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TMI Blog2017 (9) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner submits that, the Settlement Commission was considering three separate applications filed by the respondent nos. 2, 3 and 4 on June 29, 2010. The respondent nos. 2, 3 and 4 were neither assessee nor have permanent account numbers. They obtained the permanent account numbers just before filing the application before the Settlement Commission. In their applications, the respondent nos. 2, 3 and 4 contended that, they had entered into three types of contracts with Indian companies. They classified such contracts firstly, as sale of drawings and designs, secondly as sale of equipments and thirdly as spares and rendering supervisory services. The disputes relate to the contract for sale of equipments and spares. The respondent nos. 2, 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention of the Court to the various provisions of the Sale of Goods Act, 1930, namely, Sections 4, 16, 19, 21, 42 in respect of the contention that, the sale stood completed and the title to the goods stood transferred in India only. Learned Advocate for the petitioner submits that, the Settlement Commission did not consider the agreement between the respondent nos. 2, 3 and 4 and the Indian Companies in the true context. He submits that, in view of the nature of the contract between the respondent nos. 2, 3 and 4 and the Indian Companies, the plant and machineries are to be installed in India. The sales stand completed only after release of the balance 15 per cent of the sale amount by the Indian Companies. Consequently, it cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Settlement Commission is not contrary to the provisions of the Income Tax Act, 1961, the Writ Court need not interfere with the impugned order. Learned Senior Advocate appearing for the respondent nos. 2, 3 and 4 submits that, the private respondents are Non-Resident Entities. They had entered into certain contracts. They did not file any Income Tax Return in India on the premise that, the sale of equipment, designs and drawings took place outside India. In respect of contract for supervisory services, since the Indian customers had paid due tax, the private respondents need not pay the same. However, they were advised otherwise subsequently. Upon receipt of such advice, the private respondents had filed several applications bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he various terms and conditions thereunder and submits that, none of those terms and conditions can be construed to mean that, the entirety of the transacted goods are within the taxation laws in India. He contends that, in view of the provisions of the double taxation avoidance agreement, the Settlement Commission has correctly held that, the Non- Resident Entities not having permanent establishment in India are not liable to pay taxation in respect of offshore transactions. He contends that, the Settlement Commission has correctly applied the ratio of Ishikawajima-Harima Heavy Industries Ltd. (supra) as well as L.G. Cable Ltd. (supra). He relies upon 2007 Volume 291 Income Tax Reports page 482 (SC) (Commissioner Income-Tax & Anr. v. Hyund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract in question, justifies an interference that, the sale of the goods took place offshore then the Non- India Entities to the contract are not amenable to taxation in India. The Settlement Commission takes such view on the basis of Ishikawajima- Harima Heavy Industries Ltd. (supra), L.G. Cable Ltd. (supra) and Hyundai Heavy Industries Co. Ltd. (supra). Ishikawajima-Harima Heavy Industries Ltd. (supra) notices that, there can be a composite contract which is separable in the sense that a portion of the contract can be said to be performed offshore and a portion inshore. The portion which is performed offshore need not attract the Indian Taxation Laws. The extent of taxation, however, will depend on the fact situation of a given case. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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