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TMI Blog2018 (1) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is taxable in India even if MFPM establishes any kind of PE in India. With regard to Revenue’s contention that it was an agreement between two closely associated companies, it is submitted that merely for this reason it cannot be concluded that it is for the purpose of avoidance of taxes on the basis of conjectures and surmises without any documentary evidences. Further, the Revenue has erroneously opined that the clarification received from MFPM, dated 14 December 2012, should be rejected on the grounds that the same was issued by two closely associated companies for the purpose of avoidance of taxes. This is not warranted. As payment made by the Applicant to MFPM for the offshore supply of equipment, there shall be no liability to withhold tax under section 195 of the Act, from such payment. Income derived from the discharging of its obligations by MFPM as provision of services of supervision in India at the factory site where the plant has been set up - Held that:- While examining provisions of section 9, we gave reasons why the income from off shore supply could not be brought to tax in India. By the same reasoning under this provision, we have to hold that income de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res and also a manufacturing facility for mixtures and semi-finished products necessary for the production of tyres. For this purpose it entered into an Umbrella Agreement as an Equipment Purchase Contract on 1 April 2011 with M/s. Manufacture Francaise des Pneumatiques Michelin (MFPM), a closely associated group company, for design, engineering, manufacturing, inspection and packing, forwarding and dispatch from outside India of machinery and equipment for setting up its new manufacturing facility in India. MFPM is a company incorporated under the laws of France and is a tax resident of France. MFPM has extensive experience in facilitating the development of projects of establishment and extension of factories related to the activities of production of tyres and manufacture of mixtures. 2.1 Under the aforesaidUmbrella Agreement, MFPM wouldsupply the equipment in three phases. As regards Phase I, the total price for the equipment is stated as EURO9,31,90,452 (approx. INR 580 cr) and the purchase of the same was completed upto February 2013. Further, supply of equipment under Phase II and Phase III have not yet started. A plain reading of the Umbrella Agreement amply makes it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide required supervisory guidance. LOU 3 - dated 30 September 2011 - MFPM will obtain transit insurance policy for supply of plant and equipment till the port of Chennai on behalf of the Applicant which will be reimbursed by the Applicant and also the risk and rewards are transferred to the Applicant at the port of shipment. LOU 4 - dated 14 December 2012 -It was clarified that the scope of the Agreement strictly excluded installation services, which will be provided under a separate agreement and that too the scope of such services will be restricted to supervisory in nature. The supervision charges as mentioned Schedule I to the Agreement are in relation to design and manufacture of the equipment prior to importation i.e. outside India and such charges are included as part of the cost of equipment and would be borne by MFPM. 4.2 On conjoint reading of the terms of the Umbrella Agreement and LOUs as mentioned above, it is clear that the supply of equipment is a pure off-shore contract for which supply is completed outside India, which is elaborated as under: 4.2.1 Transfer of title in property Clause 5 of the Umbrella agreement specifically states that transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or carrying out all custom formalities for the import of equipment and its transit through another country. All the custom duties, tariffs, fees, taxes and the charges imposed and levied at the port of importation shall be borne by the Applicant. 4.2.5 Insurance Schedule 1 of the Umbrella Agreement specifically states that the price of the Equipment will be increased by transport, insurance and packing cost until the Port of Chennai. MFPM has obtained transit insurance policy for supply of plant and equipment till the port of Chennai on behalf of MITTPL and also the risk and rewards are transferred to MITTPL at the port of shipment. 4.3 Installation of equipment after importation by MITTPL Under the Umbrella Agreement, majority of the equipment were imported in FY 2011-12 and FY 2012-13 wherein payment amounting to ₹ 343.25 crore and ₹ 199.78 crore respectively were made and in later years emergency spare parts and stand-by equipment were purchased for small amounts. Thereafter, the Applicant entered into installation contracts with external contractors.15 third party external contractors were engaged for installation work who were paid an amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to MFPM as per the agreement included supervisory charges for successful installation and implementation of equipments in India. Hence, it is submitted that the entire amount payable by it to MFPM directly or indirectly includes payment for the supervisory services rendered by MFPM in India and hence as these services have been rendered and utilized in India are as such taxable in India. 