TMI Blog2018 (4) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... t exploiting the D&D for business purposes, that IPR of the D&D were retained by the non resident supplier. Considering the above, we hold that the FAA was not justified in holding that disputed amount was FTS. We have gone through the cases relied upon by the FAA. In none of the cases, referred to by him, the issue was not deliberated upon as to whether the consideration, received by a manufacturer of plant and machinery for supplying to its customer, wherein D&D was essential for installation of Plant and machinery, constituted part of cost of acquisition of plant. So, reversing the order of the FAA, we decide the effective Ground of appeal in favour of the assessee. - ITA No. 1086/Mum/2017 - - - Dated:- 1-3-2018 - Shri Rajendra, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CDQ Plant, worth US$ 2, 70, 00, 000 from Nippon, on FOB basis. In terms of the Designs Drawings Agreement for Plant and Machinery it also imported Designs Drawings(D D) for the CDQ Plant for (US$ Twenty Two Lakhs) by download of the soft copies of the D D from Nippon's FTP Server. The indigenous portion of the CDQ Plant was assigned to Essar Projects (India) Limited (EPL), an Indian Company. In terms of four separate agreements entered into by the assessee with EPL with the participation, consent and involvement of Nippon, EPL was appointed as an associate of Nippon for assisting in providing indigenous designs and drawings, supplying identified indigenous equipment, undertaking civil and structural steelwork including all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (145 ITD 85); Toyo Engineering Corporation (ITA/8192/ Mum/ 2004, dtd. 28/3/13) and Servall Engineering Works P. Ltd. (ITA/1250/Mum/2012 dtd. 12/9/16). 3. Before us, the Authorised Representative(AR)argued that assessee had entered in to D D agreement only for the purpose of completing, operating and maintaining the Plant, that it could not have commercially exploited such D D, that they were not capable of being used except for completing, operating and maintaining the CDQ Plant, that the D D Agreement did not permit the assessee to deploy the D D except for the said purposes, that Nippon's supply of D D constituted transaction of transfer of goods and not rendering of any service, that the assesee was being referred to as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted to commission a CDQ plant, that it entered into four Agreements with Nippon, that the Plant was a sophisticated plant which constituted of a number of integrally connected and linked smaller machineries and equipment, that it needed to be set up by installing several smaller machines, equipment and parts, that the majority of which were imported whereas others were either procured locally or were manufactured, that the procured machines and / or equipment needed to be assembled for which a Plant Design was required, that in terms of the agreements entered in to between both the parties the supply of the imported plant machinery along with D D(both engineering and civil), utilities, services for erection, start-up, commissioning and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Ishikawajma Harima Heavy Industries Ltd (288 ITR 408) has upheld the above principle. The Hon'ble Calcutta High Court in the matter Andrew Yule Co. (207ITR899)has dealt with the identical issue. In that matter, a German company had supplied certain machinery to the Indian assessee and had rendered certain services in setting up of the machinery. Considering those facts, the Hon'ble Court held that services rendered in setting up of machine could not be treated as personal service, even if the agreement for rendering the services was embodied in a separate agree - ment, that the German company had no PE in India, that in view of the Indo-German DTAA, no income had accrued in India, that there was no liability t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al reversed the order of the DRP and held that the basic engineering package sold by the assessee to the India customers had been largely designed on the basis of standard technology available with it, that the consideration was for the sale of product which was embedded in the plan set up by the India customers, that the income arising out of the transaction was to be assessed as business income, that the sale had taken place outside India, that the income was not taxable as per the provisions of the Act/DTAA, that restriction on use of IPR of D D would not change the character of transaction from sale of product to the use of licence/know how. 4. 5. We find that the assessee has been referred to as purchaser in the D D agreement, that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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