TMI Blog2024 (4) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... icate from UK Tax Authorities. Article 3(g) of India UK DTAA defines the term company to mean any body corporate or any entity which is treated as a company or body corporate for tax purposes. Admittedly, the assessee is a company. Admittedly, UK tax authorities had issued tax residency certificate for assessee clearly stating that it is a tax resident of UK even as per Article 4 of India-UK DTAA. In our considered opinion, once the assessee is a tax resident of UK as per Article 3(g) read with Article 4 of India-UK DTAA, the mechanism of tax assessment and recovery of tax will follow thereafter. The expression liable to tax mentioned in Article 4 of India UK DTAA is to be understood in the manner that whether a particular person is obligated to pay tax in that respective country or not. If it is obligated to get taxed in that country, then depending upon its income, recovery of tax would happen on its own and tax mechanism for framing tax assessment would get triggered. Hence, we hold that the assessee herein is a tax resident of UK which fact is also confirmed by the Tax Residency Certificate issued by the UK Tax authorities specifically confirming that the assessee is a tax resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e chargeability of interest u/s 234D of the Act is consequential in nature. Chargeability of interest u/s 234A - HELD THAT:- AO is directed to verify whether the return of income was filed before the due date specified u/s 139(1) of the Act or the extended due date from time to time by the CBDT and decide the chargeability of interest u/s 234A of the Act accordingly. With regard to chargeability of interest u/s 234B of the Act, the decision rendered by us hereinabove for AY 2016-17 shall apply mutatis mutandis for this year also. Accordingly, ground raised by the assessee is allowed for statistical purposes. - Shri C. N. Prasad, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Shri Ajay Vohra, Sr. Adv, Shri Aditya Vohra, Adv, Shri Arpit Goyal, CA For the Revenue : Shri Vizay B. Vasanta, CIT DR ORDER PER M. BALAGANESH, A. M.: 1. The appeals in ITA Nos. 2239,884, 885 2240/Del/2023 for AYs 2015-16, 2016-17, 2017-18 2020-21, arise out of the orders of the ld AO, DCIT, Circle International Tax-3(1)(1), New Delhi [hereinafter referred to as AO , in short] dated 29.08.2023 for AY 2015-16, 30.01.2023 for AYs 2016-17 and 2017-18 and 27.06.2023 for AY 2020-21 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for plant and equipment s including spare parts, inland transportation, staff training, testing, erection/installation related civil work, and commissioning including performance testing of plant and equipment. Accordingly, the ld AO concluded that contract entered into is a single composite contract awarded on turnkey basis. The assessee has claimed that it is merely acting as a supplier, having no role to play in the onshore project activities. In order to examine the veracity of this claim, it is imperative to study the relevant provisions of the tender awarded to the assessee. Post bidding, the single composite contract was divided into three contracts - Off-shore contract (First contract) for supply of plant and equipment including spares outside India, Type test and Training to be conducted outside India; On-shore Supply Contract (Second contract) for supply of plant and equipment including spares and testing within India and this also includes design, engineering, testing, etc. (Article 6); On-shore Service Contract (Third contract) to perform all services and civil work, testing and commissioning including training of personnel in India. The Second and Third contracts (on-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract concerning it. Therefore, it is seen that while the assessee has chosen to call itself a mere supplier of goods/equipment for the purposes of taxation of its receipts from the project, the tender documents define its exact role in the scheme of the project by placing the overall responsibility of execution of the entire scope of work on the assessee. The terms of the tender documents clearly indicate that the assessee's role is an all-encompassing one for the purposes of the project i.e. the onus of completion of every step is on the assessee and it is answerable to PGCIL for the same at all times. Hence, in no way can it be inferred from the tender document that the assessee's association with and its responsibility towards the project restricted to mere supply of, goods/equipment. The tender with all its components has been awarded in full to the assessee. Further, a plain reading of the tender documents indicates that the entire offshore supply hinges critically and completely