9911796707
TMI Blog2006 (12) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence exercising its discretion in terms of the said Rule. It is a settled position that production of additional evidence at the appellate stage is not a matter of right to litigating public and allowing of production of additional evidence is in the discretion of the Tribunal. The said discretion however, is to be exercised judicially and not arbitarily. As held in the case of CIT v. Kum Satya Setia [ 1982 (4) TMI 22 - MADHYA PRADESH HIGH COURT] , it is within the discretion of the appellate authority to allow production of additional evidence if the said authority requires any document to enable it to pass orders or for any other substantial cause. The case of the revenue is that the common office of UOPIPL and UOP Asia Limited (LO) in Delhi was virtually the projection of the assessee-company in India and the additional evidence sought to be filed by the revenue in the form of relevant pages of assessee's official website as well as press release issued by the assessee-company itself, in our opinion, are apparently relevant to consider and decide the case being made out by the revenue. It was also a case of the revenue that the employees of UOPIPL and UOP Asia L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, of the view that if the peculiar facts of the present case as discussed are considered in the light of legal position emanating from the various judicial pronouncements on the issue of admission of additional evidence, it is a fit case wherein the additional evidence sought to be produced by the revenue be allowed to be admitted having regard to its relevancy and requirement for the purpose of deciding the point in issue raised in the present appeal before us as well as for the substantial cause of justice. In that view of the matter, we allow the application filed by the revenue seeking admission of additional evidence and admit the said evidence on record. Keeping in view the fact that the additional evidence so produced by the revenue as well as elaborate explanation offered by the assessee to rebut the same is voluminous running into several pages which requires indepth examination, we find that it would be fair and proper and in the interest of justice to restore the issue relating to PE to the file of the Assessing Officer for deciding the same afresh after examining the additional evidence as well as explanation offered by the assessee while rebutting the same. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso supplied equipment directly to the Indian customers and the profit arising from such sale being the commercial/business profit was claimed to be not taxable in India as per Article 7 of the DTAA between India and USA. During the course of assessment proceedings, it was noticed by the Assessing Officer that there was another entity of UOP group operating in India, viz., UOP India Private Limited, which was stated to be principally formed with the object of rendering technical and engineering services to the Indian customers on its own. It was also stated that the said entity is also engaged in the business of procuring and selling the UOP proprietary equipment to the Indian customers on its own account. It was further found by the Assessing Officer that there has been one more entity of the UOP group in India, viz., UOP Asia Limited which was claimed to be operating only its liaison office duly approved by the RBI for the entire UOP group in India. It was also noticed by the Assessing Officer that the agreement entered into by the assessee-company with Indian Oil Corporation on 16-5-2000 has been signed by Mr. Nigel J.D. Orchard, Director, UOP Ltd. on behalf of the assessee. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly to the Indian customers at Rs. 37,40,243/- with a tax payable at the rate of 48 per cent thereon. Accordingly, the total tax payable by the assessee-company in India was worked out by the Assessing Officer at Rs. 21,17,56,377/- in the assessment completed under section 143(3) as against Rs. 1,57,47,076/- shown by the assessee in its return of income. 3. Aggrieved by the aforesaid order of the Assessing Officer passed under section 143(3), the assessee-company preferred an appeal before the learned CIT(A) and it was submitted on its behalf before him at the outset that UOPIPL was a separate legal entity and the statement recorded by the Assessing Officer of Mr, Aspray, MD of the said company, being a third party evidence, was not of much evidentiary value to draw any adverse inference against the assessee. It was submitted that the said deponent was neither authorized by the assessee-company to make any statement on its behalf nor was he competent to comment on the affairs of the assessee-company. It was also submitted that it was incumbent upon the Assessing Officer to provide an opportunity to the assessee to cross-examine Mr. Aspray before relying on his statement and hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out any activity which could be construed of creating a dependent agency PE of the assessee in India, the Assessing Officer was not justified in holding that the assessee-company had a dependent