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2014 (1) TMI 1300 - ITAT DELHIConsideration taxed on contracts - Works carried outside India Identification of onshore/offshore services Services entered by unrelated parties Held that:- During the year also MUT pipeline project, MSP platform project of ONGC and GMR (operation and maintenance contract) of GMR power Corporation were continuing relevant to the assessment years 2004-05 or earlier years whereas the project HMI (sub-station) of Hyundai Motors India Ltd. has continued from the assessment year 2006-07. In the assessment year 2007-08, the Tribunal has dealt with the issue relating to MUT pipeline project, MSP platform project, of ONGC, and GMR (operation and maintenance contract) projects which are also under consideration in the assessment year in question - The contracts are divisible - The receipts pertaining to designing, fabrication and supply of material, the activities carried out outside India is not taxable in India - The ground relating to MUT pipeline project, MSP platform project, of ONGC and GMR (operation and maintenance contract) projects in favour of the assessee that outside the receipts pertaining to designing, fabrication and supply of material, activities carried out outside India is not taxable in India - So far as taxability of receipts pertaining to HMI (sub station) of Hyundai Heavy Industries Ltd. is concerned the matter is set aside and remitted back to the AO for fresh adjudication Decided partly in favour of Assessee. Entire revenue taxed Operations carried on outside India Applicability of Provision of Article 7(3) and 7(5) of DTAA - Fabrication carried out of India Held that:- The decision in Hyundai Heavy Industries Co. Ltd. Versus Director of Income-tax (International Taxation) [2011 (5) TMI 858 - ITAT DELHI] followed - The receipts pertaining to designing, fabrication and supply of material, the activities carried out outside India is not taxable in India. Error in computing income chargeable to tax Disallowance of expenses for various projects outside India Held that:- The decision in Hyundai Heavy Industries Co. Ltd. Versus Director of Income-tax (International Taxation) [2011 (5) TMI 858 - ITAT DELHI] - The AO has taxed 90% of the receipts from these contracts under a particular method then, cannot treat the remaining 10% in a different way and even a taxed gross amount by disallowing cost and estimated the profit - the order of the AO set aside with a direction to him to take 10% of the gross revenue after allowing sub contracts cost Decided in favour of Assessee. Error in bringing tax interest at marginal rate under Article 12(5) of DTAA Held that:- The decision of the authorities below on remained that interest on Citi Bank deposit was out of surplus earned by the PE and therefore effectively connected with the PE and is to be taxed at the normal rate application to the profits of the business of a foreign company - In absence of rebuttal of this finding of the authorities by the assesee, there was no reason to interefere therewith Decided against Assessee. Levy of Interest u/s 234B and 234D of the Act Held that:- The decision in Director of Income Tax vs. Maersk Company Ltd. [2011 (4) TMI 886 - Uttarkhand High Court] followed - As soon as tax is deducted at source by the person responsible to make payment the liability of the assessee to pay the tax gets discharged - If the tax is not deducted it is payable by the assessee directly as provided u/s 191 of the Act - the liability to pay interest u/s 201 (IA) is on a person who fails to deduct the tax at source - it is absolute and is upon the person responsible for deducting tax at source till the date it was actually paid - the liability to pay interest u/s 234B of the Act arises only if the assesee is liable to pay advance tax u/s 208 and has failed to pay such tax or where the advance tax paid by the assessee under the provisions of section 210 is less than 90% of the assessed tax the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.
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