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TMI Blog2017 (4) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the factual position, we find that explanation 1(a) comes into play in the instant case. Hence, the income which is deemed to accrue / arise in India shall be only with respect to those business operations that are carried out in India. After analyzing the various case laws, statutory provisions, DTAA provisions and contractual terms and respectfully following judgment in Ishikawajima-Harima Heavy Industries Limited Vs. DIT (2007 (1) TMI 91 - SUPREME COURT ), we are inclined to hold that Offshore Supply contracts were ‘carried and concluded’ outside India and hence no income there-from deemed to accrue or arise in India as per Section 9(1) and DTAA provisions and accordingly, not chargeable to tax. The receipts thereof do not form part of receipts for the purpose of computational provisions of Section 44BBB. Explanation 4 could not overcome the limitation imposed by Explanation 1(a) to Section 9(1)(i) and hence, the impugned income do not form part of business receipts for computation of income u/s 44BBB of the Act. We held so. We also observe that impugned payment has been paid by NPCIL to ASE on ‘net’ basis and NPCIL has borne the burden of tax on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted outside India. 4. The learned DDIT/DRP erred in levying interest of ₹ 17.51 Crores under Section 234B of the ITA on the appellant company. 5. The learned DDIT failed to appreciate that the entire income of the appellant company is subject to tax deductible at source and therefore the interest under Section 234B is not leviable on the appellant company. 2. Facts in brief, are that the assessee namely Atomstroyexport [ASE] is a non-resident foreign company who filed its return of income for the Assessment Year 2007-2008 during November, 2007 declaring total income under Section 44BBB at ₹ 7,07,61,958/-. The return was picked up for scrutiny assessment under Section 143(3) and the draft assessment order was passed by Assessing Officer [AO] on 19/11/2009 which was sent to Dispute Resolution Panel [DRP] for directions under Section 144C(1). The DRP issued directions under Section 144C(5) vide its order dated 13/08/2010, pursuant to which final assessment order was passed by the Ld. DDIT on 27/09/2010 assessing total income at ₹ 116,80,84,880/- after applying presumptive provisions of Section 44BBB. 3. In the draft assessment order, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se were borne by NPCIL (the Indian entity being the contractee) and hence constituted additional income of the assessee which necessitates grossing up of total consideration in terms of Section 195A of the Income Tax Act. Hence, in essence, the DRP directions resulted into enhancement of the assessment of the assessee to the extent of remittances under offshore supply contracts and grossing up . 5. Pursuant to the directions of the DRP, the final assessment was completed by AO vide its order dated 27/09/2010 by applying provisions of Section 44BBB on total remittances made under Service contracts as well as under Offshore Supply contracts . Thus, the total income was determined in the following manner: Remittances for Offshore Supply contracts (INR) 1097.32 Crores Remittances for Service Contracts (INR) 70.76 Crores Total Remittances 1168.08 Crores Deemed Income @10% u/s 44BBB 116.80 Crores 6. Aggrieved, the assessee is in appeal before us. So far as the supply contracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the role to be played by the Russian organisation and the Indian organisation for the setting up of the nuclear power project. 8. Article 1 of IGA dated 20/11/1988 enumerates the main objective of the agreement and it reads as follows:- The government of the Republic of India and the government of the union of Soviet Socialist republics through the appropriate Indian and Soviet organisations shall cooperate in the construction and operation in India of a nuclear power station (NPS) consisting of two power units of VVER-1000 type reactor facilities at a site to be decided by the government of the Republic of India. The other terms of the IGA included, inter-alia , the obligations of respective parties and other terms and conditions of the agreement. 9. Pursuant to said arrangement / understanding, ASE and NPCIL have entered into three service contracts and four offshore supply contracts. Service contracts included supply of detailed project report for nuclear power station, elaboration of working documentation for the Project, deputation of contractors specialists at nuclear power plant site, training of NPCIL s operation and maintenance personnel . Offsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was entitled to liquidated damages. In no circumstances, could it return back the equipments and materials to the assessee. Even in case of early termination of the contract, the assessee was entitled to the compensation in respect of the supplies made till such termination. Therefore, offshore supply contract cannot be integrated with service contracts and regarded as composite contracts. 