5.3 Regarding the Applicant s contention that installation and commissioning of the machinery purchased has been carried on by it by employing local Indian contractors and by foreign nationals, who were employed by the Applicant on long-term basis, Revenue submits that the local Indian contractors , would have at best only assisted MFPM, the supplier of the machinery, in installing and commissioning of the machinery so supplied by it. These local contractors would have been used for moving of machinery from the Port of Chennai to the factory site, for construction of complicated civil works, sophisticated electrical works, etc., so as to facilitate the installation of the machinery by providing Cranes etc., which was carried on as per plan prepared by MFPM, since they did not have the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of payments made by Michelin Global Mobility (hereinafter MGM) outside India, towards the expatriate personnel supplied by MGM and employed by MITTPL. The very nature of the composite contract referred here in this report is much larger in the scope, and cannot be confined to the employment of 79 expats alone, who are stated to have been paid just small sum of ₹ 9.95crore for the Financial Year 2014-15. 5.8 Revenue submits that in this context, the details of sums paid by MITTPL to MFPM, (except purchase of raw material and capital goods as reflected in Form 3CEB) are as under: Asst. Year Description of the services availed Amount(Rs.) 2011-12 Feasibility study 5,52,68,300 2011-12 Training of personnel 2,41,294 2012-13 Reimbursement of expenditure: Social security contribution, travel and other costs 11,41,582 2013-14 Training of personnel 77,83,395 2013-14 Admn. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmits that the applicant has submitted a list of 15 third party contractors for installation of equipment and stated that these were engaged in the installation of machineries, towards which it paid ₹ 131.58 crore. However, an analysis of these contractors shows that all except two are specialized equipment manufacturers and suppliers and are engaged in installation of specialized equipment supplied by themselves and not those of MFPM. Analysis of the few sample agreements and purchase orders of local third party contractors reveals that: 5.11.1 The agreement with Satnam Global Infra Projects Limited along with Industeam SA is not for installation of MFPM supplied machinery. In this agreement of 24 July 2012, MITTPL is the customer, Satnam Global is supplier and Industeam is a service provider. The recital itself says that: And whereas the supplier is engaged in the business of manufacturing and supplying machineries and equipment. And whereas the service provider engaged in the business of providing service for manufacturing and installation. The total payment made to Satnam Global Group is ₹ 7.86 crore, out of which ₹ 1.25 crore is for instal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y conditions, Studies for purchasing, PMPO, PDR implementation . Thus it is clear that the service agreement does not mention installation of the machinery supply of MFPM but for the installation supervision and coordination of various machineries supplied by the third parties, numbering 15 and for which there were separate agreements. Hence the service agreement was not meant for installation of machineries supplied by MFPM. In short, MFPM supplied machines were installed and the same was supervised by MFPM, as there was no separate agreement for installation and supervisory service and hence the Umbrella Agreement becomes the composite agreement, for which MITTPL had not made any payment and the same was charged under the cost of machinery itself. 5.14 Revenue relies on the following case laws which have been rendered in the context of Hon ble Supreme Court judgement in the case of Vodafone International Holdings B.V. v. Union of India [2012] 204 Taxman 408 (SC). Therein, a three-judge Bench of the Supreme Court has laid down that what is needed is to consider the transaction in its entirety and to look at the transaction as a whole. Based on these observations series of Rulin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mixtures require the purchase of specific machinery and equipment by the Client. The Client does not have sufficient knowledge and experience to buy these machinery and equipment under the base conditions of effectiveness; 3. The supplier has extensive experience in facilitating the development of projects of establishment and extension of factories related to the activities of production of tyres and manufacture of mixtures, and is able to deliver directly or through specialized sub-contractors specific machinery and equipment needed by the client; 5.15.1 Revenue submits that from the above it is very clear that the Client, i.e., MITTPL, does not have knowledge and experience to even decide on the machinery and equipment required to set up its manufacturing unit for Pneumatic tyres and facility for mixtures. That being the state of affairs of MITTPL, it cannot claim that it has the wherewithal to say that the Umbrella Agreement is only for the supply of offshore machinery and equipment. It is a contract between two closely associated companies. 