on inputs and consequent approval of PGCIL. The entire installation has to be designed in accordance with the specifications of PGCIL taking into account the peculiarities of the subject pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all income and pays all expenditure of the assessee company. It is evident that the assessee company is not a beneficial owner of any income earned by it from its business activities as it is practically fiscally transparent even if the legal form suggests otherwise. Its financials show that it books an amount of expenses entirely equal to the turnover booked by it, thereby indicating that it passes-all the income to its parent company. Further, it possesses no employees and does not remunerate its directors who are remunerated by another group company. Therefore, in view of the assessee not satisfying the conditions enlisted herein above, the assessee company cannot be treated as a tax resident of UK. In view of the same, the assessee company is not entitled to any tax treaty benefits under India-UK DTAA not being a resident for tax purposes. Accordingly, its taxability is to be determined on the basis of the Income-tax Act only. 12. Thereafter, Ld. AO formed an opinion that the Indian Associate was actively involved in soliciting business for the assessee while also taking on the Indian leg of the composite contracts. Thus, concluded that there was a Dependent Agent Permanent Est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and in law, the assessment order dated 30.01.2023 passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ( the Act ) for assessment year 2016-17 assessing the total income of the Appellant at Rs. 127,85,53,180 is bad in law, void-ab-initio and therefore, liable to be quashed and/ or set aside. 2. That on the facts and circumstances of the case and in law, the assessment order passed under section 143(3) 144C(13) of the Act on 30.01.2023, being barred by limitation, is bad in law and void-ab-initio. 3. That the assessing officer erred on facts and in law in holding that the Appellant cannot be treated as tax resident of UK and is not entitled to any benefits under the India-UK Double Taxation Avoidance Agreement ( DTAA ). Re: Offshore supply receipts of Rs. 599.49.48.889 from PGCIL 4. That the DRP/assessing officer erred on facts and in law in holding that receipts from offshore supplies made by the Appellant to Power Grid Corporation of India Ltd ( PGCIL ) are taxable in India under the provisions of the Act. 5. That the DRP/assessing officer erred on facts and in law in arbitrarily holding that the Appellant had business connection in India during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dice, that the assessing officer erred on facts and in law in arbitrarily computing receipts from offshore supplies other than from PGCIL contract at Rs. 468,42,64,711, instead of actual receipts of Rs. 75,73,212 from SFO Technologies and Rs. 29,58,63,248 from GETDIL. Re: Global operation fee of Rs. 7.56,44,040 received from GETDIL 17. That the DRP/ assessing officer erred on facts and in law in taxing global operation fee of Rs. 7,56,44,040 received from GETDIL as Fees from Technical Services ( FTS ) under the provisions of the Act and the India-UK DTAA, without appreciating that the provision of said services by the Appellant did not satisfy the 'make available' clause contained in Article 13(4)(c) of the India-UK DTAA. Re: Levy of interest 18. That the assessing officer erred on facts and in law in levying interest under sections 234B and 234D of the Act. 16. We have heard the rival submissions and perused the material available on record. The ground No. 1 raised by the assessee is general in nature and does not require any specific adjudication. 17. Ground No. 2 raised by the assessee was stated to be not pressed by the ld AR at the time of hearing. The same is reckoned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of foreign entity has to be assessed on the business of income occurring to it in India. Specially referring to Board Circular dated 07.03.2016 he submitted that even the Board recognizes the that in case of projects executed under consortium arrangement and if each member is independently responsible for executing its part of work, thenaccordingly the income is taxable. In this context, he specially refered to judgment of Hon'ble Delhi High Court in Linde AG, Linde Engineering Division vs. DDIT: [2014] 365 ITR 1 (Del) of Income Tax. 9.3 He submitted thatoverstress is laid by Ld. Tax Authorities on the fact that the primary liability of execution of contracts and damage for beach of the contracts being upon the assessee ALSTOM only, so the ALSTOM-I was merely an extended arm. And thus the Ld. Tax Authorities have fallen in error in considering the associate M/s. ALSTOM-I to be Agency PE. It was submitted that there was no legal and financial dependency between the assessee and its associates. 