TMI Blog2022 (4) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... It further succeeds in its corresponding substantive grounds in Assessment Years 2010-11, 2011-12 and 2014-15. Disallowance of customs duty expenses - HELD THAT:- The assessee has strongly emphasized that the corresponding liability on account of customs duty has crystallized only in these twin relevant assessment years. Learned counsel invited our attention to assessment order for Assessment Year 2011-12 involving the corresponding vouchers between 31.08.2010 to 30.10.2011. We thus find prima facie merit in the assessee's argument indicating the impugned expenditure which have been crystallized much later in these assessment years and direct the Assessing Officer to verify the corresponding factual position and allow the same as per law in consequential proceedings. This identical later substantive ground in assessment years 2010-11 and 2011-12 is accepted for statistical purposes. Assessments as non-est since the Assessing Officer had finalized the same without issuing the corresponding draft assessment order u/s. 144C(1) - HELD THAT:- Section 144C(1) of the Act herein envisages that the Assessing Officer shall Notwithstanding anything to the contrary contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctness of the learned lower authorities' action taxing its income from off-shore supplies; involving varying sums; respectively. We deem it appropriate at this stage to reproduce the assessee's identical pleadings to this effect read as under: 2. On the fact and in the circumstances of the case, the Ld. A.O. has erred in law and in facts in alleging that the contracts with Singareni Collieries Company Limited are composite contracts and has been artificially divided into three agreements and the activities envisaged therein are interdependent and interconnected to each other. 3. On the fact and in the circumstances of the case, the Ld. A.O. has erred in attributing income from offshore supply contracts to the Indian PO disregarding the facts that these contracts were awarded by floating separate tenders. 4. On the fact and in the circumstances of the case, the Ld. A.O. has erred in law and in facts by holding that the existence of a Permanent Establishment is not confined to the services being rendered by the Project Office and has not appreciated the fact that case of the Appellant was covered under Article 5(4)(e) of the Indo-German DTAA. 5. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns emerge for adjudication: (i) Whether all the three contracts are interlinked interdependent and indivisible and therefore whether they are to be considered as a single and a composite contract? (ii) Whether there was a PE of the assessee in India before establishment of project office in India and if so, since when? (i) What is the income attributable to activities in India? 16. To answer question No. (i) above, it is necessary to go through the nature of all the three contracts. The assessee has filed paper books in 3 parts (A), (B) (C). Part-A contains the basic documents such as the copy of the audited accounts of the assessee's Project Office, the tax audit report and the computation of total income for the AY 2009-10, while Part-B contains the submissions made by the assessee before the lower authorities and also the copies of the contracts and the DGMS approvals. Part-B of the paper book contains the copies of the SCCL tender document, bid documents and the TDS certificate and copies of the dispatch documents such as bills and invoices etc. Part-C of the paper book contains copies of the draft assessment order, the order of the DRP and the final a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 5 (five) years and to quote separately for spares and services on per tonne basis, year-wise. Note: The contract for supply, operation maintenance of the equipment will come into force after the DGMS approvals for the scientific site investigations mining method/technology are obtained. 4) a) Shall guaranty for an average production of 1350 Tonnes/day and 0.40 Million tonnes per year. b) The guaranteed production should commence within 4 months period from date of commissioning the equipment, after giving required training to SCCL personnel and preparation of panel for required standards for commissioning the actual depillaring operation of coal. c) If the annual guaranteed production in any year falls below 4.00 LT/annum,) there will be penal charges equivalent to 1% of equipment cost for every fall of 1% of guaranteed production up to a maximum fall of 20%. If the guaranteed production falls below 3.0 LT/annum (i.e., 75% of the (guaranteed production) during the first year of operation, SCCL will have the right to reject the equipment. The supplier has to reimburse the complete cost of the equipment to SCCL . 