Carpi Tech SA, CHENNAI V. ADIT, CHENNAI

ITA 1742/CHNY/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8658 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 22-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2011
• Court: TRIBUNAL
• Department Lawyers: MRS PARMINDERCIT
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Business income; Rectification of order; Double taxation relief; Permanent establishment
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , . ! '# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1742/MDS./2011 / ASSESSMENT YEAR : 2008-09 M /S.CARPI TECH SA , C/O.T.N.SEETHARAMAN, ADVOCATE, NO.384,(OLD NO.196) LLOYDS ROAD, CHENNAI 600 086. VS. ADIT,(INTERNATIONAL TAXATION) CHENNAI.-34. [PAN AACCC 5322 Q ] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : MR.T.N.SEETHARAMAN,ADVOCATE /RESPONDENT BY : MRS.PARMINDER,CIT DR / DATE OF HEARING : 22 - 0 6 - 201 6 !' / DATE OF PRONOUNCEMENT : 24 - 0 8 - 2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE ASST. DIRECTOR OF INCOME TAX, INTERNATIONAL TA XATION, CHENNAI DATED 23.09.2011 PASSED U/S.143(3) R.W.S. 144C(13) OF THE ACT, WHICH ITA NO. 1742/MDS./2011 :- 2 -: IS EMANATED FROM DIRECTION OF THE DISPUTE RESOLUTIO N PANEL (DRP), CHENNAI PASSED U/S.144C(5) R.W.S 144C(8) OF THE ACT DATED 18.08.2011 OF THE ACT PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE FIRST GROUND FOR CONSIDERATION IS WITH REGA RD TO DIRECTION OF DRP THAT ASSESSEE MAINTAINS A FIXED PLACE OF BUS INESS AS A PERMANENT ESTABLISHMENT (PE) IN INDIA WITHIN A ME ANING OF ARTICLE- 5.2(I) OF DTAA BETWEEN INDIA AND THE SWISS CONFEDER ATION THAT WHETHER M/S.CARPI INDIA WATERPROOFING SPECIALISTS P VT. LTD.,(CIWSPL) REPRESENTED BY MR.V.SUBRAMANIAN HIMSELF TREATED AS P.E RENDERING INCOME OF M/S.CARPI TECH SA LIABLE TO INDIAN INCOME TAX. 3. THE FACTS OF THE CASE ARE THAT M/S.CARPI TECH S A IS A FOREIGN COMPANY, RESIDENT IN SWITZERLAND, SPECIALIZED IN GE O COMPOSITE MEMBRANE WATER PROOFING AND DRAINAGE SYSTEMS. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE PROJECT RECEIPT FROM TANAKPUR POWER PROJECT OF NATIONAL HYD RO ELECTRIC POWER CORPORATION LTD.(NHPC) WORK IS EXEMPT FROM TAX IN I NDIA FOR THE REASON THAT THE ASSESSEE DOES NOT HAVE CONTINUOUS PRESENCE OR BUSINESS CONNECTION OR A PERMANENT ESTABLISHMENT IN INDIA. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FURTHER PO INTED OUT THAT THE DURATION OF THE TANAKPUR PROJECT WAS 40 DAYS ONLY I .E. NOT MORE THAN 6 MONTHS AND STANDS EXCLUDED FROM THE SCOPE OF ARTICL E 5 OF THE DTAA BETWEEN INDIA AND THE SWISS CONFEDERATION. ITA NO. 1742/MDS./2011 :- 3 -: 3.1 THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT A S STATED EARLIER THE ASSESSEE IS ENGAGED GLOBALLY IN GEO COMPOSITE MEMBR ANE WATER PROOFING AND DRAINAGE SYSTEMS FOR DAMS, CANALS, TUNNELS AND OTHER HYDRAULIC STRUCTURES. DURING THE PERIOD UNDER CONSIDERATION T HE ASSESSEE COMMENCED THE WORK AWARDED BY NATIONAL HYDRO POWER CORPORATIO N LTD (NHPC) RELATING TO PROVIDING PVC GEO MEMBRANE WATER PROOFING FOR AN AREA OF 25100 SQ.MT IN TANAKPUR POWER CHANNEL IN UTTARKHAND. THE PROJEC T RECEIPT OF F11,95,56,285 WAS CLAIMED AS BEING EXEMPT FROM TAX ON THE GROUND THAT THE ASSESSEE DID NOT HAVE A PE IN INDIA AND AS SUCH WAS NOT LIABLE TO TAX. THE AO FURTHER FOUND THAT WHILE CLAIMING THE ABOVE EXEM PTION ON THE BASIS OF DTAA, THE ASSESSEE HAS DISCLOSED NIL INCOME FOR TH E YEAR UNDER CONSIDERATION. ACCORDING TO THE AO, IF THIS IS A A NOMALY SPECIALLY AGAINST THE CLAIM REGARDING THE NON EXISTENCE OF PE IN INDIA. T AKING THE INQUIRY FURTHER, THE AO PROCEEDED TO CALL FOR PARTICULARS WITH REGAR D TO WORKS CARRIED OUT FOR THE ASSESSMENT YEARS 2005-06 ONWARDS. IT WAS FOUND THAT THE ASSESSEE HAD RENDERED SERVICE FOR THE ASSESSMENT YEARS 2004-05 T O 2007-08 FOR THE TNEB AT KADAMPARAL AND NHPC AT TANAKPUR. WHILE FOR THE F INANCIAL YEAR 2004-05 & 2005-06 THE PROJECT FOR TNEB WAS EXECUTED BETWEEN 06-11-2004 & 21-05- 2005,. THE TOTAL NUMBER OF DAYS BEING LESS THAN 180 . THE PROJECT FOR NHPC, TANAKPUR WAS EXECUTED BETWEEN 27-01-2008 AND 05-03- 2008 THE NUMBER OF DAYS BEING LESS THAN 40. 