TMI Blog2016 (7) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... justification to sustain the findings of authorities below. We accordingly set aside the orders of authorities below and delete the entire disallowance - Decided in favour of assessee - Tax Appeal No. 2142 of 2010 With Tax Appeal No. 2143 of 2010 - - - Dated:- 28-7-2016 - Mr. KS Jhaveri And Mr. G. R.Udhwani JJ. For the Appellant(s) : Mr Nitin K Mehta, Advocate For the Opponent(s) : Mr Saurabh Soparkar, Senior Advocate With Mr Bandish Soparkar For Ms Swati Soparkar, Advocate ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) Tax Appeal No.2142 of 2010 challenges the order dated 05/03/2010 passed by the ITAT in ITA No.48/Ahd/2007 for assessment year 20002001 and came to be admitted on the following questions of law: [A] Whether the Appellate Tribunal is right in law and on facts in deleting the entire addition of ₹ 4,83,71,408/- being reimbursement of expenses to Head Office? [B] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of ₹ 1,82,55,408/- being expenditure incurred by the Head Office? [C] Whether the Appellate Tribunal is right in law and on facts in deleting of expenditure incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in departmental appeal and ground no.1 to 4 in the appeal of the assessee as above in the cross appeals are similar as have been considered in assessment year 1998-99 and requested that the order in that assessment year may be followed in this year also. 29. On consideration of the submissions of the parties and findings of authorities below, we are of the view that all the grounds in departmental appeal and ground no.1 to 4 in the appeal of the assessee as above in cross appeals are similar and identical as are considered and argued by both the parties in Assessment Year 1998-99 in ITA Nos.46/Ahd/2007 and ITA No.52/ahd/2007. Therefore, following the same order and relying upon the same reasons for decision in the Assessment Year 1998-99 above, we set aside the orders of authorities below and delete the entire additions above in these grounds. As a result, appeal of the assessee in ITA No.54/Ahd/2007 on ground no.1 to 4 is allowed and the departmental appeal in ITA No.48/Ahd/2007 on all 5 grounds is dismissed. 3.2 Thus, in light of the above observations, when the learned Tribunal has decided the questions referred in paragraph No.3.1 of this order while adopting the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9 ; (B) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ; of 35.1 Section 195 . [(1) the Act provides Any person responsible for paying to a non-residen, not being a company, or to a foreign company, any interest [***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head Salaries [***]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct incometax thereon at the rates in force : [Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode :] [Provided further that no such deduction shall be made in respect of any dividends referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are source of income sought to be taxed in India must be (i) utilized in India and (ii) rendered in India. Thus the income of the assessee for services rendered in India and utilized in India as disclosed by the assessee in its return is only chargeable to tax in India to the exclusion of income from services rendered out of India. 37. Hon'ble Karnataka High Court in the case of Jindal Thermal Power Company Ltd. Vs DCIT 225 CTR 220 held amount paid by the assessee to non-residen company for rendering technical services for commissioning of a power plant in India did not attract tax liability as the technical services were in the nature of theoretical formulation which could be rendered wholly offshore and outside India: however, 'start-- up services' and 'overall responsibility' involve executory part of the contract which took place in India and therefore, assessee was required to effect TDS out of remuneration paid towards these services. 38. The assessee pleaded before the authorities below that all the payments were made to several parties outside India for reimbursement of expenses incurred by the then KCIL (UK) (sub-contractor) for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods with allowances or cancel the contract 53 in respect of the whole or part of the shipment, unconditional appropriation of the goods took place in India, notwithstanding the c.i.f terms, and the profits from the sales accrued in India. On appeal to the Supreme Court: Held, reversing the decision of the High Court, that the sales took place in Pakistan and therefore the profits derived therefrom arose outside India. There was nothing in the agreement which envisaged the property in goods being in the appellant even after the value of the invoice had been paid by the bank under the letter of credit in Pakistan. The condition in clause (7) was a condition where the buyers failed or refused to perform the contract altogether by not accepting the documents or in not paying against the documents. Even under clause (9) the condition was not a condition of the transfer of property. Under the c. i. f. contract prima facie the property in the goods passes once the documents are tendered by the seller to the buyer or his agent as required under the contract. But, where the seller retains control over the goods by obtaining a bill of lading in his name or to his order, the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... layed by the foreign company ended with putting the machinery on board and there was no operation by that company in India so as to envisage a business connection; (ii) The supply of spare parts was also to be on f.o.b. terms, and, as in India to constitute business connection; and (iii) So far as the deputation of the foreign personnel for erection machinery is concerned, such personnel became employees of th4e Indian company and the foreign company was not responsible or the erection of the machinery as such. It was not like a turnkey project where the responsibility of th4e foreign company 55 would continue till the machinery is actually run and proves its performance. Thus, there was absolutely no operation in India which would give rise to a tax liability in India as far as the foreign company was connected and Tribunal was, therefore, right in its conclusion. Learned C I T(A) relied upon the decision in the case of Wallace Pharmaceutical Pvt. Ltd. (supra) in which applicant was a Indian Company and tax resident of India. Penser is tax resident of USA but operating internationally. It was found from facts that Penser has rendered consultancy services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset but had only put up a construction of the building for business advantage, with the result that the entire construction cost was admissible as revenue expenditure. Considering the facts and circumstances noted above, in the light of the above decisions, it is clear that the amounts spent by the assessee on erection of the temporary structure, equipments, furniture and fixtures etc. at the site unit are revenue expenditure and the same shall have to be allowed as deduction. We accordingly set aside the orders of authorities below and delete the entire addition. In view of the above finding, there is no need to consider the alternate submission of the learned Counsel for the assessee for grant of depreciation. As a result, ground NO.9 of the appeal of the assessee is allowed. 5.1 Thus, in light of the above observations and discussions, when the learned Tribunal has decided the above referred question by making detail discussions, without assigning any further reasons, while adopting the said reasonings, we answer the said question in favour of the assessee and against the Department. 6. Accordingly, all these appeals stand disposed of by answering the questions in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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