TMI Blog2011 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of carrying out the contract for onshore supplies and services etc. but such a PE would have no role to play in offshore supplies - Even if a PE is involved in carrying on some incidental activities such as clearance from the port and transportation, it cannot be said that the PE is in connection with the offshore supplies - Accordingly hold that the applicant is not liable to tax in respect of offshore supplies as per the Act - Decided in favour of assessee. - A.A.R. Nos. 858-861 of 2009 - - - Dated:- 26-7-2011 - Mr Justice. P.K. Balasubramanyan, Mr. V.K. Shridhar, JJ. Present for the Applicant Mr.N.Venkataraman, Sr.Advocate Mr. Taranpreet Singh, FCA Mr.Satish Aggarwal, FCA Mr. Akil Sambhar, ACA Mr. Hitesh Jain, ACA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract and (3) onshore service contract. The applicant refers to various clauses in the contract documents relating to offshore supply contract viz. transfer of title, insurance, payment mechanism etc. and submits that in connection with the said contract, the property in the goods to be supplied from Korea would pass outside India in favour of DTL and the sale would be concluded outside India and the payment would be received outside India in foreign currency. The applicant contends that no income accrues or arises in India and further no income will be received or deemed to be received in India. 2. In AAR No. 858/2009, the following question is formulated by the applicant for seeking advance ruling from this Authority: On the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated by the applicant for seeking advance ruling from this Authority: On the facts and circumstances of the case, whether the amounts receivable by LS Cable Limited ( Applicant LSCL ) from Delhi Transco Limited ( DTL ) for Proposed Supply Contract (Off-Shore Contract) for the package of Supply, Laying, Jointing, Testing and Commissioning of 220 KV XLPE Cable of 1000 Sq.mm between between 220 KV GIS Ridge Valley Substation and 220 KV gist RAUMA Centre (AIIMS) Substation at New Delhi (India for Tender No. DTL/DGM(PROJECT-IIA)/UGC/GT No.4/2009 are liable to tax in India under the provisions of the Income-tax Act, 1961 ( Act ) and the Agreement for Avoidance of Double Taxation between India and Korea ( India-Korea tax treaty )? In AAR No. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied that the mere filing of a Petition for Special Leave to Appeal cannot lead to keeping these applications pending indefinitely especially when the contention on behalf of the applicant is that the question stands concluded by an earlier decision of the Hon ble Supreme Court. 4. The revenue submits that on perusal of the various documents submitted by the applicant, it is noticed that though the contracts were awarded separately, any breach under one contract was deemed breach of the other contracts and a right was conferred on the employer to terminate the other contracts at the risk and cost of the applicant. The award of separate contracts does not in any way dilute the responsibility of the applicant for successful completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted that the offshore and onshore contracts are totally isolated and independent of each other. It has rather entered into a turnkey contract and has a PE in India. The revenue placed reliance on the case of Ansaldo Energia SPA, 310 ITR 237. 7. Income of similar nature earned by a non-resident was held to be not taxable in India by this authority in the case of Hyosung Corporation, 314 ITR 343, where all these issues were considered at length following the binding decision of the Hon ble Supreme Court in Ishikwajima Harima Heavy Industries, 288 ITR 410. At the outset it may be stated that this authority is not free to disregard the law laid down by the Supreme Court and to have a fresh look into the matter. The clauses in the offshore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the present case. Nothing in law prevents the parties to enter into a contract which provides for sale of material for a specified consideration, although they were meant to be utilized in the fabrication and installation of a complete plant. Regarding the revenue s plea that as the applicant has a PE in India, the income arising should be taxed in India, it stated that the existence of PE would be for the purpose of carrying out the contract for onshore supplies and services etc. but such a PE would have no role to play in offshore supplies. Even if a PE is involved in carrying on some incidental activities such as clearance from the port and transportation, it cannot be said that the PE is in connection with the offshore supplies. We ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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