5.16 Revenue submits that the case of Ishikawajma Harima, from which the Applicant takes support, is very different fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaken by them jointly. It is submitted that in this case, it is only a single supplier and the ultimate purpose of the contract was to set up a factory. 5.17 In its final submission the Revenue has stated that the transaction between MITTPL and MFPM is that of related parties and the apparent form given to the written agreements and LOUs should not be taken into consideration and only substance over form should be seen. It is not a contract between a manufacturer and supplier but MFPM is engaged in establishing of factory on behalf of MITTPL. The installation of machinery supplied by MFPM was not done by third party contractors, employees and expats but only by MFPM. 5.18 The case laws relied upon by the applicant are factually different as in these cases the transactions were between two unrelated parties with different interest. But in the Michelin Group the ultimate holding company is CGEM which has two subsidiaries, MFPM and CFM, Switzerland. MFPM, France is the manufacturer, sales entity and service provider. MFPM, Switzerland is the holding and the finance company for non-French entities including MITTPL. Both work for the interest and profit of the ultimate holding c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . 4. The client agrees to purchase the equipment as mentioned in Clause 1 below (the Equipment ) , if any required for attainment of its objectives mentioned above, in accordance with this Contract and its appendices and/or its supplemental agreement (if any) . . 1. Equipment 1.1 The purpose of this contract is to define in general terms the conditions that shall apply uniformly throughout the term of this Contract relating to the supply by the Supplier to the Client directly or through subcontractors of machinery and equipment for - The new manufacturing factory for tyres; and - The new manufacturing facility for mixtures of the Client 2.1 This new investment will require supply of machinery and equipment imported from outside India which is planned to be deployed between the years 2010 and 2017 6.3.1 Thus, the aforesaid Umbrella Agreement dated 1 April 2011 was only for off-shore supply of equipment by MFPM to Michelin India and a separate Services agreement was entered into for supervision of installation of the equipment, post supply of equipment outside India. This supports the fact that installation of plant and equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on from time to time with the Receiving party. 6.4.1 The Applicant submits that the Department has erred in classifying the payment of ₹ 9.95 crore in admin services as the same were towards supervision services as mentioned in the service contract dated 1st Feb 2013. Without prejudice to the same, in FY 2013-14 also, Michelin India has paid an amount of ₹ 2.01 crore for admin services rendered by MFPM, as evident from the Department s Report itself. 6.5 For installation of the equipment after importation, the Applicant has entered into installation contracts with external suppliers and with the help of its employees and foreign expats employed with Michelin India on long term basis, it has undertaken installation work at its factory. The local contractors with Indian employees of Michelin India played the main role in installation work. 15 third party local contractors were engaged for installation work who were paid an amount of ₹ 131.58 crore. 169 employees of Michelin India were engaged and 79 foreign expats were employed on long term basis with Michelin India for installation work. 6.5.1 As against this, MFPM has sent only 33 technicians under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.6 Coming to the main issue, it is submitted that the Department has wrongly concluded that as per the aforesaid alleged composite agreement, the price of equipment includes supervisory charges for installation and implementation of equipment in India, and the supervisory services can be rendered and utilized only in India. MFPM is only selling the equipment off shore and the Umbrella Agreement provides that the price of the equipment includes cost incurred by MFPM towards supervision charges (i.e. salaries charged, daily allowances, personnel transport costs, hotel accommodation and ancillary costs) which is done prior to importation of equipment in India and does not relate to any supervision of the installation of equipment in India. The cost of supervision charges is borne by the Supplier i.e MFPM and the price is inclusive of the expenditure incurred by Michelin France, outside India, considering that some of the equipment would be manufactured by subcontractors. In such a case, the Agreement provides that the price shall include the expenditure incurred in supervising the manufacturing activity of the subcontractors. This is evident from the following sub-clause which als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified by subsequent confirmation issued by MFPM dated 14 December 2012. It is, further, submitted that this agreement has to be read in light of the said clarification issued by Michelin France. 