3.2 THE LD.A.R SUBMITTED BEFORE AO THAT THE ASSESSEE DID G EO MEMBRANCE FIXING FOR TAMIL NADU ELECTRICITY BOARD ( TNEB) AT ITA NO. 1742/MDS./2011 :- 4 -: KADAMPARI DAM BETWEEN 17.01.2005 AND 02.05.2005- TH E DURATION OF THE PROJECT WAS 105 DAYS IN FINANCIAL YEAR 2004-05/ 2005-06. BETWEEN THE TWO PROJECTS I.E.NHPC AND TNEB THERE WAS A TIME LAG OF NEARLY THREE YEARS. TAKING SUCH ARGUMENTS IN TO ACCOUNT, THE AO TOOK TH E VIEW THAT THE PROJECTED TIME LAG BETWEEN THESE TWO PROJE CTS WAS MISLEADING, IN SO FAR AS, THE INTERVENING PERIOD WAS USED FOR BAGGING OTHER PROJECTS AS EVIDENT FROM LETTER DATED 06-08-2007 TO THE CHIEF ENGINEER, NHPC. THIS LETTER WAS ALSO SIGNED BY SRI V. SUBRAMANLAN. THIS LETTER ALSO EVIDENCED THE VISIT UNDERTAKEN BY SRI V. SUBRAMANIAN TO THE SITE, HIS I NTERACTION WITH SENIOR OFFICERS AND OTHER OFFICERS AT SITE AND THE ASSOCIA TED JOBS RELATING TO THE CONTRACT THE AO WAS OF THE OPINION THAT THE EXISTE NCE OF PE IN THE SHAPE OF THE OFFICE ADDRESS OF THE COMPANY WHICH WAS THE SAM E AS THE OFFICE ADDRESS OF THE PROJECT COORDINATOR, AS BEING A FIXED PLACE OF BUSINESS CONSTITUTING PE. ALSO, ALTERNATIVELY SRI V. SUBRAMANIAN WAS CONSTITU TING A PE. IN DOING SO, THE AO STRONGLY REFUTED THE ARGUMENTS MADE BY THE ASSES SEE THAT CIWSPL / SRI V. SUBRAMANIAN WAS AN AGENT OF INDEPENDENT STATUS IN TERMS OF ARTICLE 5.5. & 5.6 OF THE DTAA. TO BUTTRESS THE ASSERTION THAT S RI V.SUBRAMANIAN WAS NOT AN AGENT OF INDEPENDENT STATUS, THE AO HAS OBSERVED THAT THE COMPANIES CLAIMED TO HAVE BEEN REPRESENTED BY SRI V. SUBRAMAN IAN SUCH AS LITOSTROJ POWER AND M/S KONCAR WERE AT DIFFERENT POINT IN TIM E I.E. BETWEEN 2002 & 2006 WHILE THE TANAKPUR PROJECT REFERRED TO THE PER IOD 2007-2008 AND NOT DURING THE SAME PERIOD WHEN SRI V. SUBRAMANIAN WAS INVOLVED IN UNDERTAKING THE PROJECT WORK OF THE ASSESSEE. FURTH ER THAT IN THE DATA SHEET ITA NO. 1742/MDS./2011 :- 5 -: PRESENTED BEFORE THE PRINCIPAL I.E. NHPC SRI V. SUB RAMANIAN HAS BEEN REPRESENTED AS THE INDIAN REPRESENTATIVE OF THE ASS ESSEE. CIWSPL WAS ALSO THE INDIAN FACE OF CARPI TECH SA, SWITZERLAND REPRE SENTING THE COMPANY IN ALL PRACTICAL MATTERS, FINANCIALLY COMPENSATED BY T HE ASSESSEE. TO THAT EXTENT THE COMPANY REPRESENTED BY SRI V. SUBRAMANIAN WAS D EPENDENT AGENT OF CARPI TECH SA, THE ASSESSEE, AND THEREFORE CAN BE T REATED AS PE. FINALLY THE AO ALSO DREW ATTENTION TO THE FACT THAT AT THE TIME OF ISSUING AN ORDER U/S 195(2) ON AN APPLICATION MADE BY THE ASSESSEE FOR N IL DEDUCTION CERTIFICATE, ALL THESE FACTS COULD NOT BE GONE THROUGH. IT IS NO W THAT THE FACTS HAVE BEEN ANALYSED WITH REFERENCE TO CONTRACT DOCUMENT, TERMS CONTAINED THEREIN WHICH LEADS TO THE IRREVERSIBLE CONCLUSION THAT THE RECEIPTS CONTRARY TO THE CLAIM OF BEING FEES FOR INCLUDED SERVICES, WAS ACTU ALLY IN THE NATURE OF BUSINESS INCOME TAXABLE IN INDIA THAT THE PE WAS IN EXISTENCE. 3.3 THE ASSESSEES SUBMISSION WAS NOT ACCEPTED BY THE A O AND FRAMED THE DRAFT ASSESSMENT ORDER DATED 28.12.2010. THE DRAFT ASSESSMENT ORDER WAS SERVED ON THE ASSESSEE ON 05.0 1.2011. THE AO DETERMINED THE TOTAL INCOME AS F 1,09,84,831/- AS F OLLOWS:- GROSS RECEIPTS 11,95,56,285 LESS SALES TAX 47,82,251 SERVICE TAX 49,25,719 97,09,970 10,98,48,315 INCOME ESTIMATED AT 10% F1,09,84,831/- ITA NO. 1742/MDS./2011 :- 6 -: AGGRIEVED WITH THE DRAFT ASSESSMENT ORDER OF AO, TH E ASSESSEE PREFERRED DIRECTIONS FROM THE DRP. 4.1 THE DRP OBSERVED THAT AS CANVASSED BY THE AO, IN TH E ASSESSMENT ORDER, THE AO HAS DISCUSSED IN DETAIL TO SHOW THE EXISTENCE OF PE BY WAY OF