11.2 Further, It was also an undisputed position before the Assessing Officer and the DRP that the contracts for offshore supply of the equipment and materials are separate from the service contracts. Arguments as alleged by the revenue with respect to composite nature of contract are contrary to the stand taken by the AO/DRP and also do not represent the correct position in view of the termination clause in the contract. This fact is further fortified by following factual matrix:- (i) Separate contracts for rendering of services and supply of goods have been entered into by the parties. (ii) The consideration under each of the contracts for rendering of services and supply of offshore goods is also separate. (iii) In the eventuality of termination the assessee was liable to get pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, offshore supply contract has nothing to do with the activities of the permanent establishment. In the instant case India Russia DTAA is involved and Article 7(1) of the treaty refers only to attribution simplicitor and do not use the term directly or indirectly and hence, from this point of view also, the assessee stands on a better footing. Hence, Force of Attraction rule could have been applied only when the attribution of profits in Article 7(1) also included indirect attribution. It does not apply to case in hand as Article 7(1) of India Russia Treaty do not provide for indirect attribution. 11.5 Further, the contracts have been entered into between two Government representatives and hence the contracts are real and not bogus or sham and therefore no question of tax evasion arises. For this proposition, the assessee has relied upon the decision of Bombay High Court dated 16/10/2008 in ITA No. 389 of 2008 CIT Vs. The West Coast Paper Mills Ltd. 11.6 To sum up, the ld. AR primarily contended that no operations in respect of OSC has been performed in India and therefore, not taxable as per Explanation 1(a) to Section 9(1)(i). Going Further, AR placed rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of a nuclear power plants, inter-alia , envisages construction of nuclear reactors which is a complex scientific device used to initiate and control a sustained nuclear chain reaction. Nuclear reactors are used at nuclear power plants for electricity generation. ASE was under contractual obligation to construct complete Nuclear reactors along-with connected infrastructure so as to hand over a complete and functional power station to NPCIL. Nuclear reactors are the most vital part of the Nuclear Power Station. What an engine is to automobile, a nuclear reactor is to a nuclear power station. In nutshell, all the contracts whether supply contracts or service contracts sprung from one master agreement, the sole purpose of which was to set up nuclear power station in India and therefore, part and parcel of the same transaction. The assessee has only offered the service part to taxation which is basically in the nature of Royalty / Fees for Technical services and therefore, as the contract is composite one, the total consideration which springs out of the master agreement whether supply of goods or services should be offered to taxation. Offshore supply contracts are not merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Gulf) LLC ITA No. 700/Mum/2009 dated 27/11/2013 . Further, section 44BBB takes into account the principle of apportionment of income on the basis of territorial nexus while taxing the income calculated @10% of the total receipts. 12.6 CBDT Instruction No. 1829 dated 21/09/1989 Instruction No. 1829 21/09/1989 applies only to hydroelectric project only. The same has been withdrawn subsequently by Instruction No. 5 of 2009 dated 20/07/2009 primarily to counter loading of offshore supply vis- -vis onshore supply/services. The present case under consideration deals with Nuclear Power Projects and hence of no help to assessee. 12.7 Explanation 4 to 9(1)(i) The Ld. DR has contended that explanation 4 has been added by Finance Act, 2012 retrospectively w.e.f. 01/04/1962, which is subsequent to the judgment of Supreme Court in Ishikawajima-Harima Heavy Industries Ltd. (supra) and it has widened the meaning of the word through used in Section 9(1)(i). Explanation 4 to Section 9(1)(i) reads as follows: Explanation 4.-For the removal of doubts, it is hereby clarified that the expression through shall mean and include and shall be deemed to have always meant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to enlarge the controversy and decide the issue not before it. Similarly, Special Bench decision of Mumbai Tribunal in ACIT V. Prakash L.Shah [115 ITD 167] wherein the court observed that the Ld. DR cannot go beyond the assessment order and bring altogether different case, thereby undoing what has been done by the Assessing Officer. The power to modify the assessment order to the advantage of the revenue, apart from suo-moto action by the assessing officer under sections 147 or 154, lies only with the CIT under Section 263, which cannot be usurped by the ld. DR while arguing the appeal. The scope of the arguments of the ld. DR is restricted to support the view taken by the assessing officer. He can strengthen the view taken by the Assessing Officer from any angle, he like, but cannot bring out an altogether difference case de hors the view of the Assessing Officer. His area of argument is unlimited but within the boundary limits set by the Assessing Officer. Similar view has been expressed in Mahindra Mahindra Ltd. V DCIT [313 ITR 263]. Moreover, new legal points could be taken by revenue for the first time before the Tribunal only if the revenue was in appeal an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the situation in any manner. 