6.6.4 The Applicant reiterates that the cost of the equipments include the charges for designing, engineering, supervision, etc. outside India for the purpose of manufacturing the equipment and MFPM does not render any such kind of services to the Applicant under the Agreement. Therefore, the Agreement cannot be said to be a composite agreement with the element of technical services. 6.7 Regarding Revenue s observation that the local contractors and employees of Michelin India and foreign expats do not possess the requisite skill and know-how for installing the equipment, the Applicant has highlighted the magnitude and the large size and scale of factory to be set up in Chennai. It is to be noted that the factory is spread over an area of 290 acres which has offered employment opportunities to a minimum number of approximately 1,500 workers. For setting up of the factory, around 100 acres of total land is already utilized. The various departments of the factory, catering to different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees are engineers having specialized skills and technical knowledge required for the purpose of commissioning and installation of the machinery purchased by Michelin India for setting up of its factory. Accordingly, it is submitted that MFPM has no role to play in the installation of the equipment. 6.7.5 The 79 foreign nationals were employed by the Applicant on a long term basis for assistance in installation of equipment, and then for manufacture of tyres and running the day to day operations. These expats have come from various countries like UK, USA, Italy, Netherlands, Germany, Romania, Canada, France, Poland, Hungary, Spain etc. Most of the employees are from engineering, quality and maintenance background possessing technical expertise and experience in managing projects for the purpose of commissioning and installation of the machinery. 6.7.6 Further, the observations of the Department that MFPM trains the employees of Michelin India for installation work is incorrect. Michelin employees are not trained for Installation but on Michelin s training module Michelin Manufacturing Way , which enables employees to implement the production process of manufacturing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India as per Section 9(1)(i) of the Act, as no part of the income earned by MFPM from sale of equipment in India is attributable to the operations carried out in India. 6.11 Regarding the department s contention that the Applicant had a Permanent Establishment in India, the Applicant submits that there is no fixed place through which the business of MFPM is wholly or partially carried on in India. In absence of any PE of MPFM in India, there cannot be any tax liability attached to MPFM for the offshore supply of equipment under the provisions of the tax treaty. 6.11.1 The Department has specifically contended that MFPM has installation PE in India under Article 5(3) under the India France DTAA. In this regard, it is submitted that, Article 5(3) of the India France DTAA reads as under:- A building site or construction, installation or assembly project constitutes a permanent establishment only where such site or project continues for a period of more than six months. The Applicant reiterates that the aforesaid Agreement dated 1 April 2011 is for offshore supply of equipment by MFPM to Michelin India. As per the said Agreement equipment are to be supplied by MFPM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmanent establishment in the Contracting State where the permanent establishment is situated. The profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the Contracting State of which the enterprise is a resident. 6.13 With regard to Revenue s contention that it was an agreement between two closely associated companies, it is submitted that merely for this reason it cannot be concluded that it is for the purpose of avoidance of taxes on the basis of conjectures and surmises without any documentary evidences. Further, the Revenue has erroneously opined that the clarification received from MFPM, dated 14 December 2012, should be rejected on the grounds that the same was issued by two closely associated companies for the purpose of avoidance of taxes. This is not warranted. 6.14 Regarding Revenue s reliance on various cases decided by the AAR, it is submitted that the ratio decidendi laid down in the above decisions is based on the ruling of the Hon ble Supreme Court in the case of Vodafone International Holdings BV v. Union of India (204 Taxman 408), wherein the Hon ble Supreme court had held that, what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 2007; LS Cable Ltd (AAR No. 858-861 of 2009) dated 26 July 2011; Ericsson A.B. (343 ITR 470) (Del) dated 23 December 2011; Sepco III Electric Power Construction Corporation (342 ITR 213) (AAR) dated 31 January 2012; Joint Stock Company Foreign Economic Association Technoprom export (322 ITR 409) ( AAR) dated 25 February 2010; Deepak Cables (India) Ltd (AAR No. 940 of 2010) dated 26 July 2011; M/s Nokia Networks OY (253 CTR 417) (Del) dated 7 September 2012; M/s Nortel Networks India International Inc (135 DTR 105) (Del) dated 4 May 2016; and LS Cable System Limited (AAR No. 1279-1283 1320-1323/2012)dated 9 May 2016. 