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2012 (6) TMI 290 - AT - Income TaxPercentage of completion method of accounting – Held that:- The assessee revised its basis of accounting from the invoicing schedule method to the percentage of completion method for computing revenues arising from the project management and onshore supply contract with effect from assessment year 1998-99 - the facts of this ground for the current year are mutatis mutandis similar to those of immediately preceding year wherein such ground has been decided by the Tribunal in assessee's favour, thus following the precedent uphold the impugned order on this issue – in favour of assessee. Profit in respect of offshore supplies – CIT held it not to be taxed in India – Held that:- It is a case of an offshore supply of equipment on CIF basis outside India for which payment was also made outside India and hence no income accrued or arose in India – in favour of assessee. Revenues from Project Management Contract – CIT(A) considered it to be taxed on net income basis - AO contested that the assessee was not engaged in any construction activity but only in providing services and hence the revenues from PMCs were liable to be considered u/s 9(1)(vii) being fees for technical services – Held that:- From the nature of services rendered by the assessee to MRPL, HPL and CFCL, it can be seen that the same are not at all related with the direct construction/ erection of units, the assessee's services are in the nature of managing or supervising the construction/erection of units and not directly entering into such activity - parties are residents of India and the amounts have been paid by them to the assessee, a non-resident which is in the nature of fees for technical services and such services have been utilized by them in business carried on in India or for earning any income from any source in India, thus the amount received by the assessee falls u/s 9(1)(vii) and hence will be deemed to accrue or arise in India - since revenues are found to be covered u/s 9(1)(vii), the natural consequence would be the attraction of section 44D - admittedly the assessee, a non-resident, is tax resident of Japan position under DTAA need to be examined - as such the expenses so claimed by the assessee have remained unverified in terms of Article 7 read with paras 7 and 8 of Protocol the impugned order is set aside and the matter is restored to the file of AO. Challenge charging of interest u/s 234B – Held that:- As decided in case of DIT (International Taxation) v. NGC Network Asia LLC [2009 (1) TMI 174 (HC)] that when the duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be charged from the payee assessee u/s 234B – in favour of assessee.
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