13.3 Moreover, as per Article 7(1) of Tax Treaty, non-resident could be taxed in India only if it derives income through a permanent establishment situated in India and only so much of it as is attributable to the activity of such permanent establishment. As assessee has only service PE in India and hence the profit attributable to such activity alone could be brought to tax. This PE has no role to play in offshore supply contracts and therefore, cannot be brought to tax even as per the provisions of DTAA. 13.4 For the proposition that explanation 4 cannot be read into DTAA, AR has relied upon the decision of Delhi High Court in DIT Vs New Skies Satellite BV Others [95 CCH 32] which in turn rely upon Bombay High Court in CIT Vs Siemens Aktiongesellshaft [310 ITR 320] . 13.5 Per contra , DR relies on following judgments where it is held otherwise:- i. Madras High Court in Poompuhar Shipping corporation Ltd v ITO [360 ITR 257] ii. Madras High Court in Verizone communication Singapore Pvt Ltd V ITO [361 ITR 575] iii. Mumbai Tribunal in Viacom 18 Media P Ltd [162 TTJ 336] iv. Mumbai Tribunal in NGC Network Asia LLC V JD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into between the two governments:- No. Contract No. Description 1. 77-252/20500 dated 12/02/2002 Delivery of equipment with long manufacturing cycle and first priority equipment and materials 2. 77-252/22600 dated 23/08/2002 Delivery of Equipment and material 3. 77-252/22700 dated 23/08/2002 Sale of Material and equipments from third countries 4. 77-252/26000 dated 7/10/2003 The supplies from CIS countries and functions to be performed by the contractor for offshore supplies We find that all the four contracts have more or less similar terms and conditions. A perusal of terms of contract No. 77-252/20500 dated 12/02/2002 reveals that as per Article 2.1, the assessee was required to make deliveries on FOB Russian Port basis . As per Article 3.2, the contractee was required to carry out at his own expenses approximate transportation, loading/unloading, deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only one foreign company namely ASE which has entered into the agreement with the Indian company and it is not a case of Consortium of foreign companies and hence, the said instructions, in our opinion, do not apply to the present case. 14.4 Proceeding further, to understand the nature of Section 44BBB, it would be prudent to reproduce the relevant extract of this Section as follows:- Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects. 44BBB. (1) Notwithstanding anything to the contrary contained in sections 28 to 44AA, in the case of an assessee, being a foreign company, engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project approved by the Central Government in this behalf, a sum equal to ten per cent of the amount paid or payable (whether in or out of India) to the said assessee or to any person on his behalf on account of such civil construction, erection, testing or commissioning shall be deemed to be the profits and gains of such busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged only during construction or erection or testing or commissioning of plant and machinery in connection with a turnkey power project would be in a better position than a person who supplies the plant and machinery (which is otherwise not taxable) along-with such activities. The only manner in which such absurdity could be avoided by applying the provisions of section 44BBB only to those receipts which are chargeable to tax under regular charging provisions of the act. Reliance has been placed on the decision of Hon ble Supreme Court in CIT Vs. Hyundai Heavy Industries Co. Ltd. [291 ITR 482] wherein the court approved computation of income arising from installation and commissioning receipts as per Section 44BB of the act, while simultaneously holding that receipts under the supply contract was not taxable. Hence, as per Hon ble Supreme Court also the provisions of section 44BB of the act, which is one of the section dealing with presumptive taxation, would apply only to such income which is chargeable under the provisions of the act. Further, Reliance was also placed on the decision of third member of Delhi bench of the tribunal in Saipem S.P.A. v DCIT [88 ITD 213]. This d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e place of accrual would become inoperative. There would be no need to refer to the provisions of section 5 or for that matter section 9. In considering the background leading to the introduction of section 44BB, this was never the intention of the legislature and provisions of sections 5 and 9 were always meant to operate and remain effective online statue book. Section 5 is the charging provision and no income can be brought to tax unless it falls within the scope, of the said section and the use of the expression subject to other provisions of the Act in section 5 would mean that if any other section operates to exclude from the total income of any person any income, which otherwise falls within the broad framework of his total income as laid down in section 5 such section