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TMI Blog2016 (10) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, the material used by the Assessing Officer for purportedly forming this opinion is the description of the assessee of itself as “a supplier” of the equipment in an EPC contract, which inter alia required it to take offshore delivery of the equipment from a foreign vendor and supply and install the same onshore. Mere description as a “supplier” in a suit by the assessee against the insurance company claiming an insurance claim for loss of equipment, when the assessee insured the equipment jointly with the purchaser, can possibly have no connection with the escapement of any income arising out of sale of the equipment. Since that was the only material used by the Assessing Officer for issuance of the reopening notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.148 is bad in law and be set aside? 4. The Respondent Assessee is a Project Contractor. It was awarded a contract by Kondapalli Power Corporation Ltd.(KPCL), Andhra Pradesh to set up a power plant on a turnkey basis. Further, KPCL had awarded an onshore contract to the RespondentAssessee for supply of goods and services along with the commissioning of the plant. KPCL also awarded an offshore supply contract to Hanjung DCM Co. Ltd. (Hanjung) for supply of equipment valued at US$ 103 million. The equipment valued at US$ 103 million was supplied by Hanjung and taken delivery of outside India by the Respondent Assessee for and on behalf of KPCL. The aforesaid equipment was lost during its transit after the RespondentAssessee took deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to USD 103 million received on account of the same from India in its return of income for this assessment year. 2.1 Thus I have reason to believe that income of USD 51.5 million chargeable to tax has escaped assessment for A.Y.2000-01. 3 Issue notice u/s. 148 of the Income Tax Act, 1961. 6. The RespondentAssessee during the Assessment proceedings consequent to reopening notice dated 26 March 2004 submitted that the same is without jurisdiction and, therefore, must be quashed. Nevertheless, the Assessing Officer proceeded on the basis that in the suit filed by the Respondent Assessee in the Secunderabad Court against the Insurance Company it had claimed to have supplied equipment valued at US$ 103 million which was lost. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the parties involved in relation to the subject matter of this suit is as follows : a. Lanco Kondapalli Power Pvt. Limited (formerly a public limited company) ('LKPL') is the owner of the Kondapalli Power Project. b. Plaintiff is the EPC contractor for the Kondapalli Power Project, and an assured under the policy issued by Defendant. i. Encon Services Limited ('Encon') is the subcontractor of Plaintiff for transportation of the GT GTG from Kakinada to Machilipatnam. j. Seaways Shipping Limited ('SSL') was appointed by Encon for inland transportation of GT GTG from Kakinada to Machilipatnam, and was the character of 'Jala Hamsa' and 'AmethiI'. n. Aistom are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the two authorities have concurrently reached a finding of fact that the Respondent Assessee was not the supplier of the equipment and it had taken out insurance claim only in its capacity as contractor and in terms of the contract entered into between the parties. This conclusion was recorded by the CIT(A) as well as the Tribunal upon consideration of the contract entered into between the parties and particularly with regard to transit insurance. The contract provided that the contractor, i.e. Respondent Assessee will provide/arrange at its own cost in the joint name of the owner and contractor a comprehensive insurance cover to the project, including any damage to the goods during transit. It was in that context that the Respondent As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer for issuance of the reopening notice, the notice is without any legal basis or justification. The authorities below were clearly, therefore, right in setting aside the notice. 10. One more fact to be noted is that for the Assessment Year 1999-2000 and 2002-03, a coordinate bench of the Tribunal had taken a view that the Respondent Assessee has not sold any equipment. In these circumstances, the order of the coordinate bench for Assessment Years 1999-2000 and 2002-2003 also supports the Respondent's contention that they were not suppliers of the equipment and no income assessable to tax has escaped assessment. It's obligation was to insure the goods/equipment during transit done by it either on its own or thro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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