9.4 Ld. Sr. Counsel submitted that the assessee had earned revenues from offshores supplies and no activity was performed in India for earning its revenue. He specifically stressed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC), CIT vs Hindustan Shipyard Ltd: 109 ITR 158 (AP) and CIT vs Atlas Steel Company Ltd: 164 ITR 401 (Cal). 9.8.2 As with regard to the submission that Offshore supply are not taxable under the Act, he relied Ishikawajma-Harima Heavy Industries Ltd vs DIT: [2007] 288 ITR 408 (SC), DIT vs LG Cable Ltd: [2011] 237 CTR 438 (Del), DIT vs Nokia Networks OY: 358 ITR 259 (Del) and Siemens Mobile Communications SPA vs DCIT: [2020] 182 ITD 479 (Del Trib.) 9.8.3 The non applicability of Section 44BBB qua offshore supply was supported by Ld. Sr. Counsel by relying DDIT vs Mitsui Co Ltd: 118 taxmann.com 379 (Del Trib.), DOT vs Whessoe Oil Gas Ltd: 87 taxmann.com 342 (Mum Trib.) and Atomstroy Export vs DCIT: ITA No.6945/Mum/2017 (Mum Trib.) 9.8.4 He supported his contentions with regard to law on Dependent Agent Permanent Establishment ( PE ) under the India-UK DTAA he referred to the Copy of India-UK DTAA and section 182 of Indian Contract Act, 1872. He also cited judgments in National Petroleum Construction Company vs DIT: 383 ITR 648 (Del), Western Union Financial Services Incvs ADIT: 101 TTJ 56 (Del Trib.), Mitsui Co Ltd vs ACIT: ITA No.4764/Del/2016 (Del Trib.), ITO vs International Rein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that there was single composite contract which was divided into three contracts and that in two contracts, which were to be performed by the Indian entity, the ultimate liability for non-performance or compensation being on assesse, therefore, the Indian entity was a PE and the provisions of profit attribution were applicable. 12 At the same time the Ld. DRP bettered it little while discussing quite more of the recitals of the agreements and contracts but reached same finding that as there was no separate bid for each contract and that in case of any default in second or third contract, it was to be construed to be default of the assessee and result into right of termination and recovery of damages from the assessee by PGCIL, accordingly it too concluded that Associate as PE was involved throughout the contract period. DRP observed that the off-shore supply of equipment s by the assessee would have been rendered meaningless in the absence of service of supervision, erection, commissioning etc. all of which was an integral and indivisible part of the contract. 13. So the key question is if this was independent contract as claimed by assessee or there was artificial spilt of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Documents pursuant to First Stage Bid Evaluation. submitted vide communication reference CC- CS/156- WR1/HVDC-1489/7/G10 dated 12.03.2012 and Second Stage Bid vide ref. No. T0193 dated 21st March 2012 read alongwith discount letter ref no. T- 0193/01 dated 22.03.2012. WHEREAS, as per the provisions of the Bidding Documents (Part 1) and confirmations as per the documents referred in Notification of Award mentioned under Article 1.1 below, the construction of contracts shall be as follows: First Contract for CIF Indian Port of Entry supply of Plant and Equipment including mandatory Spares from outside India, Type Test and Training to be conducted outside India (also referred to as Off-Shore Contract), Second Contract for Ex-works supply of Plant and Equipment including mandatory Spares from within India and Type Test to be conducted within India (also referred to as On- Shore Supply Contract), and Third Contract for all services to be performed in India covering, inter alia, port handling, port clearance, inland transportation, insurance, delivery at site, handling, storage, erection including associated civil works, testing and commissioning of all equipment and materials, including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such engagement upon and subject to the terms and conditions hereinafter appearing. Article 6. ALSTOM having proposed ALSTOM-I as its Associate for the purpose of executing the On-Shore Supply Contract and On- Shore Services Contract and furnished ALSTOM-I's written unequivocal consent to work as the Employer's independent Contractor, on the terms and conditions as laid down in the Bidding Documents and, in accordance with the confirmations as per the documents referred in Notification of Award mentioned under Article 1.1 above, Contract Agreement Nos. CC-CS/156-WR1/HVDC- 1489/7/G10/CA-11/4336 and CC- CS/156-WR1/HVDC-1489/7/G10/CA- 