9911796707
TMI Blog2014 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... NDRA SINGH AND VIVEK VARMA , JJ. For the Appellant : R.S. Srivastava. ORDER:- PER : Vivek Varma The appeal filed by the department against the order of CIT(A)-33, Mumbai, dated 23.02.2005, wherein, the following grounds have been raised: "On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete the 1% deemed profit on Rs. 4,59,598/- being the amount payable to the appellant for work done outside India, amounting to Rs. 4,59,706/- On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to tax the appellant on an amount of Rs. 79,500/- only as against Rs. 29,10,058/- being 10% of the revenue received by the appellant rightly adopted by the AO. The appellant prays that the order of the Tribunal on the above grounds set aside and that of the AO restored". 2. The facts of the case are 3.1 OY Sisu Ab (formerly known as OY Sisu Auto AB) ('Sisu Auto' or the Appellant'), a company incorporated in Finland had executed a contract with Nhava Sheva Port Trust ('NSPT') for the supply of tractors and trailers. The total scope of works as per the contract in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28,560,000 28,560,000 Nil Supply of spares 540,580 540,580 Nil Inland transportation 837,500 408,000 429,500 Inland transport Charges paid by the Appellant -- 350,000 (350,000) Total (Rs) 29,938,080 29,858,580 79,500" 3. Before the AO it was submitted that the assessee did not have a PE in India, therefore, provisions under India Finland DTAA would not be applicable. According to the assessee tractors were to be assembled and manufactured in Finland by the assessee, whereas, tractors (sic trailors) were to be manufactured by Braith Waite Co. in Calcutta, using its own assembly / installation facilities. 4. The AO held that the assessee had PE in India in the form of Usha Sales and hence, he attributed certain percentage of revenue from sale of tractors as taxable in India, besides holding that certain percentage of sale of trailers was also taxable. 5. In the appeal before the CIT(A), the assessee agitated the view taken by the AO. The CIT(A) held, " that for supply of 36 tractors, which were manufactured outside India (Finland) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the file of the AO to frame the assessment de novo, taking into account the effect of new clause, as per notification No. GSR/786(E) dated 20.11.1984. 8. As per the directions, the AO reframed the assessment (this round is impugned). 9. Before the CIT(A), the assessee submitted, "3.13 The ld. Counsel of the appellant has submitted that a joint reading of Article 5(5) and 5(7) of the treaty indicate that Article 5(5) shall apply only to agents who can be regarded as dependent agents of the assessee. This implies that before examining whether an agent satisfies conditions laid down in para 5 it must be examined whether the agent satisfies conditions laid down in para / (independent agents clause). Only where the agent does not satisfy the conditions in para 7 conditions laid down in para 5 will need to be examined. Hence an agent who satisfies conditions laid down in para 7 would not constitute a PE in India even if the independent agent satisfies the conditions laid down in para 5. It is submitted that Usha Sales an independent legal entity operating in ordinary course of its business and its activities are not devoted wholly and almost wholly on behalf of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to have a PE in India on this account. I don't find any reason to interfere with the order of my ld. Predecessor. I, therefore, hold that Usha Sales is an independent status and therefore, the appellant cannot be deemed to have a PE in India for the supply of 38 tractors to NSPT. Hence, cannot be subjected to tax for work done outside India i.e. amounting to Rs. 459706/- being 1% deemed profit on Rs. 45970598/-. In the result, the appeal is decided in appellant's favour. 4.2 So far as supply of 136 trailers is concerned for which the appellant had entered into a sub contract with Braith Waite for manufacturing the trailers in India, I hold that appellant had an installation PB and therefore, even under the new treaty the appellant has a PE in India within the meaning of Article 5(3)(a) and 5(3)(b) of the new treaty. For the sake of convenience the Article 5(3)(a) 5(3)(b) is reproduced herein under: (a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six month. (b) a building site, a construction, assembl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less Costs: Payment made directly to Braith Waite - Total price for 136 traillers Rs. 2,10,000 per trailer 285,60,000 Total price of spares 5,40,580 Cost of inland transport for 136 Trailers Rs. 3000 per trailer 4,08,000 Payment towards custom duty 472,36,874 Expenses for inland transport 3,50,000 770,95,454 Profit/loss 79,500 4.5 I don't find any reason to deviate from the finding of my ld. Predecessor. Ground No. (i), (ii) (iii) are disposed of accordingly. In the result the appeal is partly allowed.' 11. Against this order, the present appeal is impugned before us. 12. From the records, we find that there is a consistent non appearance on the part of the assessee. On the last date, the DR was asked to effect the service of notice of hearing. At the time of present hearing, the AR placed before the Bench proof of service on S.R. Batliboi Co. (CA), as the address given on all the communications is that of S.R. Batliboi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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