Koncar Inzenjering ZA Energitiku, CHENNAI V. DDIT, CHENNAI

ITA 1204/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8083 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 19-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 03-05-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Business income; Permanent establishment
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . . ' # $ , % &' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NO. 1204/MDS/2016 / ASSESSMENT YEAR : 2011-12 M/S KONCAR INZENJERING ZA ENERGITIKU C/O K. SEKAR, CHARTERED ACCOUNTANT 29/14, II MAIN ROAD R.A PURAM CHENNAI 600 028 VS. THE DY. DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION (1) CHENNAI [PAN AACCK 4018 R] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI K. BALASUBRAMANIAN, ADVOCATE /RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT / DATE OF HEARING : 19 - 10 - 2016 ! / DATE OF PRONOUNCEMENT : 10 - 11 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-16, CHENN AI, DATED 28.1.2016 FOR ASSESSMENT YEAR 2011-12. 2. GROUND NO.1 IS RELATED TO THE CLAIM U/S 44BBB OF T HE INCOME-TAX ACT, 1961 [IN SHORT THE ACT]. ITA NO.1204/16 :- 2 -: 3. THE ASSESSEE-COMPANY FILED THE RETURN OF INCOME ON 29.11.2011 DISCLOSING TOTAL INCOME OF ` 1,30,10,008/-. THE ASSESSEE COMPUTED 10% GROSS TOTAL TURNOVER AS INCOME UNDER T HE PROVISIONS OF SEC. 44 BBB OF THE ACT. DURING THE ASSESSMENT PROC EEDINGS, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THA T IT IS A FOREIGN COMPANY ENGAGED IN THE BUSINESS OF ERECTION OF GENE RATOR AND TESTING AND COMMISSIONING AND IT IS A TURNKEY PROJECT HENC E THE ASSESSEE HAD AN OPTION TO DECLARE THE INCOME AS PER SECTION 44BB . THE ASSESSEE ALSO RELIED ON CBDT CIRCULAR NO.552 DATED 9.2.1990. THE ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM FOR COMPUTIN G THE INCOME AS PER 44BBB OF THE ACT SINCE THE ASSESSEE HAS NOT SATISF IED THE FOLLOWING CONDITIONS: (A) IT WAS NOT TURNKEY POWER PROJECT APPROVED BY THE CENTRAL GOVERNMENT AT THE TIME OF SIGNING THE CONTRACT. (B) IT WAS ALSO NOT FINANCED BY AN INTERNATIONAL AND PAYMENT AS WAS REQUIRED BY THE THEN PREVAILING CONDITION OF SEC. 44BBB. 4. THE ASSESSEE SUBMITTED A LETTER FROM T HE CHIEF ENGINEER TO THE ASSESSING OFFICER CERTIFYING THAT THE PROJECT I N QUESTION WAS A TURNKEY PROJECT WHICH READS AS UNDER: THE PROJECT MAY PLEASE BE TREATED AT PART WITH THE POWER PROJECTS APPROVED BY GOVT. OF INDIA WITH TAX TREATM ENT UNDER SECTION 44BBB OF THE INCOME-TAX ACT, 1961. THE DOC UMENT ITA NO.1204/16 :- 3 -: CANNOT BE CONSTRUED AS AN APPROVAL FROM THE CENTRAL GOVERNMENT, IN THE FACTS OF THE CASE. THE ASSESSING OFFICER DID NOT ACCEPT THE LETTER PL ACED BY THE ASSESSEE BEFORE HIM SINCE THE DOCUMENT USED THE EXPRESSION: MAY BE CONSTRUED AND IT WAS NOT THE TURNKEY PROJECT APPROV ED BY THE CENTRAL GOVERNMENT AT THE TIME OF SIGNING THE CONTRACT. 