TMI Blog2009 (6) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... Terminal Building (PTB - T-3) at the Indira Gandhi Airport at Delhi. DIAL appointed M/s Larson Toubro Ltd. (L T) as an EPC contractor in the entire project. On 27th Feb. 2008, L T entered into a contract with the applicant for the structural steel work of T 3 at PTB and Fore Court structural steel work. Thus, the applicant became the sub-contractor under the Agreement dated 27.2.2008. The scope of work as per this Agreement comprises of: (a) off shore supplies from outside India; (b) on shore supplies from India; and (c) design, detailing, painting and erection of the PTB and Fore Courts. Off shore supplies relate to overseas fabricated items and according to the applicant, the contract envisages supply, fabrication and delivery by the applicant outside India. 1.2 The applicant states that it sub-contracted the other two items i.e. on shore supplies and design, painting, erection etc. to its sub-contractor - Geodesic Techniques Pvt. Ltd. Bangalore, with the consent of L T and DIAL. L T, by its letter dated 26th May 2008 informed the applicant of exercising the election and deletion of the structural steel works in relation to the Fore Court area from the scope of wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the questions posed for consideration. The first question is general in nature and it sounds like a legal proposition culled out from decided cases. If, as pointed out by the applicant, the sale of goods in fact took place outside India and the title to the goods passed at the port of shipment or while the goods were on high-seas and the consideration was also received abroad, it could then be said that the income does not accrue or arise or is deemed to accrue or arise in India to the non-resident who is the seller of the goods. In Ishikawajima-Harima Heavy Industries Ltd. vs DIT (Mumbai), the Supreme Court while dealing with off shore supplies forming part of a turn-key project/contract observed that "the entire transaction have not been completed on the high-seas, the profits on sale did not arise in India as has been contended by the applicant". Propositions 2 4 laid down in the concluding part of the judgment may be noted: "(2) Since all parts of the transaction in question, i.e., the transfer of property in goods as well as the payment, were carried on outside the Indian soil, the transaction could not have been taxed in India. (4) The fact that the contract was sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsent to the sub-contract. Along with the agreement, the applicant filed Appendix-2A containing sub-contractor's responsibilities and Appendix-5 bearing the heading 'prices, rates and taxes'. The applicant has also filed a letter awarding sub-contract for design, fabrication and erection of structural steel work to GeoDesic Techniques (P) Ltd., Bangalore. In the sub-contract Agreement, inter alia, mention is made of 'performance bond' (Appendix-10), 'Sub-contract organization' (Appejdix-8), "Sub-contractor's deployment schedule" (Appendix-3C). However, these annexures which may be relevant have not been filed. Be that as it may, coming to the stipulations in the Sub-contract Agreement, the following deserve mention: In Appendix 2A - 'Sub-contractor Responsibilities' - the 'sub-contract works' comprise (a) the entire structural steel works including structural steel roof for Terminal-3 and all structural supports, (b) design and engineering of structural system accommodating sub-contract works, (c) supply of all material, shop fabrication, assembling, shipment and transportation, erection, inspection, testing and commissioning (d) surface treatment and protective coating or painting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat are the precise modalities of the transaction are not clear. The difficulty in understanding the entire transaction in a proper perspective is heightened by the fact that App. 5 to the Agreement contemplates high-seas purchase contract being executed by and between L T and DIAL, the applicant not being a party to such contract. The basic averment of the applicant that it effected high-sea sale of the over-seas fabricated equipment and received the payment in Singapore dollars thus remain unsubstantiated. We are at a loss to know as to what exactly happened in this case. No clarification has been given, no sequence of events have been set out and no documents relevant to the off shore supplies of goods have been furnished in spite of putting the applicant on notice. We have before us only the Sub-contract Agreement in a truncated form. As per App. 2-A 1.2, the sub-contractor assumes all the main contract responsibilities and liabilities for the sub-contract works. The 'main contract' has not been filed to understand what are those responsibilities. Some other relevant documents such as performance bond and the conditions of sub-contract, "being the "core clauses of the NEC Engin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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