would prevail. To emphasis, the provisions of section 44AB vis-a-vis the legislative intent only mean that the replace the system of computation of income earlier envisaged by application of the provisions of sections 28 to 41 and sections 43 and 43A, but the provisions of section 5, which is the charging section would remain intact and these by no maxim of interpretation would be superseded by the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view has been taken by Bombay High Court in DIT Vs. Sonat Offshore Drilling Inc. in ITA No. 508 of 2007 vide order dated 16/09/2008 and also in Vodafone India Services Private Limited V Union of India [50 taxmann.com 300]. Further, the Machinery Section of the act cannot be read dehors charging section. The act has to be read as integrated manner. Supreme Court in CIT Vs. B.C.Srinivasa Shetti 128 ITR 294 , held that: No doubt there is a qualitative difference between the charging provision and a computation provision. And ordinarily the operation of the charging provision cannot be affected by the construction of a particular computation provision. But the question here is whether it is possible to apply the computation provision at all if a certain interpretation is pressed on the charging provision. That pertains to the fundamental integrity of the statutory scheme provided for each head. AR further contended that reliance placed by DR on the decisions of Uttarakhand High Court in Sedco Forex International Inc. (supra) and CIT Vs Halliburton Offshore Services Inc.(supra) are contrary to views expressed by Supreme Court in Hyundai Heavy Industries (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh or from any asset or source of income in India, or through the transfer of a capital asset situate in India. Explanation 1-For the purposes of this clause- (a) in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operation carried out in India ; (b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in India for the purpose of export ; Explanation 4.-For the removal of doubts, it is hereby clarified that the expression through shall mean and include and shall be deemed to have always meant and included by means of , in consequence of or by reason of . We find that explanation 4 has clarified the meaning of expression of the word through . The word through as been used in Article 7(1) of the DTAA and as per the Article 3(2) of the said treaty, the expressions not defined in the treaty could derive their meaning from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with other consortium partners entered into a Turnkey Project which involved both offshore supply / services as well as onshore supply / services and construction and erection to be carried out by the non-resident assessee and assessee received consideration under all the heads. The title in goods was to pass outside India but the contractor was required to retain care, custody and control of such equipment and materials and exercise due care even after they were transferred to the buyer. The supplier had a business connection for the purposes of the act and a permanent establishment for the purposes of the DTAA in India. The apex court observed as under:- 17. The contract is a complex arrangement. Petronet and Appellant are not the only parties thereto, there are other members of the consortium who are required to carry out different parts of the contract. The consortium included an Indian company. The fact that it has been fashioned as a turnkey contract by itself may not be of much significance. The project is a turnkey project. The contract may also be a turnkey contract, but the same by itself would not mean that even for the purpose of taxability the entire contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the entire income 'accrues or arises' in each of the jurisdiction. The Authority has proceeded on the basis that supplies in question had taken place offshore. It, however, has rendered its opinion on the premise that offshore supplies or offshore services were intimately connected with the turnkey project. In the above judgment the Apex Court referred to its own decisions in the case of Anglo- French Textile Co. Pvt Ltd. Vs CIT [25 ITR 27] , and also ITO Vs. Sriram Bearings Ltd. (1997) [224 ITR 724]. After detailed discussion, the Hon ble Court summarized its conclusion in respect of the offshore supply contract in the following manner: 79. We, therefore, hold as under : Re : Offshore Supply : (1) That only such part of the income, as is attributable to the operations carried out in India can be taxed in India. (2) Since all parts of the transaction in question, i.e. the transfer of property in goods as well as the payment, were carried on outside the Indian soil, the transaction could not have been taxed in India. (3) The principle of apportionment, wherein the territorial jurisdiction of a particular state determines its capacity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed outside India. The revenue has nowhere pointed out which part of the operation relating to offshore supply contracts is carried out in India. With respect to attribution of profits to a permanent establishment it has been held that the state of the permanent establishment can tax only those profits which are economically attributable to the permanent establishment i.e. which