agency PE in India and in working out its tax liability in India by applying the provisions of section 115A read with section 44D. All the relevant details of the visits of assessee's employees to India and their participation in the negotiation meetings with the Indian customers were also furnished on behalf of the assessee-company before the learned CIT(A) in an attempt to show that the persons who participated in the negotiations and approved/signed the contracts were its own employees and not the employees of UOPIPL. It was also brought to the notice of the learned CIT(A) by the assessee that Mr. Aspray whose statement was relied upon by the Assessing Officer had joined UOPIPL only on 4-10-2002 i.e., much after the period in which the relevant agreements/contracts were entered into by the assessee-company with the Indian customers. 4. The aforesaid submissions made on behalf of the assessee-company were forwarded by the learned CIT(A) to the Assessing Officer seeking his commen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer were confronted by the learned CIT(A) to the assessee and in the counter comments, it was reiterated on behalf of the assessee-company that Mr. Aspray's statement was with regard to supply of the equipment and not with regard to providing of technology by the assessee. It was also reiterated that no opportunity was given by the Assessing Officer to the assessee-company to rebut the statement of Mr. Aspray. It was submitted that UOPIPL and UOP Asia Ltd. had only a limited role in the negotiations between the assessee-company and its Indian customers and at no times, the employees of UOPIPL did have the authority to conclude contracts and/or to accept orders on behalf of the assessee-company or otherwise to bind the assessee-company to commercial contractual terms. On the other hand, the said company was having substantial business on its own which was conducted independently whereas UOP Asia Ltd. was operating as liaison office for all the UOP group companies and not solely for the assessee-company. As regards the new stand taken by the Assessing Officer in respect of the installation PE, it was submitted that the assessee-company was never involved in the installation pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ationship had undergone any change after the joining of Mr. Aspray as the MD of UOPIPL. He held that Mr. Aspray, thus, was fully conversant with the nature of business activities of the assessee-company in India and also with the' type of business relationship between the assessee and UOPIPL. He noted from the statement of Mr. Aspray recorded by the Assessing Officer on oath that the depositions made therein were sufficient to show that the contracts in India were being negotiated by UOPIPL on behalf of the assessee-company and only the signing of the said contracts was done by the assessee-company outside India. As regards the details furnished by the assessee-company about the visits of its staff to India and participation in the negotiation meetings, he held that no independent evidence was filed on behalf of the assessee either before the Assessing Officer or before him to prove that the negotiations with the Indian customers were finalized by its own employees and the employees of UOPIPL had no role to play in the negotiations. He observed that even the copies of minutes of such negotiation meetings had not been placed on record either before the Assessing Officer or befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been possible without the frequent presence of the engineers of the assessee-company at the sites of the customers in India and the substantial receipts could not have been earned by the assessee-company by simply supplying process technologies developed outside India without active participation of its personnel in the designing of plants in India and without their frequent visits to the sites of these plants. He observed that even the major supply of equipment by the assessee-company directly to the Indian customers as well as through UOPIPL for some of the projects in India was clearly demonstrative of the active participation of the assessee in installation work at the plants of the customers. In this regard, he referred to the engineering agreement entered into by the assessee-company with Indian Oil Corporation Ltd. on 16-5-2000 to point out that the active participation of the employees of the assessee-company in the design and installation of machinery as well as commissioning of project was contemplated. He also noted from the various agreements entered into by the assessee-company with the various parties in India that the employees of the assessee-company were regularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be said to have a Permanent Establishment (PE) in India during the year under consideration. The other issues relating to attribution of profits to the PE and the ascertainment of the liability of the assessee-company on account of tax payable in India as well as interest payable under section 234B thereon are mainly consequential to the main issue. 