APPOINTMENT AND CONDUCT OF SRI V. SUBRAMANIAN, AS A DEPENDENT AGENT WITH PERMANENT ADDRESS, WHICH WAS REGULARLY USED BY THE ASSESSEE FOR ALL ITS BUSINESS. THE AO HAS ALSO GONE THROUGH THE CONDUCT OF CARPI TECH SA AND THE ACTIVE ROLE IT PLAYS IN OBTAINING AND EXECUTING THE CONTRACTS WHERE SRI V. SUBRAMANIAN ALSO IS A DIRECTOR SINCE INCEPTION. IT IS PERTINENT, IN THIS REGARD TO ANALYSE ARTICLE 5 AND THE ELEMENT CONTAINED THER EIN. ACCORDING TO DRP, THE FINDINGS OF THE AO CANNOT BE BRUSHED ASIDE ESPE CIALLY BEING BACKED BY EVIDENCE AND FACTS BROUGHT ON RECORDS. THE ASSESSEE AND THE SERVICES RENDERED IN INDIA WHEN EXAMINED WITH THAT OF ITS SU BSIDIARY IN INDIA ARE SIMILAR. SRI V. SUBRAMANIAN, THE AGENT FOR THE ASSE SSEE WHO IS CRITICAL TO ALL ASPECTS OF THE CONTRACT THROUGH THE STAGES OF SIGNI NG THE CONTRACT TO EXECUTION IS CRITICALLY FUNCTIONAL AS THE MANAGING DIRECTOR OF THE INDIAN WHERE THE OTHER TWO DIRECTORS ARE MRS. V. THENMOZHI AND MRS. S. DEVAKI WITH SRI V. SUBRAMANLAN & MRS. V. THENMOZHI BEING T HE ONLY SHAREHOLDERS. IN THE WEB SITE OF THE ASSESSEE COMPANY, THE ADDRES S FOR CORRESPONDENCE FOR ALL OFFICIAL TRANSACTIONS IS THE OFFICE CUM RES IDENTIAL ADDRESS OF SRI V. SUBRAMANIAN. BUT FOR THE FEEBLE ASSERTION THAT SRI V. SUBRAMANLAN IS AN INDEPENDENT AGENT, ALSO ACTING FOR AND ON BEHALF OF M/S KONCAR, CROATIA AND M/S LITOSTROJ POWER, SLOVENIA, NO EVIDENCE, CREDIBL E OR OTHERWISE WAS LED IN THIS REGARD. ALSO, TO REFUTE AND REBUT THE ASSERTIO N MADE BY THE AO THAT SRI ITA NO. 1742/MDS./2011 :- 7 -: V. SUBRAMANIAN PRIMARILY REPRESENTED THE ASSESSEE C OMPANY ALMOST EXCLUSIVELY DURING THE PERIOD WHEN THESE CONTRACTS WERE EXECUTED. IN THIS CASE, THE ACTIVITIES OF THE ASSESSEE AND THE INDIAN ENTITY ARE INTERTWINED AND THE INDIAN ENTITY PARTICIPATES IN THE ECONOMIC ACTI VITIES OF THE ASSESSEE, THE ACTIVITIES OF THE INDIAN ENTITY THEREFORE NECESSARI LY ARE TO BE ANALYSED TO DETERMINE WHETHER THERE IS A FIXED PLACE P.E. IN FA CT, THE NAME OF THE COMPANY ITSELF IS THE SAME AS THE NON-RESIDENT COMP ANY BUT FOR CALLING IT CARPI WATERPROOFING SPECIALTIES PRIVATE LIMITED. BO TH CARRYING OUT IDENTICAL NATURE OF JOBS IN INDIA. 4.2 FURTHER, DRP OBSERVED THAT SRI V. SUBRAMANIAN, THE MANAGING DIRECTOR OF THE INDIAN ENTITY IS THE TECHNICAL HEAD WITH QUALIFICATIONS OF BEING A GRADUATE, ENGINEER AND MARKETING MANAGEMENT HAVIN G EXPERIENCE IN HANDLING HYDRO POWER PROJECTS FOR VARIOUS FOREIGN A ND DOMESTIC COMPANIES. THE ROLE PLAYED BY HIM AS AN AGENT OF THE NON-RESID ENT COMPANY AND THE. INDIAN COMPANY WHO RENDER SIMILAR SERVICES CANNOT B E EASILY DISCERNED OR SEPARATED. THERE BEING A UNISON OF INTEREST TO A GR EAT EXTENT, WHILE AS AN INDEPENDENT AGENT THERE WOULD BE REQUIRED AN OBJEC TIVITY IN EXECUTION OF THE TASKS OF THE NONRESIDENT COMPANY. THE DRP FURTH ER OBSERVED THAT SRI V. SUBRAMANIAN REPRESENTED THE CONSORTIUM OF M/S LITOS TROJ POWER & M/S . KONCAR BY STRENGTH OF AGREEMENT, ENTERED INTO ON 3 0-07-2001. WHILE NO ACTIVITIES ARE ATTRIBUTABLE IN FAVOUR OF THESE CONS ORTIUM DURING THE PERIOD HE WAS REPRESENTING CARPI TECH SA, THE NON-RESIDENT CO MPANY. ITA NO. 1742/MDS./2011 :- 8 -: 4.3 THE DRP EXAMINED IN THIS CONTEXT THAT THE REFE RENCE BY AO TO ARTICLE 5 DRAWS SPECIAL IMPORTANCE. WHILE BUSINESS CONSTITU TES CONTINUOUS ACTIVITY IN ORGANIZED MANNER IT IS OFTEN A QUESTION OF FACT & L AW PLACE OF BUSINESS USUALLY MEANS A PREMISES OF THE ENTERPRISE USED FOR CARRYING ON THE BUSINESS, WHETHER OR NOT EXCLUSIVELY USED FOR BUSIN ESS. THE RESIDENCE OF THE COUNTRY MANAGER WAS HELD TO BE A FIXED PLACE OF BUS INESS AS THE SAME WAS USED AS AN OFFICE ADDRESS IN SUTRON CORPORATION (26 8 ITR 156). SIMILARLY AN OFFICE SPACE OF 3 X 6 METRES IN MOTOROLA INC & ORS, 95 LTD 269 (DEL). TO CONSTITUTE A PE, THE BUSINESS MUST BE LOCATED AT A SINGLE PLACE FOR A REASONABLE LENGTH OF