TMI Blog2016 (6) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... . Respectfully following the decision of Hon ble Jurisdictional High Court, we are of the considered view that the assessee does not have a PE in India and the revenue from the contract cannot be taxed accordingly the ground numbers raised by the assessee stand allowed. Levying the interest u/s 234B of the Act while computing the total demand - HELD THAT:- This issue has been dealt by Hon'ble High Court in the case of DIT VS. GE Packaged Power Inc[ 2015 (1) TMI 1168 - DELHI HIGH COURT] holds that the view taken by ITAT was correct; the primary liability of deducting tax (for the period concerned, since the law has undergone a change after the Finance Act, 2012) is that of the payer. The payer will be an assessee in default, on failure to discharge the obligation to deduct tax, under Section 201 of the Act. 8.1 Respectfully following the decision of this tribunal in GE packaged power Inc. (Supra), we are inclined to allow the ground of appeal raised by the assessee. Non grant of TDS credit - AO did not give credit to the TDS paid. - AR has submitted that the AO may be directed to grant appropriate credit of TDS as claimed by the assessee in its return - HELD THAT:- We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,56,566/- as against the income returned of ₹ 60,25,399/- on account of onshore activities undertaken for installation of platforms which income had been returned @10% of the receipt from such activities after deduction of expenditure on which tax at source had been deducted. The learned DDIT has failed to appreciate that, it had not been disputed by the assessee that the income arising out of onshore activities is taxable and even otherwise, adjustment of the aforesaid sum of ₹ 37,32,56,566/- has wrongly been. computed as operating profit from the onshore activities has wrongly been adopted as ₹ 22,74,000/- as against ₹ 60,25,399/-. Hence, there being no justification to have enhanced the said income as offered on the basis of Article 7(6) of the DTAA, and as such, the enhancement made by adopting the average OP/OR of 21.91% in respect of 8 alleged comparables was highly arbitrary. 3.1 That, even otherwise in respect of on shore activities the Ld. DDIT erred in holding that the provisions of section 44BB are not applicable to the appellant. 4. That the learned TPO to whom the reference was made was furnished the TP attribution report merely to suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest as calculated at ₹ 9,65,28,136/- has been calculated wrongly and excessively, and hence the demand thus raised is wholly erroneous. 10. That learned AO has grossly erred in not granting credit of TDS of ₹ 10,71,44,001/- while determining the tax liability of the appellant and hence the demand thus raised is wholly erroneous. 11. On the facts and in the circumstances of the case and in law, the Ld. AO erred in mechanically proposing and the DRP has further erred in upholding/ confirming the action of the Ld. AO to initiate proceedings under section 271(1)(c) of the Act. It is therefore prayed that the addition made deserves to be deleted and it be held that, no income accrued to the assessee in respect of the offshore activities and in so far as the onshore activities, the margin of profit as disclosed by the assessee was fair and reasonable, which did not warrant any enhancement, and comparable adopted to determined the same was not a fair estimate of income and was highly arbitrary. 2. The brief facts of the case as recorded by the Ld.TPO are as under: 2.1 The assessee is a tax resident of UAE and is eligible to opt for taxability of its income u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y linked with each other. He submitted that the ownership of the platforms and other materials was transferred to ONGC on issuing the completion certificate and acceptance of work. The Ld.DR placed reliance upon the decisions of the Hon ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd VS DIT reported in (2007) 288 ITR 408 and of the Tribunal in case of DIT vs. Hyundai Heavy Industries Co Ltd reported in (2009) 31 SOT 482 (ITAT[Del]). 5.1 He further submitted that assessee s income is neither a taxable in UAE nor in India and it is a tax evading mechanism instituted by the assessee. The Ld. D.R. vehemently submitted that the assessee must be categorized either as service PE, installation PE or fixed place PE. The Ld. D.R. submitted that the assessee has exceeded the minimum period of 9 months and therefore has to be recognised as having a PE. 6. We have perused the facts of the present case for the year under consideration and the facts that has been brought out by the Hon ble High Court in assessee s own case in National Petroleum Construction Co. Vs. DIT (International taxation) (supra). 