9. In connection with the main issue relating to PE, the Department has sought to file additional evidence before the Tribunal. In this regard, it has moved an application dated 9-5-2006 under rule 29 of Income-tax Appellate Tribunal Rules, 1963 for admission of additional evidence comprising of pages 1A to 3 of Annexure-A, pages 12 to 24 of Annexure-B, pages 28 to 80 of Annexure-C and pages 81 to 84 of Annexure-D. While supporting the said application, the learned CIT-DR submitted that the nature of additional evidence sought to be produced by the Department does not give rise to any new principle and by filing the same, the Department is not seeking to make any fresh line of enquiry. He submitted that the said additional evidence merely supports the case of the revenue further and thus, would be of help to enable the Tribunal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration i.e., assessment year 2001-02 and the same are also not complete or self-contained documents which could be relied upon to draw any inference. He contended that the said documents, therefore, cannot be said to be relevant evidence which may be required by the Tribunal for adjudicating upon the issues involved in the present appeal filed by the assessee and since the Tribunal has neither required any such documents nor it could have required the same, the mandate of Rule 29 clearly prohibits the Department to produce the same. 13. Referring to rule 27 of Order 41 of CPC, the learned counsel for the assessee submitted that as per the said Rule, which is absolutely pari materia to Rule 29 of the Appellate Tribunal Rules, 1963, the production of additional evidence is permitted only under the following three circumstances:- (a) Where the trial court had refused to admit the evidence though it ought to have been admitted; (b) Where the evidence was not available to the party despite exercise of due diligence; and (c) Where the appellate court required the additional evidence so as to enable it to pronounce better judgment or for any other substantial cause of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department was admitted by the Tribunal and even such a request made by the assessee also was not acceded to in some cases. He submitted that even the assessee has not been able to find any case decided wherein an application has been made by the revenue under rule 29 of the Appellate Tribunal Rules and the Tribunal, on an interpretation of Rule 29, has held that the revenue is entitled to produce additional evidence before it. He contended that this position clearly supports the stand of the assessee that under rule 29 of the Appellate Tribunal Rules, there is a complete bar for the revenue to adduce any additional evidence and its application made for admission of the additional evidence, therefore, is liable to be rejected. 17. In support of his aforesaid contentions raised while strongly opposing the application moved by the Department for admission of additional evidence, the learned counsel for the assessee has also cited the following case laws:- (i) Syed Abdul Khader v. Rami Reddy AIR 1979 SC 553. (ii) Municipal Corporation of Greater Bombay v. Lala Panchan AIR 1965 SC 1008. (iii) Gurudev Singh v. Mehnga Ram [1997] 6 SCC 507. (iv) Arjan Singh v. Kartar Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. The learned CIT-DR submitted that there are various cases decided by the different High Courts wherein the additional evidence sought to be filed by the revenue was allowed to be admitted before the Tribunal and the same, therefore, clearly shows that there is no merit in the contention raised by the learned counsel for the assessee that there is a complete bar for the Department to even seek the admission of additional evidence. In this regard, he cited the decision of Hon'ble Gujarat High Court in the case of Smt. Urmila Ratilal v. CIT [1982] 136 ITR 797 wherein it was held after examine the issue of admission of additional evidence under rule 29 of the Appellate Tribunal Rules, 1963 that the ITAT was within its jurisdiction in allowing revenue to produce additional evidence, subject however to the condition, that an opportunity should be given to the assessee to explain or rebut the said evidence. He also cited the decision of Hon'ble Punjab Haryana High Court in the case of CIT v. Saligram Prem Nath [1989] 179 ITR 239, wherein it was held that the Tribunal is vested with requisite authority and jurisdiction to admit additional evidence and material in order to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal requires any additional evidence for the purpose of disposing of an appeal before it, it can direct the Department to furnish the same available in its possession and it is not permissible to the revenue to move any application suo motu under Rule 29 seeking admission of additional evidence. In support of this contention, he has cited six cases decided by the various High Courts and five cases decided by the Tribunal as enumerated at page Nos. 28 and 29 of his Paper Book-IV wherein the issue relating to admission of additional evidence was considered and decided. As rightly pointed out by him, out of these eleven cases, there were only two cases wherein the revenue had moved an application under Rule 29 for admission of additional