TIME. THE ACTIVITY NEED NOT BE PERMANENT, ENDLESS OR WITHOUT INTERRUPTIONS. IT MAY NOT BE OUT OF PLACE T O MENTION THAT FUNCTIONS PERFORMED BY SRI V. SUBRAMANIAN OR THE INDIAN SUBSI DIARY COULD NOT BE CLASSIFIED AS PREPARATORY OR AUXILIARY IN CHARACTER . THE FACTS STRONGLY INDICATE TOWARDS SRI V. SUBRAMANIAN CONSTITUTING A DEPENDENT AGENT / PE FOR REASONS BROUGHT ON RECORD BY THE AO. THERE WERE NO PRESENCE OF A NUMBER OF PRINCIPALS WHO EXERCISED LEGAL AND OR ECONOMIC CONT ROL OVER THE AGENT SRI V. SUBRAMANIAN. THE PRINCIPAL I.E. THE ASSESSEE HAS FA ILED TO DEMONSTRATE THIS ASPECT WHEN CONFRONTED BY THE AO. THE PRINCIPAL I.E . THE ASSESSEE WAS RELYING ON THE SPECIAL SKILLS AND KNOWLEDGE OF THE AGENT SRI V. SUBRAMANIAN THE MANAGING DIRECTOR OF THE INDIAN ENTITY BY THE S AME NAME AND RENDERING SIMILAR FUNCTIONS. SRI V. SUBRAMANLAN WAS ACTING EX CLUSIVELY OR ALMOST EXCLUSIVELY FOR AND ON BEHALF OF THE ASSESSEE DURIN G THE CURRENCY OF THE CONTRACTS IN QUESTION. TO THAT EXTENT IT WAS NOT IN FURTHERANCE OF HIS ORDINARY COURSE OF BUSINESS. FINALLY THE RESCUE TAKEN FROM A RTICLE 5(2)(J) ON THE SHORT ITA NO. 1742/MDS./2011 :- 9 -: PERIOD OF CONTRACTS AND THE INTERREGNUM DOES NOT OF FER ANY SOLACE TO THE ASSESSEE EITHER. THE ASSESSEE HAS NOT DEMONSTRATED, IT WAS A MERE PASSING OR CASUAL PRESENCE FOR ITS ACTIVITY IN INDIA. THE DRP CONFIRMED THE VIEW OF THE AO ON THIS ISSUE. 4.4 ACCORDING TO THE DRP, THE ATTRIBUTION OF PROFIT S TO PE MUST BE GOVERNED IN TUNE WITH ARTICLE 7(1) WHICH LAYS DOWN THE BASIC RULE OF TAXATION OF A PE. THE COUNTRY OF SOURCE IS GIVEN RIGHT TO TA X ONLY THAT MUCH OF THE PROFITS OF THE ENTERPRISE WHICH IS ATTRIBUTABLE TO THE PE. IN THIS CASE THE AC NEEDS TO BRING TO TAX SUCH PROFITS ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA AS ALSO CONTEMPLATED IN THE PROVISIONS OF EXP LANATION TO SECTION. 9(1) OF THE ACT. HENCE, THE DRP DIRECTED THE AO TO FINA LISE THE ORDER KEEPING IN VIEW THE DIRECTIONS AS CONTAINED ABOVE. AGAINST THI S DIRECTION OF DRP AND FINAL ASSESSMENT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, LD.A.R SUBMITTED THE FOLLOWING POINTE D FOR OUR CONSIDERATION. (I) SRI V. SUBRAMANIAN, BESIDES BEING A DIRECTOR IN CIWSPL WAS ALSO REPRESENTING FOREIGN ENTERPRISE SUCH .AS M/S LIITOS TROJ POWER AND M/S KONCAR APART FROM AN INDIAN COMPANY M/S VA TECH HYDRO; (II) THE PERIODICITY WHEN THE ASSESSEE DID GEOMEMBR ANE FIXING FOR TNEB WAS EXECUTED WITHIN DURATION OF PROJECT WHICH WAS FOR 1 05 DAYS FOR THE F.YS. 2004-05 & 2005-06. THE OTHER PROJECT CARRIED OUT BY IT WAS FOR NHPC WHICH WAS COMMENCED AND COMPLETED IN DURATION OF 40 DAYS IN THE F.Y. 2007-08. THERE IS OF THREE YEARS BETWEEN THE TWO OF THEM; (III) THE ADDRESS IN CHENNAI MENTIONED BY THE AO W AS ONLY A MAILING ADDRESS, THE PREMISES BEING THE RESIDENCE-CUM-OFFIC E OF SRI V. SUBRAMANIAN; (IV) THE MERE EXISTENCE OF BOOKS OF ACCOUNT AND BAN K ACCOUNT CANNOT EITHER CONCLUSIVELY OR INFERENTIALLY POINT TO THE FIXED PL ACE OF BUSINESS THROUGH ITA NO. 1742/MDS./2011 :- 10 - : WHICH THE BUSINESS OF THE ENTERPRISE IS WHOLLY OR P ARTY CARRIED ON AS DEFINED IN ARTICLE 5.1 OF THE DTAA; (V) THE PE COULD NOT BE ESTABLISHED IN VIEW OF THE TIME LAG OF THREE YEARS BETWEEN THE TWO PROJECTS AS ALSO BUSINESS PER SE WHICH CONTEMPLATES CONTINUOUS, ORGANIZED AND SYSTEMATIC ACTIVITIES WHI CH WERE CONSPICUOUSLY ABSENT IN THE ASSESSEES CASE; (VI) THE REMARKS OF THE AO ARE THEORETICAL AND THER E IS NO FINDING THAT THE ASSESSEE CARRIED N ANY PARTICULAR ACTIVITY IN INDIA EXCEPT TWO PROJECTS DURING THE SHORT DURATION WITHIN A GAP OF THREE YEARS. (VII) THE INVITATION OF BID CLEARLY DESCRIBES THE SCOPE OF WORK AS DESIGN, MANUFACTURE, SUPPLY AND INSTALLATION OF EXPOSED IMP ERVIOUS PVC GEOCOMPOSITE MEMBRANE. THE TYPE OF WORK FALLS WITH IN THE PURVIEW OF THE EXCLUSION UNDER ARTICLE 5.2(J) DUE TO