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2024 (11) TMI 569 - AT - Income Tax


Issues Involved:

1. Validity of the Assessment Order
2. Taxability of Offshore Supply Receipts from THDC India Ltd.
3. Existence of Permanent Establishment (PE) in India
4. Attribution of Profits to PE
5. Taxability of Offshore Supply Receipts from GE Power India Ltd.
6. Levy of Interest under Section 234B of the Income Tax Act

Detailed Analysis:

1. Validity of the Assessment Order:

The assessee challenged the assessment order dated 28.04.2023, claiming it was void-ab-initio due to being barred by limitation and the absence of a Document Identification Number (DIN). However, the assessee did not press these grounds during the appeal, and they were dismissed as not pressed.

2. Taxability of Offshore Supply Receipts from THDC India Ltd.:

The primary contention was the taxability of Rs. 86,76,13,943 received from offshore supplies to THDC India Ltd. The assessee argued that the contract was not artificially split to avoid tax and that the income from offshore supplies should not be taxable in India. The Tribunal referred to its previous decision for Assessment Years 2018-19 and 2019-20, where it was held that the assessee had no business connection or PE in India, and the offshore supply receipts were not taxable. The Tribunal directed the deletion of the addition made by the Assessing Officer.

3. Existence of Permanent Establishment (PE) in India:

The Assessing Officer held that the assessee had various forms of PE in India, including Fixed Place PE, Dependent Agent PE, and Construction PE, through its association with GE Power India Ltd. However, the Tribunal found no evidence to support the existence of a PE. It referred to the decision in the case of Linde AG, where it was held that separate contracts do not necessarily imply a single composite contract for tax purposes. The Tribunal concluded that the assessee did not have a PE in India.

4. Attribution of Profits to PE:

The Assessing Officer attributed profits to the alleged PE under Section 44BBB of the Income Tax Act, applying a 10% profit rate on offshore supply receipts. The Tribunal, however, found that since the assessee did not have a PE in India, the provisions of Section 44BBB were not applicable. The Tribunal emphasized that offshore supplies were completed outside India, and no part of the profit could be attributed to India.

5. Taxability of Offshore Supply Receipts from GE Power India Ltd.:

The Assessing Officer taxed Rs. 3,07,83,774 received from GE Power India Ltd. using the same reasoning as for THDC receipts. The Tribunal, following its decision for earlier years, held that there was no business connection or PE in India concerning these receipts. Consequently, the amount was not taxable in India, and the addition was deleted.

6. Levy of Interest under Section 234B of the Income Tax Act:

The Tribunal noted that the levy of interest under Section 234B was consequential. It directed the Assessing Officer to compute interest as per law, considering the Tribunal's order for the earlier assessment years.

Conclusion:

The Tribunal allowed the appeal in part, primarily in favor of the assessee, by deleting the additions related to offshore supply receipts and directing the computation of interest under Section 234B as per the law. The Tribunal's decision was consistent with its earlier rulings for the assessee for Assessment Years 2018-19 and 2019-20.

 

 

 

 

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