18. At page 377 of the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion/mining method/technology is obtained but as per the amended document, there can be 3 separate contracts for (i) scientific site investigation (ii) supply of equipment and (iii) maintenance of spares and services and it has also been specified that these 3 contracts shall be signed only with single agency i.e. that the successful bidder who has submitted the original offer. In accordance with this proposal of the SCCL, the assessee has entered into 3 different contracts with SCCL. Contract No. 1 is referred to as RC-222, while contract No. 2 is referred to as RC-223, and contract No. 3 is referred to as RC-224. RC-222 is placed at pages 70 to 102 of the paper book, while RC-223 is from pages 103 to 182 and RC-224 is from pages 183 to 237 of part-A of the paper book. From the contract RC-222, we find that clause D of the description part mentions that SCCL has agreed to enter into a contract for scientific site investigation and obtained DGMS approval with DBT i.e. the assessee herein on the terms and conditions mentioned in the contract. Document No. 1 forming part of the contract gives the general conditions for the contract and clause 1.1 thereof gives the definition and meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tific site investigation and obtaining DGMS approval) to be carried out for securing DGMS approval would be part of a separate contract to be awarded by SCCL and that the results of scientific investigations will be the basis of design of mining method (emphasis supplied by us) and also submission of application for DGMS approval for the mining method and also that the SCCL would put up the application with DGMS and the DBT shall provide necessary assistance for making application and obtaining DGMS approval. It was also provided in clause 3.4, that any addition/alteration of the equipment supplied, suggested by DGMS, while approving the equipment and any additional studies suggested by DGMS for obtaining Mining Method approval, during the course of implementation, shall be at DBT's cost. But if any additional equipment is required as per DGMS mining method approval, the cost of such equipment shall be borne by SCCL. 22. Clause 6 thereof provides for inspection of the equipment by SCCL at manufacturers premises and also the right of the SCCL to reject the equipment if the goods fails to conform to the specifications. SCCL may reject them in writing mentioning the specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eplacement cost basis from FOB, port of shipment, till the time the equipment is successfully commissioned underground at the Mine Site on the basis of shipping advice given by DBT as per Clause 10 of the agreement. It is further provided that SCCL shall take insurance cover in USD with DBT as the beneficiary for Spares on a full replacement cost basis from FOB, port of shipment to the Mine Site and these insurance costs shall be to the account of SCCL. 27. Clause 14 provides for warranty period, while clause 17 provides for passing of the risk and title to the goods to SCCL upon delivery effected FOB at the foreign port of shipment. 28. Clause 18 provides for price and payment for the equipment and it is agreed there under that all prices are FOB according to the INCOTERMS 2000, port of origin outside India and that the payment shall be made by SCCL to DBT outside India in USD as per the invoice raised by the DBT. 29. Under clause 20 of the agreement, the SCCL undertakes to provide all other equipments, materials and man power in quantities and quality as defined in Contract RC 224 dated 21.11.2006 for provision of services for introduction of Continuous Miner Techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document for whole of the project, the intention of the assessee to segregate the contract into three contracts was clear from the beginning. It negotiated with SCCL who ultimately agreed to execute three separate contracts with specific scope of work for each of the contracts and different time frames. Thus, the intention of the parties to have three different contracts is proved. In such circumstances, the findings of the authorities below, that all the three contracts are part of a single and composite contract are not sustainable. The question No. 1 is accordingly answered in favour of the assessee. The consequential finding that in a composite contract, if there is a PE for one of the contracts, then the PE is there for all the contracts is also not sustainable. According to the revenue, the project office set up on 21.04.2008 is the PE even for the contracts I and II. This is not acceptable. The other ground on which the revenue is holding that the business income of the assessee under contract II is taxable in India is that there is a PE in India by virtue of Contract No. I. during which the technical employees of the assessee company visited India for a total period of 37 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idiary company in India, namely ASPL, which was alter ego of the assessee and that ASPL was its PE in India as the site office was jointly occupied by assessee and ASPL. Therefore, this case is distinguishable from the facts of the case before us. In the case of Samsung Heavy Industries Co. Ltd., the issue before the tribunal was whether the project office set up by the assessee therein is a fixed place of business of the assessee in India to carry out wholly or partly the impugned contract in India within the meaning of art. 5.1 of the DTAA and in the case Raytheon Company Vs. Deputy CIT, Reported