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2018 (4) TMI 634

ncome received in relation to offshore supply of spare parts and offshore repair services outside India were taxable in India under both section 9 (1) (i) of the Act as well as Article 5 read with Article 7 of tax treaty. SEE GE Energy Parts Inc. vs ADIT [2017 (2) TMI 780 - ITAT DELHI ] - Attribution of income - Held that:- We direct the attribution of income for the year under consideration in the case of assessee before us at 2.6% as has been held by this Tribunal in assessee’s own case in the group concern. - Levy of interest under section 234B - Respectfully following the decision of this Tribunal in case of GE Energy Parts Inc. vs ADIT(supra), we allow this ground raised by the assessee. - ITA No.1318/Del/2015 - Dated:- 9-4-20 .....

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placing reliance on the findings or the result of survey conducted on March 2, 2007 without appreciating that the said material did not pertain to the Appellant and the present assessment year. 1.5 That the AO and the DRP failed to appreciate the true nature of the sales cycles and process. Since the products sold by the Assessee are highly complex and technical in nature, unlike off the shelf retail product, the pre-sale and sale of an equipment manufactured by the Appellant involves extensive and continuous discussions and evaluations among multiple engineers and technicians with specializations in various technical aspects and therefore could not have been undertaken by expatriate employees of GE International Inc ( GEII ) located in In .....

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tities thus are physically present in some form or the other in India, and accordingly income accrues or arises to the Appellant in India. 2. Re: Business Income - Offshore Repair and Supply of Spare Parts - not taxable in India 2.1 That the AO and the DRP erred on facts and in law in holding that payment received by the Appellant in relation to offshore supply of spare parts and offshore repair services outside India were taxable in India under both Section 9(1 )(i) of the Income Tax Act, 1961 ( the Act ) and Article 5 r/w Article 7 of the Tax Treaty. 2.2 That the AO and DRP erred in assessing the total income of the Appellant under the provisions of the Act and the Tax Treaty without appreciating that income of the Appellant: (a) had not .....

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did not possess any authority to conclude, contracts on behalf of the Appellant and therefore could not be held to be dependent agent PE of the Appellant in India. 2.7 That the AO and the DRP failed to appreciate that the activities of GEIIPL are of a preliminary and auxiliary nature and there is no evidence/document on record which establishes that the employees of GEIIPL as the alleged agent has exercised any authority to conclude contracts or secured orders for/ on behalf of the Appellant. 3. That the AO and the DRP erred in not appreciating that GEIIPL was only providing market support in the capacity of an independent service provider to the Appellant and GEII expatriate employees were neither working under the control or supervision n .....

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d at arm's length no further attribution of income could have been made to the alleged PE of the Appellant in India. 2.13 Without prejudice, the AO and the DRP erred, on the facts and circumstances of the case and in law in not allowing deduction of expenses in computing income assessable in the hands of alleged PE of the Appellant in India 3. Miscellaneous 3.1 That the AO and the DRP erred in levying interest under Section 234A, 234B and 234C of the Act. 3.2 That on the facts and circumstances of the case and in law the AO erred in initiating penalty proceedings under Section 274 read with Section 271 (l)(c) of the Act. The grounds of appeal made herein above are without prejudice to each other. The Appellant craves leave to alter, ame .....

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ideration in the case of assessee before us at 2.6% as has been held by this Tribunal in assessee s own case in the group concern. 4. In respect of Ground No. 3 regarding levy of interest under section 234B by observing that the issue stands settled in favour of assessee by the decision of Hon ble Delhi High Court in assessee s own case for assessment year 2001-02 to 2006-07. It has been submitted that the facts and circumstances of the case before us are similar. Accordingly respectfully following the decision of this Tribunal in case of GE Energy Parts Inc. vs ADIT(supra), we allow this ground raised by the assessee. 5. In Ground No. 3.2 is released against initiation of penalty proceedings. As this ground is consequential in nature, the .....

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