6.15.3 In light of the above rulings, it is submitted that the following key principles are to be evaluated to determine whether the supply of machinery and equipment and materials qualify as offshore supply: a) There should be separate/ divisible contracts for offshore supply and onshore services or such distinction should be specifically mentioned in the agreement; b) Transfer of title in property outside India; c) Delivery of the equipment should be outside India; d) Payment for purchase of equipment should be made outside India; e) Customs duty should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of MFPM on the off shore supplies of equipment which have been paid for by the Applicant. However, the Revenue has primarily raised the issue that since the Applicant and the French group company MFPM were closely associated, the two agreements, namely Umbrella Agreement and the Service Agreement, should be read as one and in continuum, since the Applicant had got the installation done by the MFPM personnel itself, the supply, installation and supervision were to be seen together, and the Applicant s premises in India be seen as constituting a PE of MFPM. Hence, the entire income arising from the execution of this composite contract should be brought to tax in India. 7.2 It is seen that the Applicant has entered into two agreements with MFPM, namely: (a) Umbrella Agreement dated 1 April 2011 for design, engineering, manufacturing and supply of machinery and equipment from outside India; and (b) Services agreement, dated 1 February 2013 in relation to supervision of installation services rendered by different external suppliers and to coordinate the start-up and ramp-up services rendered by those suppliers. These are entered into at different points of time and havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being brought on record, it cannot be assumed that the personnel sent by MFPM under this Agreement were involved in installation work. Revenue s submission that the installation would have been done only by MFPM personnel to whom payment would have been made as part of the Administrative expenses, is also merely an assumption and bereft of any evidence whatsoever. 7.5 To examine the Applicant s claim that the services under the Services Agreement were only in the nature of supervision, and not of installation, as alleged by the Revenue, we have gone through the details of the equipment purchased, invoices raised by third party contactors, personnel hired / employed by the Applicant etc. 7.5.1 Schedule II Price List of the Equipment Purchase Contract 2011, gives the details of the equipment purchased from MFPM. It is seen that most of these are not huge and complex machines that require manufacturing personnel to install. Most appear to be pre-fabricated, shipped as such in plywood cartons (as the invoices suggest) and ready to use. These were fabricated and assembled in France itself or other places through third party suppliers of MFPM, and for which the Applicant has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achineries at the factory of the Applicant, as per its master plan. 7.5.4 Further, as against these agreements it is seen from the bills raised by them for installation, that some of the items installed are also appearing in the Schedule II - Price List, to the Umbrella Agreement, which gives the description of equipment imported/purchased. For example, some purchase orders show installation charges for Calander Environmental Machines, Calander 800, Calander EB etc. and the list of equipments in the Price list of MFPM also shows supply of these items as appearing at S. No. YPK18.1, YPK18.2, YPK24.1 etc.Satnam and Webb have also supplied and installed machineries / equipment such as belt conveyors, Axing tables with rollers, directional alignment table etc., required to synchronize with the bigger plant and installation of the same along with the machinery imported from Michelin France. 7.5.5 Similarly, the purchase orders of another third party CMI FPE Ltd. indicate installation of some of its own supplied machines, and also those of Michelin India and Michelin France. It has also installed Belt-Joining which is an item appearing in the list of imported equipment at S No. P52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Service Agreement. Revenue has not brought on record anything to establish that they were involved in installation or were paid for that purpose, nor do the agreements show this. Considering the large scale of the project spread over 100 acres, it is highly improbable that the work could have been completed by just 33 technicians from MFPM, when they have stayed for very short periods. There is no evidence also to show that more such MFPM technicians had visited India, or payment made for more personnel. It appears therefore, that installation was done by the third parties, local technicians and expats employed by the Applicant on long term basis only, trained at a high cost, under the supervision of the 33 MFPM specialist technicians who were paid ₹ 9.95 crore for the same. 7.5.9. An overview of the expenses incurred by the Applicant up to 31.3.2014 for setting up of the factory gives the following picture: Particulars Amount (Rs. crore) Total Capital Work in progress (CWIP) * 1,464.15 Less: Purchase of machinery from MFPM (580) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d parties and technicians on specific terms and conditions which are well documented and samples of which have been furnished. Thus, neither can the project be called turnkey, nor can the two separate contracts be read together as a composite contract. Revenue has based all its arguments on the assumption that installation was done by MFPM and being closely associated companies, and that it has been designed to look as separate contracts. This view cannot be accepted on the factual position narrated above. 