THE SHORT DUR ATION OF THE WORK AND THE BENEFIT IS AVAILABLE TO THE ASSESSEE; (VIII) THE POWER OF ATTORNEY IN FAVOUR OF SRI V. SU BRAMANIAN IS A SPECIFIC POWER OF ATTORNEY EXECUTED ON 22-11-2007 SUBSEQUENT TO THE AWARD DATED 05-11-2007. THE CONTRACT DOCUMENT WAS SIGNED N 10-1 2-2007. SRI V. SUBRAMANIAN DID NOT HAVE ANY GENERAL OR CONTINUOUS AUTHORITY TO ACT ON BEHALF OF THE ASSESSEE; (IX) STRONG RELIANCE IS PLACED THAT ARTICLE 5.5 REA D WITH ARTICLE 5.6 AND THE FIRST PROVISO AND SECOND PROVISO BELOW EXPLANATION 2 TO SECTION 9(1:) OF THE ACT APPLY TO THE CASE OF THE ASSESSEE. SRI V. SUBRA MANIAN / CIWSPL CANNOT BE TREATED AS PE; (X) THE AO HAS NOT GIVEN DUE WEIGHTAGE TO THE BUSI NESS CONNECTION IN INDIA WHICH CONTEMPLATES THE PERSON WHO ACTING ON BEHALF OF THE NON-RESIDENT HABITUALLY EXERCISES IN INDIA AN AUTHORITY TO CONCL UDE CONTRACTS ON BEHALF OF THE NON-RESIDENT. THE DTAA WHICH ENVISAGES A PERSO N OTHER THAN AN AGENT OF INDEPENDENT STATUS IF CONSIDERED AS A HABITUAL E XERCISE IN THAT STATE, AN AUTHORITY TO NEGOTIATE AND ENTER INTO CONTRACTS FOR OR ON BEHALF OF THE ENTERPRISE; ITA NO. 1742/MDS./2011 :- 11 - : (XI) NOT HAVING PREJUDICE TO THE ABOVE, THE AC HAS NOT ALLOWED EXPENSES TOWARDS COST OF MATERIAL, CUSTOMS DUTY THEREON IN R ELATION, TO TRANSPORT, INSTALLATION COST, ETC; . 5.1 FURTHER, THE LD.A.R PLACED RELIANCE ON THE FOL LOWING CASES. 1. MOTOROLA INC. VS. DCIT IN (2005) 95 ITD 269 (DE LHI)(SB) 2. SUTRON CORPORATION IN (2004) 268 ITR 156(AAR) WH EREIN HELD THAT COLLECTING INFORMATION SUBMITTING TENDERS AND SIGNI NG CONTRACTS ON BEHALF OF THE NON-RESIDENT AMOUNTS TO BUSINESS CONN ECTION. 3. HORIZONTAL DRILLING INTERNATIONAL S.A VS. CIT I N (1999) 237 ITR 142(AAR) 4. DIT VS. PAPER PRODUCTS LTD., IN [2005] 257 ITR 1(DELHI) 5. ADITYA BIRLA NURO LTD. VS. ADIT IN 11 ITR (TRIB) 812(MUM.) 6. TIONG WOON PROJECT AND CONTRACTING PTE LTD., IN (2011) 338 ITR 386(AAR). 6. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER O F THE LOWER AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE LD. AR MADE A PLEA THAT THE ASSES SEE HAS EXECUTED THE PROJECT OF NHPC AT TANAKPUR BETWEEN 27.01.2008 TO 0 5.03.2008, SO THAT THE NUMBER OF DAYS IS ONLY 40 DAYS. HENCE, AS PER PROV ISIONS, TIME MAY BE CONTAINING IN ARTICLE 5.2(J) OF THE DTAA BETWEEN IN DIA AND SWISS. ACCORDING TO THE LD. AR, THE ASSESSEE CANNOT BE SAID TO HAVE ANY PE IN INDIA, SINCE THE PROJECT ACTIVITY IS LESS THAN SIX MONTHS. IN OUR O PINION, THE ABOVE CONTENTION OF THE ASSESSEES COUNSEL HAS NO MERIT. IN THE PRE SENT CASE, THE BUSINESS OF ITA NO. 1742/MDS./2011 :- 12 - : THE ASSESSEE HAS BEEN CONDUCTED FROM THE ADDRESS OF PROJECT COORDINATOR, MR. V. SUBRAMANIAN AND ALL CORRESPONDENCES RELATING TO PROSPECTING OF CLIENT, PARTICIPATION IN BIDS, CORRESPONDENCE WITH CUSTOMER S, SIGNING OF CONTRACT DOCUMENT, EXECUTION OF THE PROJECT AND CLOSURE OF T HE PROJECT ETC. WERE INITIATED OR ROUTED THROUGH THE BUSINESS ADDRESS OF THE COMPANY AS ABOVE. MR. V. SUBRAMANIAN IS THE POWER OF ATTORNEY HOLDER FROM THE COMPANY FOR ALL THE PROJECTS, AS THE ASSESSEE WAS NON-RESIDENT. HE REPRESENTED THE NON- RESIDENT ASSESSEE AT SITE AND HE SIGNED ALL THE DOC UMENTS ON BEHALF OF NON- RESIDENT ASSESSEE. FURTHER, IT IS TO BE NOTED THAT : (I) THE CLAIM OF THE ASSESSEE THAT NO PE EXISTED IN VIEW OF ARTICLE 5.2(J) OF THE DTAA WAS ONLY A SUBTERFUGE ON THE FACE OF SUCH FACT S; (II) THE FIXED PLACE TEST IS A POSITIVE ONE FOR T HE ASSESSEE AND THERE WAS NO REQUIREMENT TO GO FOR SPECIAL INCLUSION FOR THE PUR POSE OF DETERMINATION OF PE; III) EVEN OTHERWISE THE NATURE OF SERVICE RENDERED BY THE ASSESSEE WAS STRICTLY NOT COVERED AS RELATING TO A BUILDING SITE , CONSTRUCTION, INSTALLATION OR ASSEMBLY PROJECT. THE WORK MOSTLY BEING IN THE NAT URE OF REPAIR AND SUPPLY OF MATERIAL AND THEREFORE THE TIME LIMIT OF 182 DAY S IN