result from the activities of the permanent establishment or which arises economically from the business carried on by the permanent establishment. In the present case, offshore supply contract has nothing to do with the activities of the permanent establishment. In the above-cited case, the court was concerned with India Japan treaty where article 7(1) for attribution of profits which referred to profits directly or indirectly attributable to the permanent establishment. The phrase directly or indirectly widens the scope of attribution of profits. Whereas in the present case India Russia DTAA is involved and Article 7(1) of the treaty refers only to attribution simplicitor and do not use the term directly or indirectly and hence, from this point of view also, the assessee stands on a better footin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. The instant case, in fact, in our view stands on a better footing as two separate contracts have been entered into between the parties, albeit on the same day, one for the offshore supply and the other for the onshore services, but even assuming that both these contracts need to be read together as a composite contract, the issue in controversy is nevertheless squarely covered by the decision of the Supreme Court in Ishikawajima Harima Heavy Industries Co. Ltd. 's case (supra) . It is beyond dispute that PGCIL had issued irrevocable letter of credit in favour of the respondent assessee and in paragraph 31.2 agreed that the property in the goods will pass to the buyer (PGCIL) as and when the respondent assessee loads the equipment onto the mode of transport for transportation from the country of origin. The stipulation in the second agreement (Erection Contract) relating to certain performances by the respondent assessee including port handling, custom clearance, transportation, insurance, handling on site, unloading at transportation site, testing and commissioning to the satisfaction of the buyer are in a separate agreement for a separate consideration which is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try of origin itself as soon as the goods were loaded upon the mode of transfer to be used to convey the plant and machinery, i.e., the shipping vessel, even prior to the goods reaching the high seas. Once the title was transferred in the aforesaid manner, there was no provision either in the agreement or in law providing a recourse to the respondents to take back the title. 36. With regard to the setting up of a permanent establishment also, the permanent establishment of the respondent in the instant case, as in the case of Ishikawajima Harima Heavy Industries Co. Ltd. (supra), had no role to play in the execution of the offshore supply contract and as a matter of fact was set up for the sole purpose of enabling the performance of the onshore services contract. 37. The contract, however, in the instant case as in the case of Ishikawajima Harima Heavy Industries Co. Ltd. (supra) would be said to have been successfully performed only after the satisfactory commissioning and erection of the plant and equipments. Since the permanent establishment was not at all involved in the transaction of the offshore supply of equipment, the existence of the permanent establishment [w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on to the buyer under the Supply Contract outside India where the equipment was manufactured. As per the judgment of Supreme Court in Ishikawajima Harima Heavy Industries Ltd.'s (supra), such agreement would not be taxable in India. In Ishikawajima Harima Heavy Industries Ltd.'s case (supra ) the Supreme Court held that no part of profit arising from the supply of equipment outside India would be chargeable to tax in India. Mr. Dastur is right in his analysis of the present case on the basis of the ratio of Ishikawajima Harima Heavy Industries Ltd.'s case (supra) inasmuch as : (i) In both the cases the property in the equipment passed outside India and in the assessee's case even the risk passed outside India ; (ii) In the case of Ishikawajima Harima Heavy Industries Ltd's case (supra) even though it was to perform onshore services including the erection and commissioning of the equipment supplied by it, nevertheless, the Supreme Court held that no part of the profit on the offshore supply of the equipment was taxable in India as a consequence of the performance of such activities in India. In the assessee's case the assessee does not per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to cure the defect by repairing or replacing the defective part. If there was delay caused due to the acceptance test not being complied with, Article 19 of the Supply Contract provided for damages. Thus, the taxable event took place outside India with the passing of the property from seller to buyer and acceptance test was not determinative of this factor. The position might have been different if the buyer had the right to reject the equipment on the failure of the acceptance test carried out in India. In Skoda Export Prabha (supra), the Andhra Pradesh High Court dealt this issue in the following manner: We may also mention that learned standing counsel for the Department challenged the finding of the Tribunal that the sale of machinery was completed outside India ; According to him, the sale was completed only in India, inasmuch as the assessee was entitled to inspect and satisfy itself about the quality and standard of the machinery supplied. We do not see any substance in this contention. The various clauses in the agreement referred to above make it clear that the sale of machinery was F. O. B., European port, and the time of fulfilment of delivery was prescribed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not revested in the seller by the buyer's subsequent default. 