5. AGGRIEVED BY THE ORDER OF THE A.O THE ASSESSEE W ENT ON APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) APPEAL DIS MISSED THE APPEAL. 5.1 AGGRIEVED BY THE ORDER OF THE LD. CIT(A) TH E ASSESSEE IN APPEAL BEFORE US. APPEARING FOR THE ASSESSEE LD. CO UNSEL SHRI BALASUBRAMANIAN, ADVOCATE SUBMITTED THAT THE ASSES SEE HAS TAKEN UP HYDRO POWER PROJECT ALONG WITH M/S LITOSROJ FOR SET TING UP OF OF 2X15 MW POWER PROJECT AT BHAVANI KATTALAI BARRIAGE 2 & 3 FOR TAMILNADU ELECTRICITY BOARD. THE SCOPE OF THE PROJECT WAS (A) OFFSHORE SUPPLY OF EQUIPMENTS GENERATO R, (B) ERECTION, TESTING AND COMMISSIONING OF EQUIPMENTS, AND (C) SUPPLY OF MANDATORY SPARES AND TOOLS. DURING THE APPEAL, THE LD. AR OF THE ASS ESSEE FURNISHED A COPY OF LETTER ISSUED BY THE GOVERNMENT OF INDIA, CENTR AL ELECTRICITY ITA NO.1204/16 :- 4 -: AUTHORITY, MINISTRY OF POWER, DATED 24.11.2008 AT P AGE NO.1 OF PAPER THE BOOK WHICH READS AS UNDER: I. BHAVANI KATTALAI BARRAGE-Z (BKB-2) HEP{2XLS= 30 MW) AND BHAVANI KATTALAI BARRAGE-3 (BKB-3) HEP (2XLS= 30 MW ) ARE UNDER EXECUTION IN TAMIL NADU BY TAMIL NADU ELECTRI CITY BOARD AS PER THE APPROVAL ACCORDED BY THE GOVERNMENT OF T AMIL NADU (GOTN) VIDE LETTER NO.: G.O.MS NO. 128 DATEDFL.06.1 999 FORBKB-2 AND LETTER NO.: (MS) NO. 27 DATED 27.03.2002 'FOR BKB- 3 BY THE POWER DELEGATED TO THE STATES BY GOVERNMEN T OF INDIA, MINISTRY OF POWER VIDE GAZETTE NOTIFICATION DATED 1 9.1 0.1994. IN VIEW OF ABOVE, CERTIFIED THAT THE PROJECTS 'BKB-2' & 'BKB-3' IN TAMIL NADU BY TAMIL NADU ELECTRICITY BOARD APPROVED BY GOVERNMENT OF TAMIL NADU AS PER DELEGATION OF POWER S AS PER ELECTRICITY ACT ARE CONSIDERED AS DEEMED TO HAVE BE EN APPROVED BY CEA (CENTRAL ELECTRICITY AUTHORITY, MINISTRY OF POWER), CENTRAL GOVERNMENT IN ITS BEHALF, II. TAMIL NADU ELECTRICITY BOARD HAS AWARDED THE CO NTRACT ON EPC BASIS FOR BK,B-2 & BKB-3 VIDE PURCHASE ORDER NO.: PD. NO. 316 DATED 08.10.2007 TO THE CONSORTIUM OF M/S LITOSTROJ , SIOVENIA AND M/S KONCAR,CROATIA FOR DESIGN, MANUFACTURE, SU PPLY, ERECTION(EXCLUDING CIVIL WORKS), TESTING, COMMISSIO NING AND HANDING OVER OF TURBINE GENERATING EQUIPMENT CO MPLETE WITH AUXILIARIES AND ACCESSORIES: THE LUMP SUM CONTRACT PRICE COMPRISES PAYMENTS IN EURO AND INR TOWARD TURNKEY E RECTION INCLUDING INLAND TRANSPORT STORAGE AND STORAGE 'CUM ERECTION INSURANCE, TESTING, COMMISSIONING AND HANDING OVER. IN VIEW OF ABOVE, CERTIFIED FOR LIMITED TAX PURPOSE THAT THE S UBJECT CONTRACT FORM PART OF TURNKEY POWER PROJECT APPROVED BY THE CENTRAL GOVERNMENT, IN ITS BEHALF. IN VIEW OF ABOV E, THE PROJECT MAY PLEASE BE TREATED AT PAR WITH POWER PROJECTS AP PROVED BY GOVERNMENT OF INDIA WITH TAX TREATMENT