability of AMC Services as Business Profits or FTS: The tribunal ruled that maintenance activities carried out by the assessee post-installation did not constitute an Installation PE in India. The presence of a subcontractor did not create a virtual presence of the assessee in India. Therefore, AMC services were not taxable as business income or FTS. 5. Computation of Profits for AAI Project: For the AAI project, the tribunal upheld the AO's decision to treat the assessee as an Installation PE but restricted the profit attribution to 10% of gross receipts. The tribunal dismissed the assessee's plea that the time duration for each site should be computed separately. 6. Computation of Profits for ONGC Sagar Laxmi Project: The tribunal held that the assessee constituted an Installation PE for the ONGC Sagar Laxmi project due to the lack of evidence regarding the project's duration. However, only the onshore provision of services and supply of equipment should be considered at 10% on a gross basis as profits attributable to the Installation PE. 7. Levy of Interest u/s 234B: The tribunal directed the AO to follow the DRP's directions, which stated that interest u/s 234B is not leviable on a foreign entity where receipts are covered under section 195 and subjected to withholding tax. The tribunal noted that the AO ignored these directions in the final assessment. 8. Levy of Surcharge and Cess: The tribunal directed the AO to follow the DRP's directions, which stated that surcharge and education cess are not leviable under the India-Netherlands DTAA. The AO had ignored these directions in the final assessment. 9. Grant of Short Credit of TDS: The tribunal directed the AO to verify the TDS certificate and grant credit for TDS as per law. The assessee claimed a short credit of ?72,801, which the AO had not accounted for in the final assessment. Conclusion: The tribunal's judgment addressed multiple issues related to the existence of PE, attribution of profits, taxability of offshore activities, and procedural matters such as the levy of interest and surcharge. The tribunal upheld certain actions of the AO while directing compliance with the DRP's directions on other matters. The appeals were partly allowed for statistical purposes.
|