7.7 Revenue has also argued that since MFPM had earlier carried out a feasibility study for which the Applicant had paid ₹ 5.52 crore, its PE was established then itself. We donot agree. This study was carried out even before the signing of the Umbrella Agreement and supply of equipment at the behest of the Applicant, and for which the amount was paid on arms length basis, as assessed by the TPO. This study of preparatory and auxiliary nature carried out for a short and one off period, even before the business commenced could not be said to have established a business connection at that point in time, or fixed place of business through which its business was carried on, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific Pte Ltd., AAR 981 of 2010 (MAPL), Ansaldo Energia SPA [310 ITR 237 (Mad)]; and Alstom Transport [2012] 22 Taxmann.com 304,AAR, among others. 7.8.2 The case cited by Revenue, that is MAPL appears inapplicable to the facts of the instant case. For example, there was a composite agreement and though the scope of the work was divided, MAPL was responsible for the entire project from supply of all materials, shipment, transportation, fabrication, installation, inspection, testing, and commissioning, indicating that it was an indivisible contract. Payments were also related not to sale of goods, but to different stages of completion of the contract, which were not separately linked to supply and services. MAPL sold the goods outside India but its responsibility remained till delivery on site, paid Customs duty and for clearances. It was responsible for all the shipment risks, including taking insurance of the goods. Thus all the activities were integrated from the supply till commissioning of the plant in India and hence could not be dissected to identify the taxable events or cut of off shore from on shore activities. On all these features, the case of the Applicant is on a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case, it can be well separated from the whole. Such segregation may be essential also, as held by the Hon ble Supreme Court in Huyndai Industries Co. Ltd., to separate the PE from the other transactions so that income can be correctly attributed to the PE. The business connection as contemplated under Section 9 of the Act has to be direct and real. In the present case, the sale of goods, simplicitor, outside India would not give rise to any taxable income in India even though the said goods are to be utilized within India. Hence, no part of the income from the off shore supply of equipment can be brought to tax in India, on the facts of this case. 7.9.1 The principle of apportionment on the basis of territorial nexus is now well accepted. Explanation 1 to section 9(1)(i) of the Act also specifies that only that part of income which was due to operations in India would be deemed to accrue or arise in India. It necessarily follows that in case where a contract is only a part of the operations to be carried out in India, the assessee would not be liable for part of income that arises from operations conducted outside India. In such a case, income from the venture would have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly were outside India, and therefore cannot be deemed to accrue or arise in the country; Clause (a) of Explanation 1 to Section 9(1)(i) states that only such part of the income as is attributable to the operations carried out in India, is taxable in India; the existence of a permanent establishment would not constitute sufficient business connection , and the permanent establishment would be the taxable entity; the fiscal jurisdiction of a country would not extend to the taxing of entire income attributable to the permanent establishment; and there exists a difference between the existence of a business connection and the income accruing or arising out of such business connection. 7.10 In both the cases of Ishikawajima Harima (SC)(supra) as well as Linde AG (Del)(supra), which followed Ishikawajima Harima, there was a single composite contract but the project was undertaken by several different parties coming together on turnkey basis. The instant case is actually on a better footing in that here there are only two parties, apart from the third parties engaged in manufacture, supply and installation, there are two clearly demarcated contracts, the events from which income emana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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