UNDER SECTIO N 44BBB OF THE INCOME TAX ACT, 1961. FURTHER, THE LD. AR FURTHER CLARIFIED THA T THE EARLIER THE SUBJECT OF POWER WAS INCLUDED IN THE MINISTRY OF ENERGY AND W.E.F.02/07/1992 THE DEPARTMENT MINISTRY OF ENERGY SOURCES WAS DIS PENSED WITH AND THE MINISTRY OF POWER STARTED FUNCTIONING INDEPENDE NTLY. HENCE ALL THE ITA NO.1204/16 :- 5 -: RELEVANT OFFICIAL COMMUNICATION IS ISSUED FROM THE MINISTRY OF POWER WHICH SHOULD BE CONSIDERED ON PAR WITH THE COMMUNIC ATION ISSUED BY MINISTRY OF ENERGY. THE CBDT IN CIRCULAR NO. 552 D ATED 9.2.1990 CLARIFIED THAT AN APPROVAL ISSUED BY THE DEPARTMENT OF POWER IN THE MINISTRY OF ENERGY SHALL BE DEEMED TO BE APPROVAL O F THE CENTRAL GOVERNMENT FOR THE PURPOSE OF SEC. 44BBB OF THE ACT . 6. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL PLACED BEFORE US. THE ASSESSEE HAS SIGNED THE AGR EEMENT FOR THE EXECUTION OF TURNKEY PROJECT WITH TAMILNADU ELECTRI CITY BOARD ON 27.12.2006. FROM THE CERTIFICATE ISSUED BY THE CEN TRAL ELECTRICITY AUTHORITY, MINISTRY OF POWER, IT WAS CLARIFIED THAT IT IS A TURNKEY PROJECT TO BE TREATED AT PAR WITH POWER PROJECTS APPROVED B Y THE GOVERNMENT OF INDIA FOR THE PURPOSE OF SECTION 44BBB OF THE AC T. THE LETTER WAS ISSUED BY THE CENTRAL ELECTRICITY AUTHORITY, GOVERN MENT OF INDIA, MINISTRY OF POWER ON 24.11.2008 WHICH WAS PLACED BE FORE THE ASSESSING OFFICER ALSO. BY CIRCULAR NO. 552 DATED 9.12.1990, IT WAS CLARIFIED BY THE CBDT THAT AN APPROVAL ISSUED BY TH E DEPARTMENT OF POWER IN THE MINISTRY OF ENERGY SHALL BE DEEMED TO BE APPROVAL OF THE CENTRAL GOVERNMENT FOR THE PURPOSES OF SEC. 44BBB O F THE ACT. NOW ITA NO.1204/16 :- 6 -: MINISTRY OF ENERGY SOURCES WAS DISPENSED WITH AND THE MINISTRY OF POWER STARTED FUNCTIONING INDEPENDENTLY THEREFORE THE LETTER ISSUED BY THE MINISTRY OF POWER IS A VALID COMMUNICATION ON THE SUBJECT OF ELECTRICITY AND POWER. THE LD. AR HAS PLACED RELI ANCE ON THE EVIDENCES FILED BEFORE THE ASSESSING OFFICER REGARD ING APPROVAL OF CENTRAL GOVERNMENT, WE HAVE NO REASON TO REJECT TH E CLAIM OF THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE DISPROVING THE GENUINESS AND AUTHENTICITY OF THE FURNISHED BY THE REVENUE. SECO NDLY, THE ASSESSING OFFICER REJECTED THE CLAIM STATING THAT THE CENTRAL GOVERNMENT APPROVAL IS NOT AVAILABLE AT THE TIME OF SIGNING OF THE CONT RACT. NOW IT IS WELL SETTLED ISSUE THAT ADDITIONAL CLAIMS AND SUPPORTING DOCUMENTS SUCH AS APPROVALS ETC MAY BE FURNISHED AT THE TIME OF ASSES SMENT BEFORE THE ASSESSING OFFICER OR BEFORE THE APPELLATE AUTHORITI ES WHICH WILL BE TREATED AS SUFFICIENT COMPLIANCE. SINCE THE APPROV AL WAS SUBMITTED BEFORE THE ASSESSING OFFICER DURING THE PENDENCY OF ASSESSMENT PROCEEDINGS, FURNISHING COMPLETE DETAILS OF THE POW ER PROJECT AND CERTIFICATE THAT THE