43. Thus, Overall Agreement does not result the income accruing in India. The execution of an overall agreement is prompted by purely commercial considerations as the India Cellular Operator would be desirous of having a single entity that he could liaise with, a fact which even the Board has noted in its Instruction No.1829 dated 21st September, 1989. Although Instruction number 1829 stands withdrawn by virtue of Circular No.7/2008 dated 22nd October, 2009, such withdrawal can have no retrospective effect and the principle laid down in Instruction No. 1829 must continue to govern the assessment for the relevant year. 44. The aforesaid analysis will bring forth the legal position that the place of negotiation, the place of signing of agreement, or formal acceptance thereof or overall responsibility of the assessee are irrelevant circumstances. Since the transaction relates to the sale of goods, the relevant factor and determinative factor would be as to where the property in the goods passes. In the present case, the finding is that property passed on the high seas. Concededly, in the present case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supply the title passed outside India alone will not decide taxability. In Ishikawajima Harima Heavy Industries Ltd. s case (supra), both the title and consideration passed outside the taxable territory and very importantly, it was found that it was not a composite contract, nor was there any involvement of the PE in the transaction. It was further factually found that the contract was a divisible one segregating the supply segment and service segment, and that by agreement the parties had decided when title passed. We find that in his case, after holding that the splitting of contract into four and assigning the onshore work to a subsidiary was a fa ade, the Hon ble Madras High court not only held that the assessee had a PE in India in the form of project office but also held that the assessee s income from offshore supply was taxable in India. We find the same also distinguishable on the ground that in this case, there were allegations of loading of supply contracts to compensate for services. Further, Tribunal, accepting the assessee s contentions, had held that 25% of total receipts were attributable to operations performed outside India and hence, not chargeable to tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply contract were carried out in India and there was no such overlapping of responsibilities envisaged under the Supply Contract and the Erection Contract performed by the respondent through its head office and permanent establishment. Ansaldo Energia SPA's case (supra) is thus clearly inapplicable to the fact situation in the present case and is therefore of no avail to the revenue 14.18 DR has further relied upon Mumbai ITAT decision in Orpak Systems Ltd. Vs. ADIT ITA No. 8863/M/11 order dated 06/01/2016 where it was has held that even though the consideration in respect of offshore supply was received outside India in foreign exchange, the same was taxable in India as the contract was a composite contract entered by the assessee in single bid and the assessee being responsible for the entire project till the commissioning stage. After holding that the sub-contracting of onshore installation work to a third party by the assessee was only a method of execution of a composite contract, the Hon ble Tribunal in this case not only held that the assessee had PE in India, it also held that the assessee s income from offshore supply was taxable in India. But we find the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was borne by the Indian Entity and. In view of jurisdictional Hon ble Bombay High Court in the case of DIT Vs NGC Asia Network LLC [313 ITR 187] , we are inclined to hold that since the impugned payments were subjected to TDS and the assessee was to receive the income on net payment basis and hence interest u/s 234B is not attracted on the facts and circumstances of the case. The Ground of assessee appeal succeeds. ITA No. 6573/Mum/2011 18. This appeal has been raised by Assessee for AY 2008-09 on similar facts and circumstances against the order of Ld. DDIT final order dated 12/08/2011. The assessee earned income of ₹ 585.57 Crores from OSC contracts which was taken as part of receipts for the purpose of Section 44BBB. Following our decision in ITA No.8074/Mum/2010 and subject to our observation in para-16, we delete the impugned additions and consequential interest u/s 234B. ITA No. 1033/Mum/2015 19. This appeal has been preferred by Assessee for AY 2011-12 on similar facts and circumstances against the order of Ld. DDIT final order dated 16/12/2014. The assessee earned income of ₹ 226.02 Crores from OSC contracts which was taken as part o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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