111/4337 between the Employer and the Contractor's Associate ALSTOM-1 has also been made on 17.08.2012, respectively for the On-Shore Supply Contract (also referred to as the 'Second Contract') and On-Shore Services Contract (also referred to as the Third Contract'). The scope of 'Second Contract' includes Design, engineering, manufacture, testing at manufacturer's works and Ex-works supply of all the equipment and materials including mandatory spares from within India and Type Testing, as detailed in the Contract Docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract', when erected and commissioned by its associate, ALSTOM-I under the Third Contract' shall give satisfactory performance in accordance with the provisions of the Contract . 14.1 Further, from the notification of award of off-shore contract dated 21.06.2012 and the relevant minutes dated 28.10.2011, page 125-127 of PB, relevant clauses are reproduced as below :- 1.3 Your First Stage Bid submitted for the subject package under Proposal reference no. T0193 dated 26.11.2011; which was opened on 28th November, 2011. In your bid, you have confirmed that M/s. ALSTON T D India (ALSTOM INDIA) (earlier known as M/s. AREVA T D India Limited) shall be your Associate for the purpose of executing the On-Shore Supply Contract and On-Shore Services Contract (refer para 2.2 below) and furnished ALSTOM INDIA'S written consent vide their letter dated 26.11.2011. 12.1 We confirm having accepted your Bid referred to at para 1.3, 1.7 1.8 above) read in conjunction with all the specifications, terms conditions of the Bidding Documents (referred to at para 1.2, 1.2.1, 1.2.2, 1.2.3 1.6 above) and your confirmations as per the documents referred above, and award on you the 'Off-Shore Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. ALSTOM T D India Limited vide. our Notification of Award Ref. No. CCCS/ 156-WR1/HVDC- 1489/7/G10/NOA-III/4337 dated 21.06.2012 for award of 'On- Services Contract' (also referred to as the Third Contract') for performance of all other activities, as set forth in the Bidding Documents, viz. port handling, port clearance, inland transportation, insurance, delivery at site, handling, storage, erection including associated civil works, testing and commissioning of all equipment and materials, including the equipment supplied under the First Contract and the Second Contract. Training in India etc. required for the complete execution of +800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under National Grid Improvement Project Notwithstanding the award of work under three separate Contracts in the aforesaid manner, you shall be overall responsible to ensure the execution of all the three Contracts to achieve successful completion and taking over of the works under the package by the Employer as per the requirements stipulated in the Bidding Documents. It is expressly understood and agreed by you th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not one scope of contract under which the assesse and Indian Associate were working together. 17. In aforesaid context only, this notification of award letter dated 26.06.2012 in clause 2.2 mentions that as ALSTOM-I was 'awarded' contract 2 and 3 for which 'separate notification of award on-shore supply contract and on-shore service contract was made on 21.06.2012. Thereupon the off- shore contract was executed on 17.08.2012 where it was specifically mentioned that ALSTOM-I was made part of the contract as the part of proposal at the bid stage itself. This ofshore contract specifically mentions that ALSTOM-1 shall be 'independent contractor' of PGCIL on the terms and conditions as laid down in the bidding document. Article 6 of this document dated 17.08.2012 specifically makes reference to ALSTOM-I's 'written unequivocal consent to work as the independent contractor of PGCIL' and that separate contracts have been entered between PGCIL and Indian Associate of the assesse, ALSTOM- I, on the same date 17.08.2012 for the second and third contract. 18. The aforesaid discussion of the relevant clauses leave no doubt in the mind of this Bench that at the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided that if ALSTOM-I fails to enter into the second contract and the third contract, the said contracts shall be entered into between ALSTOM and Power Grid in lines with the provisions of the document . Now as a fact this clause is part of Appendices 10, to the offshore agreement which contains 'specific agreements made during meetings held from 03.07.2012 to 05.07.2012 between the PGCIL and M/s. ALSTOM, along with its associate ALSTOM-I. This agreement was on the part of ALSTOM to execute second and third contract, merely as an assurance that at advance stage after the bid is accepted and before the contract is actually executed the bid is not frustrated. In any case when the three contract stand executed on 17.08.2012, the issues discussed in the meeting between 03.07.2012 and 05.07.2012 became superfluous but Ld. DRP has unnecessarily stressed upon the same to draw a conclusion that primary commitment in all the three contracts was of the assessee. 