CLAUSE (J) OF ARTICLE 5.2 WOULD NOT APPLY; IV) THE CONTRACT WAS NOT ONE OF ASSEMBLY, CONSTRUCT ION OR INSTALLATION AND NO TIME LIMIT HAS BEEN PRESCRIBED FOR INCIDENCE OF SOU RCE COUNTRY TAXATION OF SUCH PROJECTS. RELIANCE WAS PLACED ON THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF FURGO ENGINEERS BV[20 SOT 78](DELHI) WH EREIN IT WAS HELD THAT NUMBER OF DAYS WAS NOT SIGNIFICANT IN PECULIAR TYPE OF WORK UNDERTAKEN. IN ITA NO. 1742/MDS./2011 :- 13 - : THAT CASE WORK UNDERTAKEN FOR JUST OVER 40 DAYS CON STITUTED PE AS THE BUSINESS WAS CONDUCTED THROUGH A FIXED PLACE; V) THE EXAMINATION OF CONTRACT DOCUMENTS REVEALED T HAT M/. CARPI INDIA WATERPROOFING SPECIALTIES PRIVATE LIMITED REPRESENT ED BY SR. V. SUBRAMANIAN WAS ALSO THE DESIGNATED POWER OF ATTORNEY HOLDER FO R THESE PROJECTS ON BEHALF OF THE NON-RESIDENT ASSESSEE. SRI V. SUBRAM ANIAN HAD ALSO BEEN MENTIONED AS THE PROJECT REPRESENTATIVE AT SITE AND ALTERNATIVELY PROJECT COORDINATOR IN THE CONTRACT DOCUMENTS. THE CONTRAC T DOCUMENTS WERE SIGNED BY SRI V. SUBRAMANIAN ON BEHALF OF THE ASSESSEE; VI) THE COMPANY IN ITS REPLY DATED 15-11-2010 BEFOR E THE AO HAD SPECIFICALLY MENTIONED ITS DATE OF INCORPORATION AS 216-12-2005 WITH SHARE HOLDERS AND DIRECTORS INCLUDING THE NAME OF SR V. SUBRAMANIAN A S A DIRECTOR WITH TWO OTHERS; VII) THE LETTER HEADS OF BOTH THE ASSESSES I.E. CIW SPL AND M/S. CARPL TECH SA WERE SIMILAR AND TO THAT EXTENT CIWSPL SRI V. SUB RAMANIAN WAS THE INDIA FACE OF THE ASSESSEE; VIII) THE DOMESTIC COMPANY CIWSPL WAS THE AUTHORIZE D REPRESENTATIVE FOR THE PROJECT TAKEN BY THE ASSESSEE AND FURTHER ALL E XPENSES IN INDIA TO EXECUTE THE PROJECT WERE INCURRED BY CIWSPL WHICH WERE REIMBURSED BY THE ASSESSEE BY REMITTANCE FROM SWITZERLAND AS WELL AS FROM LOCAL ACCOUNT AS CONFIRMED BY THE ASSESSEE VIDE ITS LETTER DATED 15- 11-2010; IX) M/S. SHAKIRA ENTERPRISES PVT. LTD., A VENDOR WA S APPOINTED BY CIWSPL TO RENDER SERVICES LOCALLY AT NEW DELHI AND THE PAYMEN TS TO THE SAID COMPANY WAS MADE FROM THE ACCOUNT OF CIWSPL THROUGH THEIR B ANK ACCOUNT. ITA NO. 1742/MDS./2011 :- 14 - : 7.1 ON THE BASIS OF THE ABOVE FACTUAL FINDINGS , A SHOW CAUSE DATED 21- 10-2010 WAS ISSUED BY AO REQUIRING THE ASSESSEE TO EXPLAIN WHY CIWSPL REPRESENTED BY SRI V. SUBRAMANIAN OR ALTERNATIVELY, SRI V. SUBRAMANIAN HIMSELF BE NOT TREATED AS PE IN TERMS OF ARTICLE 5. 1 AND 5.2 OF THE DTAA. IN REPLY TO THE ABOVE, THE ASSESSEE MERELY TOOK THE PL EA OF THE PROVISIONS AND TIME LIMIT AS CONTAIN IN ARTICLE 5.2(J) OF THE DTAA . IT ALSO TOOK THE PLEA THAT THERE WAS CONSIDERABLE TIME LAG OF THREE YEARS BETW EEN THE PROJECT EXECUTED FOR TNEB AND NHPC AT KADAMPARAI AND TANAKPUR RESPEC TIVELY. FINALLY IT WAS ARGUED THAT SRI V. SUBRAMANIAN COULD NOT BE TREATED AS PE SINCE HE REPRESENTS OTHER COMPANIES ALSO IN THE ORDINARY COU RSE OF BUSINESS, THESE BEING M/S. LITOSTROJ POWER, SLOVENIA AND M/S. KONCA R, CROATIA. 7.2 FURTHER, ON THE ARGUMENT OF THE LD. AR IS THAT SRI V. SUBRAMANIAN WAS NOT AN AGENT OF INDEPENDENT STATUS, THE AO OBSERVED THAT THE COMPANIES CLAIMED TO HAVE BEEN REPRESENTED BY SRI V. SUBRAMAN IAN SUCH AS LITOSTROJ POWER AND M/S KONCAR WERE AT DIFFERENT POINT IN TIM E I.E. BETWEEN 2002 & 2006 WHILE THE TANAKPUR PROJECT REFERRED TO THE PER IOD 2007-08 AND NOT DURING THE SAME PERIOD WHEN SRI V. SUBRAMANIAN WAS INVOLVED IN UNDERTAKING THE PROJECT WORK OF THE ASSESSEE. FURT HER THAT IN THE DATA SHEET PRESENTED BEFORE THE PRINCIPAL I.E. NHPC SRI V. SUB RAMANIAN HAS BEEN REPRESENTED AS THE INDIAN REPRESENTATIVE OF THE ASS ESSEE. CIWSPL WAS ALSO THE INDIAN F ACE OF CARPI TECH SA, SWITZERLAND REPR ESENTING THE COMPANY IN ALL PRACTICAL MATTERS, FINANCIALLY COMPENSATED BY T HE ASSESSEE. TO THAT EXTENT, THE COMPANY REPRESENTED BY SRI V. SUBRAMANI AN WAS DEPENDENT ITA NO. 1742/MDS./2011 :- 15 - : AGENT OF CARPI TECH