in (2011) 142 TTJ (Del) 137, the question was the date from which the PE had come into existence and also whether the FTS and Royalty for supply of equipment and software embedded therein can be bifurcated. Therefore these two decisions are also not applicable to the facts of the case before us. 4. Learned CIT-DR vehemently contended that the concept of res judicata too is indeed alien to income tax proceedings as per Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC) wherein each and every assessment year involves its own facts and circumstances. He fails to pinpoint any distinctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual position and allow the same as per law in consequential proceedings. This identical later substantive ground in assessment years 2010-11 and 2011-12 is accepted for statistical purposes. 7. Learned counsel next invited our attention to the assessee's identical additional grounds in Assessment Years 2010-11 and 2011-12 that both these assessments are non-est since the Assessing Officer had finalized the same without issuing the corresponding draft assessment order u/s. 144C(1) of the Act. 8. The Revenue has vehemently opposed admission of the assessee's instant additional substantive ground as a mere afterthought plea only. This tribunal's special bench decision All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287 (Mum-SB); after taking into consideration hon'ble apex court's landmark judgment in NTPC Limited Vs. CIT 229 ITR 383 (SC), holds that we tribunal can very well establish a pure legal plea raised for the first time in the 2nd appeal proceedings so as to determine correct tax liability of an assessee provided all the relevant facts are on record. We thus reject the Revenue's foregoing technical objection to admission of assessee's instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee. ] Section 144C(1) of the Act herein envisages that the Assessing Officer shall Notwithstanding anything to the contrary contained in this Act , in the first instance, forward a draft of the proposed order of assessment i.e. a draft assessment order to the eligible assessee...... We thus observe that there would be hardly any denial to the fact that this section 144C(1) of the Act in issue contains a non-obstante clause having overriding effect over other provisions in the Act. We quote Central Bank of India Vs. State of Kerala (2009) 4 SCC 94 (SC) to this effect. We also sought to know from both the parties as to whether the legislature has prescribed any draft assessment proforma or not. The reply received was in negative only. Learned counsel invited our attention to case law Kalyan Kumar Ray Vs. CIT 191 ITR 634 (SC) that an assessment is an integrated process not only invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedents results in manifest injustice, differing from the earlier judgment will be permissible. When a Division Bench differs from the judgment of another Division Bench, it has to refer the case to a Full Bench. A single judge cannot differ from a decision of a Division Bench except when that decision or a judgment relied upon in that decision is overruled by a Full Bench or the Supreme Court, or when the law laid down by a Full Bench or the Supreme Court is inconsistent with the decision. 38. It may be noticed that precedent ceases to be a binding precedent - (i) if it is reversed or overruled by a higher court, (ii) when it is affirmed or reversed on a different ground, (iii) when it is inconsistent with the earlier decisions of the same rank, (iv) when it is sub silentio, and (v) when it is rendered per incuriam. 39. In paragraph 578 at page 297 of Halsbury's Laws of England, Fourth Edition, the rule of per incuriam is stated as follows: A decision is given per incuriam when the court has acted in ignorance of a previous decision of its own or of a court of co-ordinate jurisdiction which covered the case before it, in which case it m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44. Though a judgment rendered per incuriam can be ignored even by a lower court, yet it appears that such a course of action was not approved by the House of Lords in Cassell and Co. Ltd. v. Broome [1972] 1 All ER 801, wherein the House of Lords disapproved the judgment of the Court of Appeal treating an earlier judgment of the House of Lords as per incuriam. Lord Hailsham observed (at page 809): It is not open to the Court of Appeal to give gratuitous advice to judges of first instance to ignore decisions of the House of Lords in this way. We therefore are of the opinion in light of our foregoing detailed discussion that both the draft assessments herein dt. 28.3.2013 and 14.3.2013 continue to hold the field as valid ones only as the latter notices would also in the nature of drafts only in light of 144C(1) of the Act. The assessee fails in its identical additional substantive ground raised in assessment year 2010-11 and 2011-12 ITA Nos. 610/Hyd/2014 and 483/Hyd/2015; respectively. Both these appeals are partly allowed. 14. The assessee's latter substantive ground in Assessment Year 2014-15 in ITA No. 207/Hyd/2017 regarding set off of brought forward losses is ..... 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