20.2 Further in para 5.2, the Ld. DRP has reproduced para 3.2 of the notification of award dated 21.06.2012 without understanding the context in which the same was made. As for the convenience para 5.2 of the order of DRP is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of work' mentioned in the bid to be the contract which has been awarded by PGCIL to assessee while as discussed above, the notification of award of the off-shore contract dated 21.06.2012 gave the limited scope of work in off-shore contract and there is a separate delineation of scope of the word for second and third contract awarded to ASTOM-I. Thus Ld. DRP has fallen in error to conclude there is no separate delineation of work. 21. Lastly, the major focus of tax authorities below and Ld. DR has also been on the fact that under the bid and the three contracts the ultimate responsibility of execution and liability in case of breach remained with the assessee. In this context, the Bench is of considered opinion that the business prudence involving such major infrastructure projects cannot be examined and questioned by the revenue authorities attributing bare motives and to assume that the different contracts under one bid are with only intention to escape taxation. Such arrangements are more out of business prudence and usually for the safeguard of the rights of Indian entity, like PGCIL, which negotiates and gets executed such infrastructural facility contracts. The intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her agency to commence and complete its portion of work. The level of cooperation as agreed between Linde and Samsung was also akin to the level of cooperation as expected from independent agencies executing a project. This can be understood by taking an illustration of a simple project for construction of a building. It is only after an Architect or a Designer provides the detailed drawings that a civil contractor can commence construction. Similarly, it is only after the civil construction is commenced and progressed to a certain level that space for electrical contractors is available for them to perform their work. The work of Interior finishing can take place only after the civil works are complete. The fact that each of the aforesaid agencies, namely, the architect, the civil and electrical contractors are required to complete their work in a pre- determined sequence and are required to cooperate with each other in providing the necessary information and adhering to a specified schedule would not necessarily imply that the architect, civil contractors and electrical contractors had formed an Association of Persons. In this illustration each one of the participants works towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uccessful completion of project. Such a role assigned to the applicant by Power Grid was in the overall interest of the project. It is an arrangement conceived of and agreed to by the parties keeping in view the overall objective of successful commissioning of the project. 23. Thus, the bench is of considered opinion that the Ld. Tax Authorities below have fallen in error in concluding that there was an artificial split of a contract and that there was one inseparable, indivisible and composite contract. 24. On the basis of aforesaid discussion the question of assessee having a permanent establishment (PE) can be examined. Ld. AO has not given any substantial reason on the basis of evidence while what weighted heavily in the mind of Ld. DRP was that the supply of equipment on the basis of off-shore contract would have been rendered meaningless in the absence of services of supervision, erection commissioning etc. all of which was an indivisible part of the contract. 25. The Bench is of considered opinion that when the allegation of the Revenue about an artificial split of contract is not sustained and it is established that the assessee has entered into the 'First Contract' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion PE as per Article 5(2) of the DTAA. 27. As for the applicability of Section 44BBB of the Act, is concerned, it can be observed that the foundation of it was existence of a PE. The assessee under the 'First contract' was merely under obligation to make off shore supplies and wherein property in the goods transferred outside Indian, therefore as Section 44BBB does not speak of engagement of a foreign company for 'supply' in connection with the turnkey Power Project, the provisions of Section 44BBB are not applicable. Thus Ld. DRP has fallen in error in sustaining application of Section 44BBB of the Act, on premises that the assessee is involved in the end to end execution of the project in India. The revenue derived by the assessee were on the basis of offshore supplies and not out of any construction, erection, testing or commissioning activities of a turnkey power project in India. Thus, the application of section 44BBB to such revenue, which is not per se taxable India, is not sustainable. 28. It also appears that the Revenue is not disputing the fact that under the 'First Contract' assessee was only supposed to make off shore supplies. Otherwise too i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binding directions of DRP. Raising the question that Offshore supply receipts from GETDIL SFO Technologies- Ld. AO did not follow DRP directions Ld. Sr. Counsel relied ESPN Star Sports Mauritius SNCET Companies vs Union of India: 388 ITR 383 (Del), Global One India Pvt Ltd vs DCIT: ITA No.1980/Del/2014 (Del Trib.)and he submitted such addition is not sustainable. Ld. DR however, supported the findings of Ld. Tax Authorities below. 31. It can be appreciated in regard to these grounds that Ld. DRP in para 5.15 of its order had specifically directed the Ld. AO that receipts on account of offshores supplies made by the assessee to GE T D and SFO, if they are not related to the PGCIL contract, which is the basis of addition in the draft assessment order, be deleted. Ld. AO in para 20 of final assessment order observed as follows:- 20. In view of the directions of the Hon'ble DRP the receipts from GE T D India Ltd. and SFO Technologies have been re-examined and it is held that Since the company constituted a dependent agent PE in India (GET D) as far as the assessee's entire operations in India were concerned and the same has upheld by the Ld. DRP. It is pertinent to mention here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciated that Ld. AO made the general observations while Ld. DRP observed that the specialize / customize training provided by the assessee to the users for assessee and use of specific technical content available for their business 'make available' technical knowledge, skill and experience within the meaning of and scope of Article 13 of the DTAA. It has taken into consideration certain specific services on account of which the assessee had received global operation fees. The relevant para 6.3 of the order of ld. DRP is reproduced below :- 6.3 On perusal of the relevant Global Operation Fees Agreements for the years 2017 and 2018 entered into between GE T D India Ltd and the assessee, which are available in the paper book filed in DRP proceedings, the following services, inter alia, are seen to be provided therein under the respective Heads a) Technical support for manufacturing process. b) Test system- which includes Test System design, Test Software development and provision for upgrades and new products, design and provision of test jigs and fixtures, providing of technical support in respect of system failure, process performance, spares and maintenance and Training of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anand NVH Products Incvs ACIT: ITA No.1951/Del/2021 (Del Trib.), NTT Asia Pacific Holdings Pte Ltd vs. ACIT: 196 ITD 591 (Mum Trib.), Raymond Ltd vs DCIT: 86 ITD 791 (Mum Trib.), GE Energy Management Services Incvs ADIT: 193 ITD 485 (Del Trib.), Bombardier Transportation Sweden AB vs DCIT: 90 ITR(T) 405 (Del Trib.), Bio Rad Laboratories Incvs ACIT: ITA No.994 996/Del/2022 dated 30.12.2022 (Del Trib)Ld. 34.1 Supporting his contention that Managerial services are not FTS in absence of 'managerial word in India-UK DTAA the Id. Sr. Counsel relied Steria (India) Ltd vs CIT: 386 ITR 390 (Del) and Everest Global Incvs DDIT: 194 ITD 729 (Del Trib.). Ld. DR however, defended the findings. 35. In this context, it can be observed that the Global Operation Fees Agreement made available at page no. 372-396 of paper book along with copy of invoices available at page no. 397-403 of the paper book establish, that the assessee had agreed to provide services which included industrialization of products, sources and procurement of raw materials, setting quality standers, supply general and contracts. The industrialization support for SMP services details and descriptions have been given in appen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her single composite contract was artificially split into three separate contract 9.8 11 to 23 10, 12 to 27 12 to 15 Offshore supply receipts from SFO Technologies and GETDIL 30 to 32 30 to 32 16-17 Global operation fees from GETDIL as fees for technical services (FTS) 33 to 35 32 to 35 20. Ground No. 3 raised by the assessee is challenging the denial of treaty benefit under India UK DTAA to the assessee by holding that the assessee cannot be treated as tax resident of UK. 21. We have heard the rival submissions and perused the material available on record. We find that the assessee had enclosed a certificate issued by HM Revenue and Customs, UK certifying that assessee is a tax resident in UK for the year 2015. This is enclosed in page 308 of the Paper Book. Similar certificate for the year 2016 2017 are enclosed in pages 311 and 313 of the Paper Book respectively. The said certificate specifically mentioned that the assessee company is a resident of UK in accordance with Article 4 of the treaty between India-UK DTAA. We find from the profit and loss account of the assessee for the period ended 31.12.2015 is enclosed in pages 318 to 328 of the PB wherein, there is a note written b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia-UK DTAA, the mechanism of tax assessment and recovery of tax will follow thereafter. The expression liable to tax mentioned in Article 4 of India UK DTAA is to be understood in the manner that whether a particular person is obligated to pay tax in that respective country or not. If it is obligated to get taxed in that country, then depending upon its income, recovery of tax would happen on its own and tax mechanism for framing tax assessment would get triggered. Hence, we hold that the assessee herein is a tax resident of UK which fact is also confirmed by the Tax Residency Certificate issued by the UK Tax authorities specifically confirming that the assessee is a tax resident even as per Article 4 of the India-UK DTAA. Having held that the assessee is a tax resident of UK, it would be automatically entitled for treaty benefits. Accordingly, ground No. 3 raised by the assessee is allowed. 24. Ground No. 6 raised by the assessee is challenging the action of the ld AO in holding that GETDIL constitutes fixed place permanent establishment in India. 25. We have heard the rival submissions and perused the material available on record. The assessee has a group company i.e. GETDIL. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay advance tax. In the present case, PGCIL, who is buyer of offshore supplies made by the assessee which has been brought to tax by the ld AO in the final assessment order, had duly deducted tax at source before making the said payment. Hence, it was submitted that there was no default on the part of the assessee in payment of advance tax. This issue is no longer res integra in the view of the decision of the Coordinate Bench of this Tribunal in the case of BG International Vs. JCIT in ITA 62/DDN/2019 for AY 2015-16 dated 24.02.2020, wherein, it was held in para 32 and 33 as under:- 32. We have heard the rival contentions and perused the record. The AO while computing the income in the hands of the assessee has charged interest u/s 234B of the Act at Rs. 39.46 crores (approx.). The assessee is aggrieved by the aforesaid charging of the interest. The case of the assessee is that the tax due on the income of the assessee was subjected to tax deduction at source. Our attention was drawn to the computation of the tax liability in the hands of the assessee by the Assessing Officer which was placed on record. It was pointed out that the assessee had not paid any taxes by way of advance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 2239/Del/2023 AY 2015-16 35. All the grounds raised by the assessee for AY 2015-16 are identical with those raised for AY 2016-17. Accordingly, decision rendered by us hereinabove for AY 2016-17 shall apply mutatis mutandis for AY 2015-16 also except with variance in figures. 36. In the result, the appeal of the assessee in ITA No. 2239/Del/2023 for AY 2015-19 is partly allowed. ITA No. 2240/Del/2023 AY 2020-21 37. The ground Nos. 1 to 17 raised by the assessee for AY 2020-21 are identical with the grounds raised for AY 2016-17 and hence, the decision rendered thereon for AY 2016-17 shall apply mutatis mutandis for AY 2020-21 also except with variance in figures. 38. Ground No. 18 of the assessee is challenging the chargeability of interest u/s 234A of the Act. The ld AO is directed to verify whether the return of income was filed before the due date specified u/s 139(1) of the Act or the extended due date from time to time by the CBDT and decide the chargeability of interest u/s 234A of the Act accordingly. With regard to chargeability of interest u/s 234B of the Act, the decision rendered by us hereinabove for AY 2016-17 shall apply mutatis mutandis for this year also. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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