evidence and in both these cases reported as CIT v. Rao Raja Hanut Singh [2001] 252 ITR 528 (Raj.) and CIT v. Smt. Kamal C. Mahboobbani [1995] 214 ITR 152 (Bom.), the Department was not allowed to produce the additional evidence and its applications for admission thereof were rejected. However, a perusal of decisions rendered by the Hon'ble High Courts in both these cases shows that it was nowhere laid down that there is a complete bar for the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance that the assessing authority has decided the case without giving sufficient opportunity to adduce evidence on any specified or unspecified points and, therefore, this limb of the conditions obviously was not invoked at all. These observations of the Hon'ble Rajasthan High Court clearly indicate that insofar as the second limb of the conditions specified in Rule 29 relating to deciding the case without giving sufficient opportunity to adduce evidence is concerned, the assessee and assessee alone can be permitted to adduce additional evidence simply because the situation as contemplated in this condition can cause prejudice only to the assessee. Insofar as the first condition in the Rule 29, viz., if the Tribunal requires the additional evidence to enable it to pass orders or for any other substantial cause is concerned, Hon'ble Rajasthan High Court, however, noticed on page 535 of the report that this expression is often used in the Statute in clothing the appellate courts or Tribunals with powers to allow parties to lead additional evidence provided the same enables it to pass orders or for any substantial cause. It is pertinent to note here the expression used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence before the Tribunal under Rule 29 of the Appellate Tribunal Rules, 1963 as sought to be canvassed by him while opposing the application moved by the revenue for admission of additional evidence in the present case. 25. Before us, the learned counsel for the assessee has submitted that he has not been able to find any case wherein an application moved by the revenue under Rule 29 has been accepted by the Tribunal allowing it to produce the additional evidence on interpretation of Rule 29. He has also submitted that none of the authorities cited by the learned CIT-DR supports the contention of the Department that it is entitled to lead additional evidence before the Tribunal. On perusal of the decisions cited by the learned CIT-DR, we, however, find it difficult to accept these submissions of the learned counsel for the assessee. For instance, in the case of Anaikar Trades Estates (P.) Ltd. cited by learned CIT-DR, the assessee had sold several plots of land to various parties and the value of properties shown in the documents of sale was Rs. 2,58,338/-. The Valuation Officer of the Department estimated the market value of the property sold at Rs. 4,17,000/- and adopting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in particular JT . The ITO held certain cash credits appearing in the name of the JT as unexplained and treated the same as the income of the assessee. When the matter went in second appeal, the learned counsel for the revenue sought the permission of the Tribunal to place on record the balance sheets and profit and loss accounts of JT for the relevant periods as additional evidence which was vehemently opposed by the counsel for the assessee. The Tribunal was of the opinion that the additional evidence sought to be adduced by the revenue was relevant to the points at issue and would be of assistance to it in deciding the appeal. The objection of the counsel for the assessee, therefore, was overruled by the Tribunal and the additional evidence produced by the revenue was admitted. At the same time, the Tribunal thought that it was only fair that the assessee should be given an opportunity to explain the additional evidence and the AAC, therefore, was directed by the Tribunal for giving the assessee to offer his explanation on the additional evidence and also to lead any further evidence which he may wish to produce to rebut the said additional evidence. This action of the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned CIT-DR wherein it was held that a Tribunal is vested with the requisite authority and jurisdiction to admit additional evidence and material in order to do substantial justice between the parties. Accordingly, the Tribunal was directed by Hon'ble Punjab Haryana High Court to decide the matter afresh by taking into account the material placed on record by the revenue after, affording an opportunity to the assessee to rebut it if necessary by adducing additional evidence. It was also clarified by their Lordships that it would be open to the Tribunal either to deal with the matter itself or to remand the case for this purpose to the ITO. 28. The decision of Hon'ble Kerala High Court in the case of Midas Rubber (P.) Ltd. v. CIT [1998] 232 ITR 824 also supports the case of the revenue that it can move an application for admission of additional evidence before the Tribunal. In the said case, additional evidence comprising of work sheets showing calculation of surtax was filed by the Department arid admitting the same, the issue relating to change of previous year under the , Income-tax Act was decided by the Tribunal against the assessee relying thereon. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that additional evidence is material in the interest of justice for deciding a particular issue, its discretion cannot be interfered with unless it has been exercised on non-existing or imaginary grounds. In the case of Mahavir Singh cited by the learned counsel for the assessee, it was held that section 107 of CPC enables an appellate court to take additional evidence or to require such other evidence to be taken subject to such conditions and limitations as are prescribed under Order 41 of Rule 27 of CPC. It was also held that the parties are not entitled, as of right, to the admission of such evidence and the matter is entirely in the discretion of the court which is of course to be exercised judicially and sparingly. It was observed that Order 41, Rule 27 of CPC envisages certain circumstances when additional evidence can be adduced and one of such circumstances is where the appellate court requires any document to be produced or any witness to be examined to enable it to pronounce judgment or for any other substantial cause. It was also clarified that the expression to enable it to pronounce judgment contemplates a situation when the appellate court finds itself unab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the claim in appeal is discretionary and no fetters can be imposed on the exercise of such power. However, as held by Hon'ble Allahabad High Court in the case of Ram Prasad Sharma v. CIT [1979] 119 ITR 867 and by the Hon'ble Andhra Pradesh High Court in the case of A.K. Babu Khan v. CWT [1976] 102 ITR 756, it is not an arbitrary power but it is a judicial one circumscribed by the limitations given in Rule 29 of the Appellate Tribunal Rules, 1963. The conditions precedent for the exercise of power under Rule 29 must, therefore, be found to have been established. However, where there is no lack of evidence but yet the plea in support of admitting the evidence is so decisive and of clinching value with reference to the points at issue, it is open to the Tribunal to invoke its power of allowing additional evidence to render substantial justice and not to deprive the party of such justice on technical grounds. Further, as held by Hon'ble Bombay High Court in the case of Velji Deoraj Co. v. CIT [1968] 68 ITR 708, when the evidence was available to the party at the initial stage and had not been produced by him, the mere fact that evidence sought to be produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be well within its powers to admit the evidence, consider the same on merits or remit the matter to the lower authorities for examining the same. In the case of Smt. Urmila Ratilal, Hon'ble Gujarat High Court has held that when the additional evidence filed by the revenue was admitted by the Tribunal overruling the objection raised by the assessee, interest of justice demanded that the assessee was given an opportunity to explain or rebut the additional evidence before relying on the same. In the case of Charbhai Biri Works v. Asstt. CIT [2003] 87 ITD 189 cited by the learned counsel for the assessee, it was held by Pune Bench of ITAT in its Third Member decision that when the documents which were not available before the Assessing Officer were produced before the Tribunal for the first time and the same were admitted as additional evidence being material and relevant for adjudicating the matter, the issue was required to be restored to the file of the Assessing Officer to verify correctness and authenticity of such documents and to adjudicate the matter afresh after providing adequate opportunity to the assessee of being heard. 34. Keeping in view the legal position as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ology of the assessee-company in the contract area including India with particular reference to engineering and technical services being offered by the assessee-company. It was thus economically and legally independent of the assessee-company and majority of its income in the year under consideration came from independent third parties. Moreover, the said company acted in its ordinary course of business and was also remunerated by the assessee-company for its services at arm's length. UOPIPL thus was an agent of an independent status in terms of paragraph 5 of Article 5 of the DTAA. [TVM India Ltd. v. CIT [1999] 237 ITR 230 (AAR - New Delhi) and Ul-Nisr Publishing v. CIT [1999] 105 Taxman 308 (AAR - New Delhi) relied upon]. (ii) UOPIPL, is primarily for supply of equipment where it acts as a trader or supplier of equipment. However, when it comes to supply of process technology by the assessee-company to the Indian customers, it merely acts as a communication interface/channel between the assessee-company and potential customers as and when required. (iii) The activities of UOPIPL were not devoted wholly or almost wholly to the assessee-company and the transactions were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fice in India was not permitted to carry on any revenue generating activity. It, therefore, cannot