TMI Blog2017 (9) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... t is of view that, so far as the plant and machineries are concerned, the sale took place offshore and, therefore, is not taxable in India. So far as the supervisory contracts are concerned, the Settlement Commission is of the view that, the same is taxable and has determined the tax liability. The private respondents have accepted the same. Provisions in the contract allowing deferred payment to be made in India, by itself may not allow an inference that, the title to the goods stand transferred only upon such payment being made. An order passed by the Settlement Commission is justiciable. Jyotendrasinhji (1993 (4) TMI 1 - SUPREME Court ) is of the view that, an order of the Settlement Commission which is contrary to any of the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplications, 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 and 4 claim that, it sold the plant to the Indian purchaser aboard and that, the sale being concluded abroad on CIF basis Income Tax cannot be charged on such proceeds. Learned Advocate for the petitioner contends that, the contract does not conclusively establish that, the title to the plant stood transferred abroad. On the contrary, since the plants are to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent 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 said that, the title of the goods stood transferred abroad prior to receipt of full payment. Title to the goods would pass in the given facts only upon payment of the balance 15% of the sale amount. Under the contract, obligation to make such payment arises only after the plant and machineries are successfully installed and commissioned in India. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome 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 before the Settlement commission. Referring to the transaction had between the private respondents and the Indian Companies, learned Senior Advocate for the private respondents submits that, the private respondents are not liable to pay tax for the entirety of the subject contracts as a major portion of the contracts had happened outside India. The Settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident 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. Hyundai Heavy Industries Co. Ltd.) and 1988 Volume 172 Income Tax Reports page 358 (AP) (Additional Commissioner of Income-Tax v. Skoda Export, Praha) in support of his contentions. Does the order of the Settlement Commission allowing the settlement application filed by the private respondents require any interference under Article 226 of the Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. This principle is followed in Hyundai Heavy Industries Co. Ltd. (supra) and L.G. Cable Ltd. (supra). The Settlement Commission considers the contracts. It looks into the aspect of the taxability of the portion said to be performed within India. It takes a particular view upon understanding the contract between the parties and gives reasons for s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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