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TMI Blog2024 (3) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... hat freight and charges are payable at the destination only. The invoice for supply of plant and machinery shows that place of delivery is Moji Port, Japan and the value of invoice is on FOB basis. Thus, the aforesaid facts clearly establish that the situs of sale of plant and equipment was in Japan and not within the territory of India. Therefore, in our view, the ratio laid down in case of Ishikawajma-Harima Heavy Industries Ltd [ 2007 (1) TMI 91 - SUPREME COURT] clearly applies to the facts of assessee s case and no part of the receipts in dispute is taxable in India as the sale event and transfer of title over the goods have taken place outside the territory of India. In the facts of the present appeal, admittedly, the assessee is not engaged in the business of providing services or facilities in connection with prospecting for, or extraction or production of mineral oils in India. Neither the assessee has supplied plant and machinery on hire for use or to be used in prospecting for, or extraction or production of mineral oils. The assessee has sold the plant and equipment to BPCL for setting up a plant in its facilities at Kochi. Therefore, in our opinion, the conditions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petroleum Corporation Limited (BPCL), all other receipts were offered to tax in India. Insofar as the receipts from sale and supply of equipment to BPCL, the assessee claimed before the Assessing Officer that such sale/supply of goods having been made from offshore on Freight On Board (FOB) basis and the sale transaction having been completed outside India, there is no taxable event in India so as to bring to tax the receipts in India. The Assessing Officer, however, was not convinced with the submissions of the assessee. He observed that the assessee as per the scope of work under the contract between the assessee and BPCL, it includes licence fee, basic design engineering fee, mandatory service as per agreements, Additional Services based on the requirements Training Fees in addition to the cost of plants and equipments sold. He observed, one of the group entities of the assessee, i.e., namely Lurgi India International Services Pvt. Ltd. has entered into a separate contract with BPCL, in terms of which, the said entity is required to provide Catalyst Loading Supervision, mandatory service as per agreements or additional services based on the requirement. He submitted, as per sco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establish that the sale event was completed outside the territory of India, the receipts from supply of plant and machinery cannot be taxed in India. 6. Proceeding further, he submitted, BPCL has entered into five separate contracts with the assessee. He submitted, the scope of work under each contract is distinct and separate. He submitted, the Indian entity has also entered into a separate contract with BPCL, wherein, the scope of work is totally different. Thus, he submitted, when there are independent contract for specific work to be performed, the Departmental Authorities cannot conclude that the work executed is under a composite contract. In support of such contention, he relied upon the decision of Ishikawajma- Harima Heavy Industries Ltd. Vs. Director of Income Tax [2007] 158 Taxman 259 (SC). 7. Without prejudice, he submitted, application of section 44BB of the Act is totally misplaced as the said provision can be invoked only in case of a non-resident engaged in the business of providing services or facilities or supplying plant and machinery on hire for use or to be used in prospecting for, or extraction or production of, mineral oil. He submitted, the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reactor Package Unit Service Agreement 10 June 2016 Catalyst and Proprietary Equipment Supply Agreement 11. As could be seen from the above, the assessee entered into five independent agreements with BPCL, wherein, scope of work has been specifically identified and demarcated. Insofar as agreement for supply of Catalyst and Proprietary Equipment, the purchase order clearly stipulates that the terms of delivery is FOB/FCA Japanese Seaport/Airport/Warehouse. Article 7.02 of the Agreement reads as under: 7.02 Supplier shall procure all the Catalyst and Proprietary Equipment on FOB/FCA Japanese Seaport/Airport/Warehouse basis as per INCOTERMS 2010. 12. The terms of payment as per Article 5 of the agreement says that 10% of the price has to be paid as advance and 80% of the price has to be paid upon delivery FOB/FCA Japanese Seaport/Airport/Warehouse out of an unconditional irrevocable and documentary Letter of Crodit which shall be opened within 30 days of the issuance of company s purchase order. Whereas, balance 10% will be paid upon successful completion of test run. Clause 5.02 stipulates that the payment has to be paid to supplier s account number and the bank specified in suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case, the Department was convinced that the assessee had a PE in India all the receipts should have been brought to tax under domestic law, either under section 44BB or section 44DA or section 9(1)(vii) of Act, as the case may be. Further, though, the departmental authorities have concluded that the assessee had a PE in India, however, they have not established how the conditions of Article 5(1) of the tax treaty are satisfied and what is the nature of PE in India. On careful scrutiny of the assessment order and directions of learned DRP, we find that except general observations, no valid reasoning has been provided by the departmental authorities to establish existence of PE. 16. Thus, considering the totality of facts and circumstances of the case, in final analysis, we hold that the receipts from sale/supply of plant and equipment are not taxable in India. Accordingly, ground no. 1 is allowed. 17. Ground no. 2, being premature at this stage and ground no. 3 being a general ground, are dismissed. 18. In view of our decision in the main appeal, the stay application has become infructuous. 19. In the result, the appeal is allowed and the stay application is dismissed. Order pro ..... 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