be said that UOP Asia Limited (LO) was dependent agency PE of the assessee in India under Article 5(4) of Indo-US DTAA. Contentions raised on behalf of the Department:- (i) UOPIPL and UOP Asia Limited are not only 100 per cent subsidiary of the assessee-company but even their business activities carried out in India were devoted entirely for the business of the assessee-company. Even the employees of these concerns are getting transferred amongst the UOP Group companies and, therefore if the corporate veil is lifted, it would be clearly evident that all these concerns including the assessee-company are one and the same. The engineering and technical employees of UOPIPL and UOP Asia Limited (LO) were also sent to the assessee's office at USA for training on regular basis. As per clause 1.1 of the Equipment Trading Agreement dated 29-12-1999 between UOPIPL and the assessee-company, the employees of UOPIPL were engaged in performing contracts of consultancy services, engineering agreements and miscellaneous service agreements entered into between the assessee-company and its India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian customers were sent to USA for the countersignature of the assessee. It also shows that the Managing Director of UOPIPL had an authority to negotiate and conclude contracts in India on behalf of the assessee-company. It can also be seen from these documents that the employees of UOP Asia Limited (LO) Mr. Prabhakar Nair and Mr. Mark Purowicz were actually involved in contract negotiations with various customers in India under the guidance and control of Mr. K.J. Aspray, current CEO of UOPIPL. (v) Additional evidence impounded during the survey shows that the consolidated contract with Indian customers was initially negotiated and finalized by UOPIPL and UOP Asia Limited (LO) and the same was subsequently split into various contracts amongst the assessee and UOPIPL in such a manner that presence of PE in India could be avoided. Further, it also shows that various changes were made by Mr. K.J. Aspray, MD of UOPIPL in the draft MoU sent by the assessee and after making such changes, the MoU was sent to the assessee for signature. It clearly shows the involvement of Mr. K.J. Aspray in negotiation and conclusion of contract on behalf of the assessee. Other documents forming part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liaison work and they did not have any role to play in negotiation of contract and rendering technical services was apparently wrong and unbelievable on the face of it. Mr. Paul McCormick and Mr. S. Varadarajan, employees of UOP Asia Limited (LO) and UOPIPL respectively had not only accompanied the officials of the assessee-company during the course of commercial negotiations but they had actually participated in such commercial negotiations on behalf of the assessee-company as per the details available on pages 364, 394 and 395 of assessee's Paper Book-2. Both these concerns as well as their employees, therefore, were dependable agent of the assessee-company in India in terms of Article 5(4) of the DTAA. Point - Whether the assessee-company was having an installation PE in India? Contentions raised on behalf of the assessee-company:- (i) The assessee-company was not engaged in any construction, installation or assembly project or in supervision activities in connection with any such project. As evident from the relevant agreements, the activities of the assessee-company were confined to provision of technical know-how, drawings and basic designs and the provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, catalyst and absorbent services, reliability, availability, inspection and maintenance support and human resource services. It also gets involved in providing training to the personnel, equipment inspection and project management. The details of the scope of services to be rendered by the assessee as stipulated in the relevant engineering agreements with Indian customers clearly show that technology transfer did involve substantial manpower deployment at the customer's site in India (clauses 1.4, 7.1, 7.2 and 7.3 of engineering agreement dated 16-5-2000 with IOC and clause 1.4 of consultancy service agreement with Tamil Nadu Petro Products Ltd.). (ii) The aforesaid position clearly apparent from the said agreements gets fortified from the two Press Notes released by the assessee on 4-6-2002 and 4-3-2003 and it can be easily inferred by applying the test of human probabilities that the assessee had a physical presence in India for installation related activities for a period of more than 120 days in the year under consideration and there was thus an installation PE of the assessee-company in India within the meaning given in Article 5(2)(k) of DTAA. The very fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses without the permission of UOPIPL/UOP Asia Limited (LO), it could not be said that the said place constituted fixed place PE of the assessee-company in India. (iv) The lower authorities have not recorded any finding to the effect that the assessee-company was having a fixed place of business in India with a right to use the same and since the permission of UOPIPL/UOP Asia