SA, THE ASSESSEE, AND THEREFORE CAN BE TREATED AS PE. FINALLY THE AO HAS ALSO DRAWN ATTENTION TO THE FACT THAT AT THE TIME OF ISSUING AN ORDER U/S 195(2) ON AN APPLICATION MADE BY THE A SSESSEE FOR NIL DEDUCTION CERTIFICATE, ALL THESE FACTS COULD NOT BE GONE THROUGH. IT IS NOW THAT THE FACTS HAVE BEEN ANALYSED WITH REFERENCE TO CONTRACT DOCUMENT, TERMS CONTAINED THEREIN WHICH LEADS TO THE IRREVERS IBLE CONCLUSION THAT THE RECEIPTS CONTRARY TO THE CLAIM OF BEING FEES FOR IN CLUDED SERVICES, WAS ACTUALLY IN THE NATURE OF BUSINESS INCOME TAXABLE I N INDIA THAT THE PE WAS IN EXISTENCE. 7.3 SRI V. SUBRAMANIAN, THE AGENT FOR THE ASSESSEE WHO IS CRITICAL TO ALL ASPECTS OF THE CONTRACT THROUGH THE STAGES OF SIGNI NG THE CONTRACT TO EXECUTION IS CRITICALLY FUNCTIONAL AS THE MANAGING DIRECTOR OF THE INDIAN SUBSIDIARY, WHERE THE OTHER TWO DIRECTORS ARE MRS. V. THENMOZHI AND M RS. S. DEVAKI WITH SRI V . SUBRAMANIAN & MRS. V . THENMOZHI BE I NG THE ONLY SHAREHOLDERS, IN THE WEB SITE OF THE ASSESSEE COMPANY, THE ADDRESS FOR CORRESPONDENCE FOR ALL OFFICIAL TRANSAC TIONS IS THE OFFICE CUM RESIDENTIAL ADDRESS OF SRI V. SUBRAMANIAN . BUT FOR THE FEEBLE ASSERTION THAT SRI V. SUBRAMANIAN IS AN INDEPENDENT AGENT ALSO ACTING FOR AND ON BEHALF OF M/S. KONCAR, CROATIA AND M/S. LITOSTROJ POWER, SLOVENIA, NO EVIDENCE, CREDIBLE OR OTHERWISE WAS LED IN THIS REGARD. AS ALSO, TO REFUTE AND REBUT THE ASSERTION MADE BY THE AO THAT SRI V. SUBRAMANIAN PRIMARILY RE PRESENTED THE ITA NO. 1742/MDS./2011 :- 16 - : ASSESSEE COMPANY ALMOST EXCLUSIVELY DURING THE PERI OD WHEN THESE CONTRACTS WERE EXECUTED . IN A CASE AS THIS BEFORE US, THE ACTIVITIES OF THE ASSESSEE AND THE INDIAN ENTITY AR E I NTERTWINED AND THE INDIAN ENTITY PARTICIPATES IN THE ECONOMIC ACTI VITIES OF THE ASSESSEE, THE ACTIVITIES OF THE INDIAN ENTITY THERE FORE NECESSARI L Y ARE TO BE ANALYSED TO DETERMINE WHETHER THERE IS A FIXED PLACE P.E. IN FACT, THE NAME OF THE COMPANY ITSELF IS THE SAME AS THE NON-RESIDENT COMPANY BUT FOR CALLING IT CARPI WATER PROOFING SPECIALITIES PRIVATE LIMITED. BOTH CARRYING OUT IDE NTICAL NATURE OF JOBS IN INDIA. 7.4 FURTHER, SRI V. SUBRAMANIAN, THE MANAGING DIRECT OR OF THE INDIAN ENTITY IS THE TECHNICAL HEAD WITH QUALIFICAT IONS OF BEING A GRADUATE ENGINEER AND MARKETING MANAGEMENT HAVING E XPERIENCE IN HANDLING HYDRO POWER PROJECTS FOR VARIOUS FOREIG N AND DOMESTIC COMPANIES. THE ROLE PLAYED BY HIM AS AN AGENT OF TH E NON- RESIDENT COMPANY AND THE. INDIAN COMPANY WHO RENDER SIMILAR SERVICES CANNOT BE EASILY DISCERNED OR ' SEPARATED. THERE BE I NG A UNISON OF INTEREST TO A GREAT EXTENT, WHILE AS AN INDEPENDENT AGENT THERE WOULD BE REQUIRED AN OBJECT IVITY IN EXECUTION OF THE TASKS OF THE NON- RESIDENT COMPANY . ITA NO. 1742/MDS./2011 :- 17 - : 7.5 IT IS ALSO NOTED THAT SRI V. SUBRAMANIAN REPRESE NTED THE CONSORTIUM OF M/S. LITOSTROJ POWER & M/S KONCAR BY STRENGTH OF AGREEMENT ENTERED INTO ON 30-07-2001. WHILE NO ACTIVI TIES ARE ATTRIBUTABLE IN FAVOUR OF THESE CONSORTIUM DURING T HE PERIOD HE WAS REPRESENTING CARPI TECH SA, THE NON-RESIDENT CO MPANY. 7.6 IT IS IN THIS CONTEXT THAT THE REFERENCE BY AO TO ARTICLE 5 DRAWS SPECIA L IMPORTANCE. WHILE BUSINESS CONSTITUTES CONTINUOUS A CTIVITY IN ORGANIZED MANNER IT IS OFTEN A QUESTION OF FACT & LAW. 