CONTRACT WORK OF THE ASSESSE E MAY BE TREATED AS TURNKEY PROJECT FOR THE PURPOSES OF SEC. 44BBB OF T HE ACT AND THE ASSESSING OFFICER HAS NOT DISPOVED THE SAME WE DO NOT FIND ANY REASON FOR REJECTING THE CLAIM OF THE ASSESSEE. T HEREFORE, WE HOLD THAT CONDITION (A) IS SATISFIED BY THE ASSESSEE. CONDITION (B) IT WAS NOT FINANCED BY AN INTERNATIONAL AND PAYMENT AS WAS REQUIRED BY THE ITA NO.1204/16 :- 7 -: THEN PREVAILING CONDITION OF SEC. 44BBB. THIS CONDITION HAS BEEN OMITTED FROM THE ACT WITH EFFECT FROM 1.4.2004 AND HENCE CANNOT BE INVOKED. FROM THE ABOVE IT IS CLEAR THAT THE ASSE SSEE HAS SATISFIED ALL THE CONDITIONS FOR THE PURPOSES OF COMPUTING THE IN COME U/S 44BBB AS A TURNKEY PROJECT. THEREFORE WE SET ASIDE THE OR DERS OF THE LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO COM PUTE THE INCOME AS PER SEC. 44 BBB OF THE ACT. THIS GROUND OF APPEAL IS ALLOWED. 8. GROUND NO.2 IS RELATED TO DESIGN ENGINEERING & TECH NICAL AND SUPERVISORY SERVICES TO THE EXTENT OF ` 21,38,263/- TREATED AS TECHNICAL SERVICES AND TAXED U/S 115 A R.W. SEC. 4 4D OF THE ACT. 9. THE ASSESSING OFFICER TAXED THE DESIGN ENGINEERING AND SUPERVISORY SERVICES U/S 44AD OF THE ACT. THE RELE VANT PART OF THE ASSESSMENT ORDER IS EXTRACTED HEREUNDER FOR THE SAK E OF CONVENIENCE. 4. CLAIM FOR DESIGN ENGINEERING AND TECHNICAL AND SUPERVISORY SERVICES: 4.1 AN AMOUNT OF RS.21,38,623 HAS BEEN DEBITED UND ER THE ABOVE HEAD. ON ANALYSIS OF THE DETAILS IT IS FOUND THAT THE SAME HAS BEEN INCURRED IN CONNECTION WITH PURELY TECHNICAL AND DE SIGN SERVICES. ACTUALLY, THIS IS A PART OF CONSIDERATION RECEIVED FROM TNEB, AND REPATRIATED BY THE NON-RESIDENT COMPANY TO THE HEAD OFFICE. THE CHARGE IS IN THE NATURE OF RENDERING OF ANY MANAGERIAL TECHNICAL, OR CONSULTANCY SERVICES AS ENVISAGED IN THE DEFINITION /OR FEE FOR TECHNICAL SERVICES U/S 9(I)(VII). THEREFORE, THE AMOUNT IS TREATED AS FEE FOR TECHNICAL SERVICES IN THE HANDS OF THE NON- RESIDENT COMPANY. THE SAME IS NOT COVERED BY THE EXCEPTIONS MENTIONED IN EXPLANATION 2 TO 9(1)(VII) FOR THE FOLLOWING REASONS: ITA NO.1204/16 :- 8 -: A. THIS IS NOT A CONSIDERATION FOR ANY CONSTRUCTION , ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE ASSESSEE; B. THE RECEIPT DOES NOT CONSTITUTE INCOME UNDER THE HEAD SALARIES IN THE HANDS OF THE RECIPIENT. 4.2 THEREFORE, THIS AMOUNT WOULD BE EXCLUDED FROM BOTH THE INCOME AND EXPENDITURE REFLECTED IN THE RETURN BUT TAXED AS FEE FOR TECHNICAL SERVICES UNDER SPECIAL PROVISION OF SECTI ON 44 D R.W.S. 115 A. THE REMAINING INCOME/LOSS WOULD BE CONSIDERED AS BUSINESS INCOME OF THE PERMANENT ESTABLISHMENT, SUBJECT TO A DJUSTMENTS UNDER CHANTER IV OF THE INCOME TAX ACT. 10. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION MADE B Y THE ASSESSING OFFICER REITERATING THE DISCUSSION OF THE ASSESSING OFFICER. 