Limited (LO) would have been necessary for the employees of the assessee-company to use their premises, the said premises could not constitute a fixed place PE of the assessee-company. (v) Even if it is assumed for the sake of argument that the premises of UOPIPL/UOP Asia Limited (LO) was being used by the employees of the assessee-company at times during their visit to India, it was only the facility offered by them to the employees of the assessee-company gratis which did not create any right in favour of such employees to enter the said office as they pleased for the purpose of carrying out the activities of the assessee-company. It was thus not a case of fixed place PE of the assessee-company in India as held by Delhi Special Bench of ITAT in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso discharging services as part of performance of contracts entered into between the assessee-company and its Indian customers. The affidavit filed by Mr. Nigel Orchard, employee of the assessee-company stating otherwise was merely self-serving evidence which could not be relied upon. On the other hand, the liaison office was clearly involved in providing secretarial, administrative and logistical services to the assessee-company and the employees of the said liaison office were also engaged in commercial negotiation of the contract on behalf of the assessee-company. These services, therefore, could not be classified as merely of preparatory or auxiliary nature as sought to be contended by the learned counsel for the assessee. In fact, the said liaison office had not only acted as communication centre but also carried out essential commercial negotiation for finalizing contracts on behalf of the assessee-company and the same, therefore, represented permanent establishment of the assessee-company as held in the cases of UAE Exchange Centre LLC, In re [2004] 268 ITR 9 (AAR - New Delhi) and Sutron Corpn., In re [2004] 268 ITR 156 (AAR - New Delhi). 36. Keeping in view the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the fact remains to be seen is that it was admitted by the assessee-company in the aforesaid letter dated 10-12-2005 that it did have an office in India for service tax purposes which, read with the other additional evidence, appears to be relevant for the purpose of deciding the issue as to whether the assessee-company was having a fixed place PE in India and/or whether the liaison office of UOP Asia Limited was a dependent agency PE of the assessee-company in India during the previous year relevant to assessment year 2001-02. Annex. -B (Pages 12 to 24) 39. These are the copies of various e-mails exchanged between employees of the UOP Group including the assessee-company and employees of UOPIPL and UOP Asia Limited (LO). One of such e-mails placed at page 12 was sent by Keith J. Aspray, Managing Director of UOPIPL to the assessee-company forwarding a draft agreement for approval by Norm and then by Carlos suggesting that the same is what is required for consultant agreements prior to sending execution copies to them. It was also mentioned by Mr. Aspray in the footnote that he would be sending a note to Norm and Carlos giving his input before the agreement comes their w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meeting of IOC/UOP Steering Committee and as mentioned therein, Keith J. Aspray, Managing Director of UOPIPL and Mr. P. Nair, General Manager of UOP Asia Limited, New Delhi were members of UOP Steering Committee with remaining two members of the said committee being the employees of the assessee-company. Annex. -C (Pages 28 to 80) 40. Page 28 of Annexure-C is a memorandum issued by the UOP group on 16-5-2002 laying down the guidelines for UOP contracting party in the international region for R P contracts. A copy of the said memorandum was marked, inter alia, to K. Aspray. The guidelines so issued in the said memorandum were as follows:- During the latter part of the 1990's and through the year 2000, a thorough evaluation of tax issues, as they relate to contracts, was carried out. It was decided that starting January 2001, that new contracts in the International Region should be concluded with UOP Limited so long as there was no loss of financial benefit, whereas we have historically contracted with UOP LLC (e.g. for new projects). The prime driving force for this change is that if UOP Limited staff functioned essentially as UOPLLC employees by negotiating contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in DP and then make its way back to Delhi. An example of movements of a recent agreement (#O3DO837) : Singed by Customer: Sept. 8, 2004 (Uday) Sent by Delhi to Guildford: Sept. 9, 2004 (Uday) Received in Guildford: Sept. 13,2004 Sent by Guildford to DP Legal: Sept. 14,2004 Received in DP Legal: Sept. 16,2004 (Sally) Received at CAC office: Sept. 16, 2004 (Sally) Sent by CAC to COM: Oct. 4, 2004 42. The aforesaid suggestion made by the Delhi office giving an example of movement of recent agreement also suggests prima facie that the agreements with Indian customers were being finalized in India and only after getting the same signed from the Indian customers, they were sent to US for signatures. 