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TMI Blog2012 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax should be determined on that basis - Held that:- On perusal of aforesaid, it is found that this would be an offshore sale in the light of the decision in case of Ishikawajima-Harima Heavy Industries Ltd (2007 - TMI - 3467 - Supreme Court ) and hence not liable to tax in India. We clarify that the ruling relates only to off-shore supplies – Decided in favor of assessee. - AAR No.1008 of 2010 - - - Dated:- 31-1-2012 - P.K. Balasubramanyan, V.K. Shridhar, JJ. RULING 1. The applicant is a company incorporated under the laws of China on 26.3.2009. The applicant, among other things, is a supplier of equipments for Electric Power Projects. On 26.3.2009, the applicant entered into a contract with M/s Jhajjar Power Limited, for supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Offshore supply of Equipments, under Offshore Supply contract No. JHA/SEP/F/15/0027 dated 1st June, 2009, are liable to tax in India under the provisions of the Income-tax Act, 1961 ('Act')? 3. On behalf of the applicant, the terms of the contract were elaborately referred to. It is pointed out that the Indian company, was defined as the 'owner' in the contract and the applicant was defined as the 'contracting counter-party'. With reference to Clause 27 of the contract, it was pointed out that the parties had stipulated for the passing of the title to the equipment outside the country. The title passed at the port of loading. Port of loading itself was defined to show that it was outside the country. The technical requirements were that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act indicate that the applicant has to conduct the testing of equipments in India during commissioning of the units and that the equipments will not be accepted by the Indian company which could reject them if they do not pass the "Factory Acceptance Tests." A substantial part of the contract amount was allocated for civil and erection purposes and the applicant had to coordinate with relevant contractors relating to pre-commissioning activities. The applicant was to coordinate with relevant contractors for issuing notices to the Indian company regarding commissioning activities. The Indian company had to issue a certificate of completion indicating defects or deficiencies, if any, that prevent provisional completion. The applicant had to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurance that this would be an offshore sale in the light of the decision of the Supreme Court in Ishikawajima-Harima Heavy Industries Ltd. referred to earlier. The argument of the Revenue that the transaction must be taken as one and indivisible and the liability to tax should be determined on that basis, cannot be accepted in the light of the decision of the Supreme Court. The effect of the above decision of the Supreme Court is that the Income-tax Authorities under the Act have no jurisdiction to tax the payment made outside for these supplies taking place outside the country. Relying on the decision of the Supreme Court, we overrule the objection raised on behalf of the Revenue. 8. We therefore rule on the question posed, that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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