11. DURING APPEAL, THE LD. AR ARGUED THAT THE ENTIRE PA YMENT WAS CONTRACT RECEIPTS WHICH SHOULD BE ASSESSED AS P ER SEC. 44BBB OF THE ACT. THE ASSESSEE HAS NOT RECEIVED ANY SEPARA TE CONSIDERATION TOWARDS RENDERING TECHNICAL AND SUPERVISORY SERVICE S. THE ENTIRE AMOUNT WAS BUSINESS INCOME OF THE NON-RESIDENT COMP ANY AND A PORTION OF WHICH CANNOT BE CARVED OUT AND BE TREATE D AS FEE FOR TECHNICAL SERVICES. SINCE THE ASSESSEE HAS NOT RE NDERED ANY SERVICES FOR MAKING SEPARATE ASSESSMENT. THE ASSESSING OFFI CER HAS NOT EXAMINED THE ISSUE WHETHER TECHNICAL AND SUPERVISOR Y SERVICES WERE PAID TO THE ASSESSEE-COMPANY SEPARATELY OR AS A PAR T OF THE COMPOSITE RECEIPT OF THE CONTRACT WORK. IF THE ASSESSEE-COMP ANY WAS PAID ENGINEERING AND TECHNICAL SERVICES SEPARATELY THEN THERE IS A QUESTION OF EXAMINING WHETHER SUCH PAYMENT COMES WITHIN THE DEFINITION OF ITA NO.1204/16 :- 9 -: TECHNICAL SERVICES. ON THE OTHER HAND THE LD. D.R RELIED ON THE LOWER AUTHORITIES ORDERS. 12. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL PLACED BEFORE US. NEITHER THE ASSESSING OF FICER NOR THE CIT(A) HAVE ENQUIRED THE FACTS OF THE CASE AND GIVE N A FINDING ON THE NATURE OF THE PAYMENT AND THE RECEIPT. THE ASSESSEE SUBMITTED THAT TNEB HAS PAID THE ERECTION , COMMISSION AND INSTALL ATION CHARGES IN EUROS AND INDIAN RUPEES WHICH HAS BEEN DULY ACCOUNT ED AS INCOME. AS THIS RECEIPT WAS BUSINESS INCOME FOR KONCAR IN I NDIA ACCORDING TO THE ASSESSEE A PORTION OF IT CANNOT BE CARVED OUT A ND BE TREATED AS FEES FOR TECHNICAL SERVICES. THE ACTIVITIES IN THE WORK ARE PHYSICAL ACTIVITIES FOR ERECTION OF PLANT AND MACHINERY & TE STING AND COMMISSIONING. AND THEY ARE NOT STAND ALONE SERVICE S WHICH FORM PART OF THE TOTAL PROJECT OF SUPPLY AND ERECTION OF PLAN T AND MACHINERY IN CONNECTION WITH A POWER PROJECT. THE ASSESSEE RELIE D ON SOURCE RULE WHICH WAS EXPLAINED IN [1994] 50 ITD 348 (CAL.)IN THE ITAT CALCUTTA BENCH E, DEPUTY COMMISSIONER OF INCOME- TAXV.SCHLUMBERGER SEACO AS UNDER: THE DEFINITION OF THE WORDS 'FEES FOR TECHNICAL SE RVICES' AS CONTAINED IN EXPLANATION 2 TO SECTION 9(1)( VII ) HAS BEEN EXPLAINED BY THE CIRCULAR AS UNDER : '16.3 THE EXPRESSION FEES FOR TECHNICAL SERVICES H AS BEEN DEFINED TO MEAN ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION ) FOR THE RENDERING OF MANAGERIAL. TECHNICAL OR CONSULTANCY SERVICES, INCLUDING THE PR OVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL). IT, HOWEVER, DOES NOT INCLUDE FEE S OF THE FOLLOWING TYPES, NAMELY : ITA NO.1204/16 :- 10 -: ( I )ANY CONSIDERATION RECEIVED FOR ANY CONSTRUCTION, A SSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT. SUCH CONSIDERATION HAS BEEN EXCLUDED FROM THE DEFINITION ON THE GROUND THAT SUCH ACTIVITIES VIRTUALLY AMOUNT TO CARRYING ON BUSINESS IN INDIA, FOR WHICH CONSIDERABLE EXPENDITURE WILL HAVE TO BE INCU RRED BY A NON-RESIDENT AND ACCORDINGLY IT WILL NOT BE FAIR TO TAX SUCH CONSIDE RATION IN THE HANDS OF A FOREIGN COMPANY ON GROSS BASIS OR TO RESTRICT THE EXPENDITU RE INCURRED FOR EARNING THE SAME TO 20 PER CENT OF THE GROSS AMOUNT AS PROVIDED IN NEW SEC TION 44D OF THAT ACT. CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJ ECT WILL, THEREFORE, BE CHARGEABLE TO TAX ON NET BASIS, I.E. , AFTER ALLOWING DEDUCTION. IN RESPECT OF COSTS AND EXPENDITURE INCURRED FOR EARNING THE SAME AND CHARGED TO TAX AT THE RATES APPLICABLE TO THE ORDINARY INCOME OF THE NON-RESIDENT AS SPECIFIED IN THE RELE VANT FINANCE ACT. ( II )CONSIDERATION WHICH WILL BE CHARGEABLE TO TAX IN T HE HANDS OF THE RECIPIENT UNDER THE HEAD SALARIES. 16.4 THE AFORESAID AMENDMENT HAS COME INTO FORCE WI TH EFFECT FROM THE 1ST JUNE, 1976 AND WILL APPLY IN RELATION TO THE ASSESSMENT YEAR 1977- 78 AND SUBSEQUENT YEARS [SECTION 4( B ) (PART) OF THE FINANCE ACT].' FROM THE ABOVE CIRCULAR IT WILL BE CLEAR THAT THE L EGISLATURE WHILE INTRODUCING EXPLANATION 2 TO SECTION 9(1)( VII ) HAD IN MIND ONLY THOSE NON- RESIDENTS WHO DID NOT CARRY ON ANY BUSINESS AS SUCH IN INDIA BUT WERE MER ELY IN RECEIPT OF THE INCOME BY WAY OF FEES FOR TECHNICAL SERVICES. THIS IS EXACTLY WHY THE LATER PART OF THE EXPLANATION EXCLUDES FROM THE PURVIEW OF THE DEFINITION, ANY IN COME REPRESENTED BY CONSIDERATION FOR ANY MINING OR LIKE PROJECT IN IND IA WHICH WOULD NECESSARILY INVOLVE THE INCURRING OF EXPENDITURE, SETTING UP OF VARIOUS OPERATIONS IN INDIA DEPLOYMENT OF MEN AND MATERIAL AND CONSIDERABLE ORG ANISATION AND ESTABLISHMENT. IN THE CASE OF THE ASSESSEE, THE EXPENDITURE WAS DEBITED THE PROFIT AND LOSS ACCOUNT AND THE ASSESSEE EXPLAINED THAT TH IS WAS PART OF THE RECEIPT OF CONTRACT WORKS AND NO SEPARATE RECEI PT WAS RECEIVED BY THE ASSESSEE FOR ANY STAND ALONE WORKS. THIS FACT W AS NOT EXAMINED BY THE A.O. IF THE PAYMENT WAS PART OF THE CONTRACT WO RKS THE SECTION 44D DOES NOT APPLY AND IF THE RECEIPT WAS SEPARATEL Y MADE FOR TECHNICAL FEES THEN THE PROVISIONS OF SECTION 44D A RE APPLICABLE. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUT HORITIES AND RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WIT H A DIRECTION TO EXAMINE WHETHER THE RECEIPT IN QUESTION IS A PART O F THE CONTRACT WORK ITA NO.1204/16 :- 11 -: OR A SEPARATE PAYMENT AND DECIDE ON MERITS AFTER GI VING OPPORTUNITY TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTI CAL PURPOSES. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ' # $ ) (D.S. SUNDER SINGH) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 10 TH NOVEMBER, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF