TMI Blog2012 (2) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ted these supplies. Further, all such issues, including whether the contract is composite and indivisible, have been addressed in the case of Ishikawajima Harima Heavy Industry (2007 - TMI - 3467 - Supreme Court ). Therefore, amount received/receivable by applicant for offshore supplies is not liable to tax in India under the provisions of the Act, in view of the decision of Supreme Court in IHHI - Decided in favor of assessee. - AAR No. 854 of 2009 - - - Dated:- 1-2-2012 - P.K. Balasubramanyan, V.K. Shridhar, JJ. RULING V.K. Shridhar, Member Applicant (CTCI) is a Hong Kong company and is in the business of engineering, procurement and construction of petroleum, petro-chemical and power plants. With a view to execute a proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act) is liable to be taxed in India? (ii) If the answer to the question No. (i) is in affirmative, to what extent the income received by the Applicant under the Contract for offshore supplies is to be considered as reasonably attributable to the operations carried out in India and to be taxed in India. 4. It is the case of CTCI that transfer of goods to Petronet i.e. the offshore supplies, being outside India, there is no territorial nexus for taxation regarding those offshore supplies. Learned counsel submitted that in the light of the decision in Ishikawajima Harima Heavy Industry, 288 ITR 408 (IHHI), the facts being identical, the questions raised have to be ruled in its favour. The counsel pointed out that the only objection raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the consortium formed by CTCI and CINDA? To answer the first question we have examined the sample of an invoice for 'offshore supplies' placed before us. What we notice on its perusal is that: (refer to page 30 of the written submission filed on 29.8.2011) the importer is Petronet in the Declaration Form presented to the Custom Authorities. the supplier is CTCI Overseas Corporation Ltd., Taiwan, holding company of the applicant. the import is for Home Consumption of Petronet. the port of shipment is Philadelphila, USA. Then the invoices for offshore services presented by CTCI to Petronet showing the mode of payment is to: (refer to pages 55 and 56, of the written submission filed on 29.8.2001) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filling in the import declaration. This was examined and found correct by the custom authority. Regarding the name of the bank to which the payment has been remitted by Petronet, it is submitted that the applicant has maintained a bank account in Calyon Taipei Branch (Now CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK) as per the certificate from the said bank. Further, a certificate from Petronet was furnished that the offshore supplies were made by the applicant and that the payments have been made in its favour. 10. The facts as subsequently clarified were not controverted by the Revenue. 11. The Revenue has argued that the case of the applicant is covered under the provisions of the Act as the Government of India has not entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 9; the concept of permanent establishment is relevant for assessing the income of a non-resident under the DTAA." Referring to the nature of the transaction, it was held that where "the entire transaction having been completed on the high seas, the profits on sale did not arise in India .. Thus, having been excluded from the scope of taxation under the Act the application of the Double Taxation Treaty would not arise." In the present case, though the applicant has a business connection in India, it has not carried out any part of the business relating to offshore supplies in India. Under the deeming provision of section 9(1) read with Explanation 1(a), any business income accruing or arising to the applicant can be taxed in India only in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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