43. All the aforesaid documents identified as pages 12 to 24 of Annexure-Band pages 28 to 80 of Annexure-C prima facie suggest or indicate that the employees of UOPIPL and UOP Asia Limited (LO) were involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to once again refer to the issue involved in the present appeal which is whether the assessee-company was having a permanent establishment in India during the year under consideration. The case of the revenue is that the common office of UOPIPL and UOP Asia Limited (LO) in Delhi was virtually the projection of the assessee-company in India and the additional evidence sought to be filed by the revenue in the form of relevant pages of assessee's official website as well as press release issued by the assessee-company itself, in our opinion, are apparently relevant to consider and decide the case being made out by the revenue. It was also a case of the revenue that the employees of UOPIPL and UOP Asia Limited (LO) were working for the assessee-company in India and the nature of services rendered by them on behalf of the assessee-company to the Indian customers including negotiation and finalisation of contracts could not be classified as merely preparatory or auxiliary. This case of the revenue was based on a statement of Mr. K. J. Aspray, Managing Director of UOPIPL recorded on oath. The additional evidence comprising of various documents forming part of Annexures-B and C, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to make out a new case. According to us, the additional evidence filed by the revenue is quite relevant for the purpose of deciding the issue before us and the same, therefore, can be admitted as per rule 29 of Appellate Tribunal Rules, 1963 as held by Hon'bIe Madras High Court in the case of R.S.S. Shanmugam Pillai Sons. The said additional evidence also needs to be taken into consideration in the interest of justice for deciding the issue relating to the PE. 49. Before us, it has been vehemently contended by the learned counsel for the assessee relying on the decision of Hon'ble Supreme Court in the case of Mahavir Singh that the expression used in the relevant Rule is to enable it to pronounce judgment and the same contemplates a situation when the appellate court finds itself unable to pronounce judgment owing to a lacuna or defect in the evidence as it stands. However, as further clarified by the Hon'ble Supreme Court in the said judgment, the ability to pronounce a judgment is to be understood as the ability to pronounce a judgment satisfactory to the mind of Court delivering it. In our opinion, the additional evidence sought to be produced by the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same having come to their possession as a result of survey carried out in March 2006, it cannot be disputed that they came to the knowledge of the Department subsequently. Moreover, neither the ownership of the said documents in the hands of the concerned persons from whose possession the same have been found and seized nor the contents thereof have been denied before us. 51. We are, therefore, of the view that if the peculiar facts of the present case as discussed hereinabove are considered in the light of legal position emanating from the various judicial pronouncements on the issue of admission of additional evidence, it is a fit case wherein the additional evidence sought to be produced by the revenue be allowed to be admitted having regard to its relevancy and requirement for the purpose of deciding the point in issue raised in the present appeal before us as well as for the substantial cause of justice. In that view of the matter, we allow the application filed by the revenue seeking admission of additional evidence and admit the said evidence on record. 52. As already noted, the assessee was given an opportunity during the course of hearing to advance the arguments on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue for admission of additional evidence stating that the same was moved by the learned CIT-DR only after the conclusion of arguments from the side of the assessee. In this regard, we may observe that a survey was carried out in the premises of the assessee just before the commencement of hearing of the present appeal of the assessee before the Tribunal. During the course of the said hearing, the factum of survey was brought to the notice of the Bench by the learned CIT-DR and it was also indicated that the documents impounded during the course of the said survey, if found relevant and material for deciding the issue involved in the present appeal, might be sought to be produced as additional evidence. Having already granted a stay of outstanding demand in this case, the Bench proceeded to hear the arguments advanced by the learned counsel for the assessee without prejudice to the right of the revenue to move an application for admission of additional evidence, if required. The revenue finally decided to move such application and accordingly, the same came to be filed only after the conclusion of first round of arguments advanced on behalf of the assessee. The assessee, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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