'PLACE OF BUSINESS' USUALLY MEANS A PREMISES OF THE ENTERPRIS E USED FOR CARRYING ON THE BUSINESS, WHETHER OR NOT EXCLUSIVELY USED FO R BUSINESS. THE RESIDENCE OF THE COUNTRY MANAGER WAS HELD TO BE A F IXED PLACE OF BUSINESS AS THE SAME WAS USED AS AN OFFICE ADDRESS IN SUTRON CORPORATION IN RE 268 ITR 156 AAR. SIMILARLY AN OFF ICE SPACE OF 3 X 6 METRES IN MOTOROLA INC & ORS 95 ITD 269 (DEL). TO CONSTITUTE A PE, THE BUSINESS MUST BE LOCATED AT A SINGLE PLACE FOR A RE ASONABLE L ENGTH OF TIME. THE ACTIVITY NEED NOT BE PERMANENT, ENDLESS O R WITHOUT INTERRUPTIONS. IT MAY NOT BE OUT OF PLACE TO MENTIO N THAT FUNCTIONS PERFORMED BY SRI V. SUBRAMANIAN OR THE INDIAN SUBSI DIARY COULD NOT BE CLASSIFIED AS PREPARATORY OR AUXI L IARY IN CHARACTER. THE FACTS STRONGLY INDICATE TOWARDS SRI V. SUBRAMANIAN CONSTITUTING A DEPENDENT AGENT / PE FOR REASONS BROUGHT ON RECORD BY THE AO AND AS D ISCUSSED IN ITA NO. 1742/MDS./2011 :- 18 - : FOREGOING PARAGRAPHS. THERE WERE NO PRESENCE OF A N UMBER OF PRINCIPALS WHO EXERCISED LEGAL AND OR ECONOMIC CONT ROL OVER THE AGENT SRI V. SUBRAMANIAN. THE PRINCIPAL I . E . THE ASSESSEE HAS FAILED TO DEMONSTRATE THIS ASPECT WHEN CONFRONTED BY THE AO. THE PRINCIPAL I . E. THE ASSESSEE WAS RELYING ON THE SPECIAL SKILLS A ND KNOWLEDGE OF THE AGENT SRI V. SUBRAMANIAN THE MANAG ING DIRECTOR OF THE INDIAN ENT I TY BY THE SAME NAME AND RENDERING SIMILAR FUNCTIONS . SRI V. SUBRAMANIAN WAS ACTING EXCLUSIVELY OR ALMOST EXCLUSIVELY FOR AND ON BEHALF OF THE ASSESSEE DURING THE CURRENCY OF TH E CONTRACTS IN QUESTION. TO THAT EXTENT IT WAS NOT IN FURTHERANCE OF HIS ORDINARY COURSE OF BUSINESS. FINALLY THE REFUGE TAKEN OF ART ICLE 5(2)(J) ON THE SHORT PERIOD OF CONTRACTS AND THE INTERREGNUM DOES NOT OFFER ANY SOLACE TO THE ASSESSEE EITHER. THE ASSESSEE HAS NO T DEMONSTRATED IT WAS A MERE PASSING, TRANSIENT OR CASUAL PRESENCE FO R ITS ACTIVITY IN INDIA. IN VIEW OF THIS, WE CONFIRM THE ORDER OF TH E LOWER AUTHORITIES THIS GROUND IS THEREFORE DISMISSED. 8. THE NEXT GROUND IS THAT THE CONSIDERATION FOR THE TANAKPUR PROJECT HAD TWO COMPONENTS, NAMELY, EURO COMPONENT (EURO 14 27977.00) PAID BY NHPC TO CARPI TECH SA, SWITZERLAND BY BANK TRANSFER AND RUPEE COMPONENT OF WHICH THE INR COMPONENT WAS RS.2,89,22,585/- ONL Y (OUT OF THE TOTAL CONTRACT VALUE OF RS.11,95,56,285/-) WHICH ALONE WA S PAYABLE AND RECEIVED IN INDIA FOR PAYMENT OF CUSTOMS DUTY ON IMPORTS (AM OUNT PAID ITA NO. 1742/MDS./2011 :- 19 - : RS.1,21,12,541/-), SERVICE TAX AND SALES TAX AND TO WARDS SUB-CONTRACTORS PAYMENT/LABOUR CHARGES AND SITE EXPENSES; THE AO HA S ALLOWED ONLY SALES TAX/SERVICE TAX; THE ASSESSEE SUBMITS THAT THE INCO ME SO COMPUTED IS PATENTLY INCORRECT AND EXCESSIVE. THE LD. DR RELIE D ON THE ORDER OF THE LOWER AUTHORITIES. 8.1. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. IT IS TO BE NOTED THAT CONSEQUENT TO ASSESSMENT PA SSED U/S.143(3) R.W.S144C(13) DATED 23.09.2011, THE ASSESSEE FILED A RECTIFICATION PETITION AND THE SAME WAS ENTERTAINED BY THE AO VIDE ORDER D ATED 27.09.2012 WHEREIN THE AO BROUGHT THE INCOME IN THE INR COMPON ENT TO TAX AFTER ALLOWING EXPENDITURE INCURRED WHICH IS AS FOLLOWS:- AMOUNT RECEIVED FROM INR 2,89,22,585/- ALLOWABLE EXPENDITURE 69,76,220 NET 2,19,46,365 9. THE CONTENTION OF THE LD. AR IS THAT THE ASSESSEE IS ENTITLED TO SALES- TAX, SERVICE-TAX, CUSTOMS DUTY PAID ON IMPORT. IN OUR OPINION, DUE DEDUCTION TO BE GIVEN IN RESPECT OF THE ABOVE COMPONENTS PROP ORTIONATE TO THE INDIAN RUPEES COMPONENT, IF IT IS NOT ALREADY GIVEN. IT I S ALSO BROUGHT TO OUR NOTICE THAT THE AO PASSED THE RECTIFICATION PROCEEDINGS VI DE ORDER DATED 27.9.2012. WHILE PASSING THE RECTIFICATION ORDER, HE HAS NOT C ONSIDERED ALL THE ABOVE COMPONENTS PROPERLY. ACCORDINGLY, WE DIRECT THE AS SESSING OFFICER TO GIVE CREDIT TO THE ABOVE COMPONENTS SUBJECT TO THE PROVI SIONS OF SECTION 43B OF THE INCOME-TAX ACT, WHICH IS RELATING TO THE INCOME IN INDIAN RUPEES ITA NO. 1742/MDS./2011 :- 20 - : COMPONENT. IT IS NEEDLESS TO SAY THAT THE AO SHALL GIVE OPPORTUNITY TO THE ASSESSEE BEFORE PASSING CONSEQUENTIAL ORDER. WITH THIS OBSERVATION, THIS GROUND OF APPEAL OF APPEAL IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 24 TH AUGUST, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) ! / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 24 TH AUGUST, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF