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TMI Blog2017 (11) TMI 1498X X X X Extracts X X X X X X X X Extracts X X X X ..... O of attributing to project office in India [and making an addition to income] profit on a presumptive basis on off shore sales made directly to GAIL on FOB basis, from outside India ignoring the facts and circumstances. 1.2. The learned CIT(A) should have deleted the whole of the addition to income on account of off-shore sales made directly to GAIL on FOB basis, from outside India once it has been agreed that the contract with GAIL is divisible." 2. The appeal for A.Y. 2007-08 in ITA No. 5833/Del./2010 is also directed by assessee against the order u/s. 144C/143(3) dated 12.10.2010 of DDIT (Intl. Taxation), Noida on the following grounds : "1). That the lower authorities have erred in making the addition of Rs. 1,02,59,131/- on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed an appeal in the assessee's case for the A.Y. 2002-03 on the issue of taxability of off shore supply which is pending before the Hon'ble High Court. 3). Whether on the facts and circumstances of the case, the CIT(A) has erred in cancelling the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Income Tax Act, 1961." 4. As emerged out of the aforesaid grounds of appeals and the facts attending to the present cases, we find that in all the three appeals of the assessee, the solitary issue which needs adjudication is whether the sales made by the non-resident Canadian assessee on FOB basis under a contract are liable to tax in India or not? The only difference is that the appeals for the Assessment Years 2004-05 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said equipment was claimed to have been passed to GAIL at port of shipment in Canada. The second part of the contract was for a value of US Dollar 17,05,263 which was to be executed in India and for the execution of the same, Global had established a Project Office in India. 6. The assessee filed return of income on 31st October 2005 declaring an income of Rs. 21,61,298/- from second part of the contract. 7. In the assessment order, the AO has taken a view that in respect of supply of equipments, the same was a part of a contract including erection and commissioning and hence the offshore supply of equipments towards this turnkey contract is taxable in India. Applying the rates as provided in Sections 44BB and 44BBB which deal with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fshore supplies of equipment should be treated to have accrued in India and profits in this respect should be determined on the basis of global profit ratio; hence he also made the similar directions by observing as under: "Respectfully following the order of Hon'ble ITAT, referred to above, the issue raised in ground of appeal No. 1 is decided accordingly. The addition of Rs. 23,26,739/- would be modified to the extent that the Assessing Officer would work out the profit by taking 20% profit on sale of off-shore equipments; the profit in this respect to be determined on the basis of global profit ratio, after verification of the details and statistics to be submitted by the assessee in this respect." 9. It is this order of ld. of CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Allahabad High Court, after following the Supreme Court judgment in the case of Ishika Vazima-Harima Heavy Industries Ltd. vs. Director of Income Tax, Mumbai in 288 ITR 408, [2007] 3 SCC 481, held that the contract was a divisible contract and the equipments which were manufactured and supplied outside India on FOB basis, the assessee was not liable to pay any tax in India as there was no element of sale at all in India and then dismissed the departmental appeal. The assessee's appeal being Income Tax Appeal No. 429/2011 was also decided in terms of department's appeal vide order of even date, wherein the Hon'ble High Court held that none of the profits in respect of supplies made on FOB basis is chargeable to tax in India. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2002-03 has been dismissed by the Allahabad High Court vide judgment dated 30th November 2016 and even in the assessee's appeal in relation to the maintenance of addition to the extent of 20% of the profits on FOB supplies, the issue has also been decided in favour of assessee. Since, we have already deleted the addition made on these counts relying on the decision of Hon'ble jurisdictional High court, we are of the considered opinion that the assessee cannot be deemed to have concealed the particulars of income with respect to profit on FOB supplies during the Assessment Year 2007-08. Besides, the department did not initiate any penalty on the similar addition made in A.Y. 2002-03, and the penalty imposed for A.Y. 2004-05, stood canc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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