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2023 (7) TMI 982 - ITAT DELHIIncome deemed to accrue or arise in India - profit attributable to the India PE - As argued transaction was effected offshore and the Project Office merely acted for custom clearance - HELD THAT:- Though custom clearance of offshore equipment supply was the responsibility of Hitachi Ltd. Indian Project Office, however, all activities in relation to the same are carried out by M/s Mitsui & Co. Ltd. and goods are only passed through the Project Offices for the purpose of customs duty compliance in India including payment of customs duty and IGST, which in turn was charged back to Hitachi Ltd. Japan by the Project Office. The activities relating to customs clearance are covered under the scope of work for Onshore portion of the contract. Hence, as per the terms of contract with DFCCIL, the offshore goods supplied from Japan were handed over to M/s Mitsui & Co. Ltd. in Japan for transportation and delivery at site. Thus, no activity in respect of offshore portion of the contract is attributable to the PEs of assessee in India. Role of the Project Officer - What was the role of the Project Office for the transaction in question and what is the basis for attributing the profit at 35% to the PE. Moreover, before AO it was stated by the assessee company that the goods were passed through the Project Offices purely for the purpose of customs duty compliances. The lower authorities have not adverted anything on this aspect. As on account of loss no profit could be attributed - As following the binding judgment of CIT (International Taxation) Vs. Nokia Solutions and Net Works OY [2022 (12) TMI 700 - DELHI HIGH COURT] we are of the considered view that the authorities below were not justified in attributing the profit to the assessee when there was loss. We, therefore, direct the Assessing Officer to delete the impugned addition - Decided in favour of assessee.
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