6.1 The Hon ble High Court had framed and decided the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed that the abovenamed three employees were simple graduates and were not capable for participating in the execution of the work undertaken. The DRP had observed that Sh. M.N. Shah, S~. M. Karkera, Sh. C.G. Pillai, Sh. P.K.G. Nair and Sh. R.L. Kulkarni, who were employees of the Project Office of the Assessee, had attended the kick-off meeting with ONGC on 16th December, 2005 and had also signed the minutes of that meeting. The DRP had proceeded on the basis that this fact was not disputed. The IT AT had also concurred with the aforesaid finding. However, it is seen that the Assessee had repeatedly pointed out that persons named were not employees of the Project Office. Further, there is no material which would support the findings that Sh. M.N. Shah, Sh. M. Karkera, Sh. C.G. Pillai, Sh. P.K.G. Nair and Sh. R.L. Kulkarni were employees at the Project Office. 25. In our view, in absence of any material, observations made with regard to the employees of the Project Office being present at the meeting cannot be sustained. Similarly, there is also no material that the employees of the Project Office had participated in review of the engineering documents done in Mumbai or had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamine the role played by the Assessee's Project Office and its involvement with the activities to be conducted under the contracts. In view of the nature of the enquiry, it would always be open for the Assessee to explain that the Project Office was only involved as a communication channel and was not involved in any of the main activities required for execution of the contracts. Secondly, the decision in the case of Goetze (India) Ltd. (supra) does not fetter the Appellate Authority from considering the claim made by an Assessee. The limitation as expressed is only with regard to the AO. 32. It is also relevant to state that the exclusionary clause of Article 5(3)(e) would apply equally to a place of business falling within the Article 5(2)(h) as it would be an office falling within the scope of Article 5(2)(c) of the DTAA. Thus, the Assessee also cannot be stated to have a permanent .establishment under Article 5(2)(h) of the DT AA. In this view, although it is not necessary to consider the second question, nonetheless, we consider it appropriate to do so. 33. In terms of clause (h) of paragraph 2 of Article 5 of the DTA.A, a building site or construction or assembly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness activities in connection with the building site or assembly project. 36. The activities at site carried on by any contractor through a sub-contractor would not count towards the duration of the contractor's PE, as in that case, the construction site or project cannot be construed as a fixed place of business of the contractor and would fail one of the essential tests of paragraph 1 of Article 5 of the DTAA. This, of course, would not hold good if the contractor's office or establishment in the source country (i.e. where the site/project is located) is also involved alongwith the sub-contractor. 39. In the facts of the present case, where admittedly the Assessee did not have access to the site during the period from 21.05.2006 till 19.11.2006, the same clearly cannot be construed as its PE under Article 5(2)(h) of DTAA. If the period during which the Assessee did not have access to the site in question is excluded, the aggregate period would be less than nine months and this would exclude the applicability of Article 5(2)(h) of DTAA. It is implicit in the expression 'Permanent Establishment' that there should be some degree of permanency of the fixed pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts from the contract with ONGC is also not taxable in India the question of attribution does not arise. 7. The Ld.AR submitted that there exist identical facts for the year under consideration. Respectfully following the decision of Hon ble Jurisdictional High Court, we are of the considered view that the assessee does not have a PE in India and the revenue from the contract cannot be taxed accordingly the ground numbers 2, 3, 4, 5, 6, 7, 8 raised by the assessee stand allowed. Ground No. 9: 8. The ld.AR submits that this issue has been dealt by Hon'ble High Court in the case of DIT VS. GE Packaged Power Inc. reported in 373 ITR 65, wherein the Hon'ble High Court held as under: 21. A Court's task is to unravel the legislative intent, if it is not discernable. Where, however, the provisions are clear, the Court's duty is to administer the law in its terms. It is bound to adhere to its precedents; yet its devotion to a previous holding cannot blind it to the clear terms of the statute, wherever found. If Alcatel Lucent USA Inc (supra) is correct and is to be applied in all situations, there would be dissimilar and asymmetrical results entirely depend ..... 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