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TMI Blog2023 (2) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... e the basic information as to invoices raised by it under all the three categories despite the averment before the Tribunal that computations were erroneous. The complete reconciliation of invoices raised by it under all the heads vis- -vis payments received by it and the quantum of income offered by it over various years has neither been tabulated nor been quantified at any stage of proceedings. Instead, the assessee has, merely raked up the issue on merits, which already stood adjudicated by the Tribunal. Double taxation of income - No separate books are being maintained for Indian operations and therefore, the method of accounting would lose relevance in such a case. Per query from the bench, Ld. AR has failed to provide any such information or computations before us. In such an eventuality, lower authorities would be left with no option but to determine the profits as per material available on record, which they have correctly done. AR has pleaded for another opportunity to provide the complete details as well as computations to the lower authorities - Accepting the same, we direct Ld. AO / TPO to provide another opportunity of hearing to the assessee to place before it the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that all the activities right from engineering stage to commissioning stage were inextricably and organically linked and therefore, the turnkey contract was a single composite contract between Ford India and the assessee. Accordingly, considering markup of 7.33% on all the three activities, Ld. AO proposed addition of Rs.532.72 Lacs. The Ld. DRP made certain modification after considering remand report. Aggrieved, the assessee preferred appeal before this Tribunal. 2. The issue, on merits, was adjudicated by the Bench in revenue s favor as under: - 7.4 Now on the issue whether the income on account of supply of paint shop material/ equipment on account of the composite contract is taxable in India in the hands of the PE, the Ld AR submitted the same plea taken before the AO/DRP and on the grounds above. Per contra, the Ld Standing Counsel relied on the orders of the lower authorities, his counter, supra. It is clear from the elaborate facts viz in case of Ford contract, examination of RFQ, proposal by Durr Germany in response to RFQ, Letter of Intent, Proposal given to Ford by Durr Germany, Purchase Order, Organisational Chart, Project progress/Final report, transfer of risk on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, the facts recorded by the DRP in the following portion of its order stand undisputed:- the assessee is intricately connected to the client activities in India from supply of equipment till certification of successful installation and commissioning as per the agreement. Even though the installation activities are undertaken by the Indian subsidiary, the presence and continued supervision of assessee is well established. It is the responsibility of assessee to give final proof of performance. Hence the PE is clearly constituted as brought out by the AO in the DAO and these facts are further fortified by the evidence gathered during remand report. The remand report submitted by the AO details the evidence gathered and the same is captured in earlier paras. Various documents, agreements, invoices obtained and enclosed to the remand report confirms these facts. As per the Ground 1(a), it is claimed by the assessee that it has not participated in the execution of the installation and commissioning of the plant and hence there can be no question of attributing any portion of income to the assessee. However as per the documents obtained during survey it is seen that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree contracts are inextricably linked and it was a composite contract, (b) all responsibility from the beginning to the end rested on the assessee. (c) there is an intimate, real and continuous relationship with the subsidiary company, and (d) that the price of the other contract was loaded on to Contract No. I. In these circumstances, we do not think that the first question arises for consideration. Therefore, we do not find merit in the submissions of the Ld AR and hence the corresponding grounds fail. The bench thus held that all the three contacts were single composite contract and income arising therefrom was to be assessed in the hands of the assessee. 3. However, considering the plea of Ld. AR with respect to correct computations, the issue of computation of income was restored to the file of Ld. AO / TPO with following directions: - 8. On the issue of mistakes in the computation, the Ld AR submitted that supplies are added to the total income by applying an ad-hoc markup rate. On the transactions with Ford India, the Ld AR submitted that down payment invoices considered as supplies as per the RR, a basic error which leads to same payment being counted twice resulting in do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .52 Euros from Ford India contract over the years which need to be reconciled year-wise and the assessee was directed to reconcile the same. The assessee, vide reply dated 04.10.2019, inter-alia, admitted that downpayment invoices of Ford India do not form part of the PO and the same were over and above total PO value. This amount was revised to 4,23,12,142 Euros by the assessee which do not include installation and commissioning revenue. The Ld. AO held that it was thus clear that invoices were raised separately for supply, installation and commissioning. No details of profit earned were made available by the assessee and the assessee did not file any reconciliation for the income which was taxed twice along with convincing evidences. 4.3 Accordingly, these details were again sought from the assessee, vide letter dated 05.11.2019. The assessee, vide reply dated 14.11.2019, filed certain details of supplies made to Ford India along with details of income accrued on mercantile basis under supervisory contract etc. The Ld. AO rejected the plea that downpayment invoices as unearthed by the department during survey proceedings were mere documents that facilitate the release of payment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has, merely raked up the issue on merits, which already stood adjudicated by the Tribunal. The assessee also raised a plea of double taxation of income without demonstrating the same. No separate books are being maintained for Indian operations and therefore, the method of accounting would lose relevance in such a case. Per query from the bench, Ld. AR has failed to provide any such information or computations before us. In such an eventuality, lower authorities would be left with no option but to determine the profits as per material available on record, which they have correctly done. During hearing, Ld. AR has pleaded for another opportunity to provide the complete details as well as computations to the lower authorities. Accepting the same, we direct Ld. AO / TPO to provide another opportunity of hearing to the assessee to place before it the complete details of invoices raised by it, in all the heads, under the contract and income offered by it over various years. The computation of income which arose to the assessee under the contract shall also be quantified. The complete onus, in this regard, would be on assessee. We order so. For the said limited purpose only, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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