9911796707
TMI Blog2023 (11) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. 2. Ground of appeal taken by the assessee in ITA No.872/Del/2016 read as under :- The following grounds of appeal are mutually exclusive of and without prejudice to each another. 1. That Learned Assessing Officer ('Ld. AO') erred in assessing the income of the Appellant at INR 27,86,03,199/- as against the returned income declared by the Appellant at INR 25,19,77,876/-. 2. That on the facts and in the circumstances of the case and in law, the impugned order passed by the Ld. AO is bad in law and void ab-initio. Re: Project Office at Vadodara does not constitute Fixed Place Permanent Establishment ( PE ) of the Appellant Company under Article 5(1) of the India-Germany DTAA. 3. That on the facts and in the circumstances of the case and in law, the Ld. AO and the Hon'ble DRP erred in alleging that Project Office at Vadodara constitutes fixed place PE of the Appellant under Article 5(1) of the Indo-Germany Double Taxation Avoidance Agreement ( DTAA ) without independently examining the same in the light of Appellant's factual background. 3.1 Without prejudice to above, Ld. AO and the Hon'ble DRP failed to appreciate that mere existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out by BTIL are independent, separately identifiable, separately compensated and hence there is no question of alleging it to be the PE of BTG. 4.6 That the Ld. AO erred in not allowing the travel expenses of INR 55,947,355 (Euro 888,053), (being 75% of the expenses incurred by the Appellant during the relevant previous year) despite holding that last year's order should be followed w.r.t the treatment/ allowability of travel expenses incurred during captioned assessment year. 4.7 That the Ld. AO and Hon'ble DRP erred in disallowing travel related expenses by also alleging that 25% of the same relates to contracts other than RS-2 contract without any basis to support the same. 4.8 That the Ld. AO / Hon'ble DRP erred in adopting contradictory stands inasmuch as one hand they allege large number of expat employees visited India during the relevant previous year solely for purposes to assist BTIL in execution of RS-2 contract and on the other hand, they disallow 25% of travel expenses while holding that the appellant has been unable to demonstrate that the entire amount of travel expenses were incurred only in respect of RS-2 contract. 5. That the Ld. AO an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger rolling stock ('Contract RS2'). During the AY 2010-11, the assessee company has made onshore supplies of passenger rolling stock to DMRC. Further, the assessee company has also rendered intermediary services to Bombardier Transportation India Limited ( BTIL ) for marketing, project management and engineering etc. during the AY 2010-11. As the facts and circumstances of the current year are the same as the preceding assessment year 2010-11, vide order sheet entry dated 16.03.2015 the assessee was asked to show cause as to why the assessment for AY 2011-12 should not be completed on the same lines as the previous A.Y. 2010-11. The assessee vide letter dated 25.03.2015 filed its written submissions. 3.1 AO made enquiry from the assessee in this regard but he was not satisfied. He has held that the assessee has two fixed base PEs, first in the form of BTIL and the other in the form of Project Office (PO). AO further held that facts and circumstances remaining the same as in the previous AY 2010-11, the same rate has been accepted for the purpose of attributing profits of the PE by the assessee during the current AY 2011-12. AO went on to compute the net profit attributab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the same are similar to AY 2010-11 and submitted that the ratio of the order dated 14.07.2023 of ITAT in ITA No.1390/Del/2015 for AY 2010-11 will also apply in this year i.e. AY 2011-12. Further, he submitted that no profit was earned by the AO. He referred to the aforesaid ITAT order in this regard. He also submitted that the ld. CIT (A) for AY 2012-13 has held that the PO could not be treated as PE of the assessee and the Department has not filed any appeal, hence this issue has attained finality. 8. Per contra, ld. DR for the Revenue could not dispute this proposition that the facts are similar to AY 2010-11. 9. We have heard both the parties and perused the records. We find that ITAT in the aforesaid order for AY 2010-11 has noted that DRP had held that project Office has not made any profit. In this regard, observation of the ITAT for AY 2010-11 in para 6 is as under :- While dealing with assessee s objection, learned DRP granted substantial relief to the assessee qua the attribution of profit in relation to onshore supply and services. However, insofar as, income from offshore supply of 8 train sets, learned DRP, though, agreed with the assessee that the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No.5638/Del/2018 read as under :- These grounds are without prejudice and in addition to the grounds raised in ITA No. 872/De1/2016 [Appellant's Appeal for AY 2011-12 against final assessment order dated 27.01.2016 passed under Section 143(3) read with 144C (13) of the Income-tax Act, 1961 ( Act )] . 1. That the AO grossly erred in taxing the interest paid by Bombardier Transportation India Limited ( BTIN ) on the external commercial borrowing ( ECB ) advanced by the Appellant at the rate of 40% on the basis of its finding that the Appellant had a fixed place permanent establishment ( PE ) in India in the form of its project office ( PO ) in India. 2. That the rectification order passed by the Ld. AO is patently illegal as the interest income received from BTIN pursuant to the loan agreement has not been discussed in the Assessment Order dated 27.01.2016 and same is not a mistake apparent from the records under Section 154 of the Act. 3. That the AO completely erred in law and on facts in ignoring that the ECB advanced by the Appellant to BTIN, was not effectively connected with the activities of the PO, basis which such PO was determined to be the PE of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d undisputedly constitute a fixed place PE of the assessee since its business was being carried out though the PO. Accordingly, the above mistake being apparent from record is hereby rectified. Income of Rs. 21,69,76,045/- is taxed @10% and income of Rs. 3,50,01,831/- is taxed @ 40% (plus surcharge and education cess). Tax Detailed computation in this regard is given in ITNS-150 which is made part of this order. Credit of prepaid taxes and tax paid after regular assessment, if any, is allowed. Notice of demand and necessary forms issued. 17. Against the above order, assessee has filed appeal before us. We have head both the parties and perused the records. 18. Ld. Counsel of the assessee submitted that given the fact that there is no PE of assessee in India in terms of ITAT order in assessee s own case in AY 2010-11 (supra), there is no question of attributing interest income to PE of India and taxing the same at 40%. Accordingly, ld. Counsel of the assessee submitted that these grounds being consequential to the finding on PE and deserves to be allowed as well and the interest income requires to be taxed at 10% as declared by the assessee in the return of income. 19. Per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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