TMI Blog2024 (4) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... ee from the offshore supply of escalators and elevators to DMRCL and MMRCL is not taxable in India. Accordingly, we direct the Assessing Officer to delete the addition made in the hands of the assessee. As a result, ground No. 1 raised in assessee s appeal is allowed. Refund - Non receipt of funds granted by the AO - During the course of appellate proceedings before us the ld. Counsel submitted assessee has not issued refund as determined in the intimation issued u/s 143(1) of the Act - HELD THAT:- After hearing both the sides we direct the AO to determine the refund after verification of the relevant supporting material as claimed by the assessee. Therefore, this ground of appeal of the assessee is allowed for statistical purpose. - Shri Amit Shukla, Judicial Member And Shri Amarjit Singh, Accountant Member For the Appellant : Yogesh Thar For the Respondent : Anil Sant ORDER PER AMARJIT SINGH (AM): This appeal filed by the assessee is directed against the order passed by the ACIT International Taxation, Circle 4(2)(1) Mumbai vide order u/s 143(3) r.w.s 144C(13) on 24.07.2023 in pursuance to directions issued by the Dispute Resolution Panel u/s 144C(5) of the Act vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 23,39,460/-. The return was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 29.06.2021. During the year under consideration the assessee has shown receipts from Delhi Metro Rail Corporation Limited (DMRCL) and Maharashtra Metro Rail Corporation Limited (MMRCL). The assessee was having contract with DMRCLAE-05R for Rs. 50.57 crore for Design, Manufacturing, Supply, Installation, Testing and Commissioning (including integrated testing and commissioning) of [escalators etc. The assessee was also having contract with MMRCL for Rs. 105.93 crores for Design, Manufacturing, Supply, Installation, Testing and Commissioning of Heavy Duty Machine Room etc. During the year under consideration the assessee has raised invoices amounting to Rs. 39,99,47,528/- against MMRCL and Rs. 6,04,85,280/- against DMRCL and both the receipts have been considered as non-taxable by the assessee. On query, the assessee explained that during the year it had supplied escalator to Delhi Metro Rail Corporation Limited (DMRCL) and Maharashtra Metro Rail Corporation Ltd. (MMRCL), therefore, the payment made by them to the assessee will be regarded as supply of goods and will be tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the sides and perused the material on record. During the year under consideration the assessee was in receipt of Rs. 46,04,32,808/- for design manufacture and supply of escalators/elevators to Delhi Metro Rail Corporation Ltd. and to Maharashtra metro Rail Corporation Ltd. (DMRCL) and (MMRCL). The assessee has claimed that the aforesaid receipt was not taxable in India on the ground that they pertained to off-shore supplies of equipment to DMRCL and MMRCL. However, the AO has taken a view that the assessee entered into an arrangement with its Indian Associate Enterprise Schindler India Pvt. Ltd. (SIPL) for the fulfilment of its obligation under the contract and income of the assessee was earned from India in respect of composite contract. The assessing officer was of the view that the contract with DMRCL and MMRCL was composite and indivisible and could not be split up into supply and commissioning parts as stated by the assessee. The AO also stated that the said consortium was liable to be assessed as an Associate of Person (AOP) and the income from the transaction was chargeable to tax in India, as no benefit of India-China DTAA could be granted to the association. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the project as a consortium with each party responsible for its own scope of work. It was further agreed that both parties shall be jointly and severally responsible for completing the project. As per Article 3 of the MOU, the assessee agreed to undertake the design, manufacturing, and supply of escalators, while SIPL‟s scope of work included clearance of material after reaching at port and transportation to the site as per contract conditions, installation, testing, commissioning and maintenance of escalators. We find similar terms in MOU in respect of contract with MMRCL. Firstly, from the above, it is evident that the scope of work of each of the parties in the consortium is separately defined and since the MOU forms part of the contract agreement, it cannot be denied that the same was not known to the DMRCL/MMRCL. Secondly, the work of SIPL can only start after the goods reach the port of destination. In Article 2 of the MOU, the parties specify the percentage of effort and time that is expected to be spent by them on the project. In this Article, it has been clarified that the said percentage does not, in any way, imply the share of profit or losses, and each party will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration received from DMRCL and MMRCL was claimed as not taxable by the assessee on the basis that the same is in respect of the offshore supply of elevators and escalators. The distinct scope of work and separate responsibility of each member of the consortium, in the present case, was also accepted by DMRCL and MMRCL. The same is evident from the fact that the MOU forms part of the contract agreement and DMRCL/MMRCL also agreed to pay separate considerations and also in different currencies to both parties. As per the Revenue, since the contract with DMRCL/MMRCL is a composite contract with part of the contract being performed in India, therefore, the consideration received by the assessee is taxable in India. Though, the Assessing Officer vide draft assessment order treated the consortium as an AOP under the Act, however, proceeded to make the addition only in the hands of the assessee. The learned DRP did not go into the question of AOP and upheld the addition in the hands of the assessee on a substantive basis. On one hand, the Revenue treated the agreement with DMRCL and MMRCL as a composite contract, while on the other hand, it is an admitted fact that no separate assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s various relevant terms. Page 755 of it mentions that : 'Cost, Insurance and Freight' means that the seller has the same obligation as under CFR but with the addition that he has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is only required to obtain insurance on minimum coverage. The CIF term requires the seller to clear the goods for export. CFR, in turn, has been explained as Cost and Freight means that the seller must pay the cost and freight necessary to bring the goods to the named port of destination but the risk of losses of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer when the goods pass the ship's rail in the port of shipment. It has further been explained that in the case of CIF the seller must 'deliver the goods on board the vessel at the port of shipment on the date or within the period stipulated'. Clause A.5 also sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y operations in India in respect of its scope of work, therefore, we are of the considered opinion that the income earned by the assessee from the offshore supply of escalators and elevators to DMRCL and MMRCL is not taxable in India. Accordingly, we direct the Assessing Officer to delete the addition made in the hands of the assessee. As a result, ground No. 1 raised in assessee s appeal is allowed. 16. In view of aforesaid findings, ground No. 2, raised in assessee s appeal on without prejudice basis is rendered academic and therefore, is dismissed as infructuous. 17. In the result, the appeal by the assessee is partly allowed. 6. We find that issue raised before the Tribunal in this year is similar to the proceeding assessment year as referred above in this order. Since, identical issue was dealt by the Tribunal in earlier years in favour of the assessee as cited supra in the assessee s own case, therefore, following the decision of the ITAT we direct the AO to delete the impugned additions. Accordingly, the ground no. 2 of the appeal of the assessee is allowed. 7. Since, we have adjudicated ground no. 2 in favour of the assessee therefore, ground no. 3 of appeal become infructu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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