VITKOVICE HEAVY MACHINERY A.S., MUMBAI V. ASST DIT (IT) 2(2), MUMBAI

ITA 2125/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8976 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: L
• Next Hearing Date: 15-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2014
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.2125/M/2014 (AY 2010 - 2011) VITKOVICE HEAVY MACHINERY A.S., C/O. MZSH & ASSOCIATES, LEVEL - 9, THE RUBY, NOTH WEST WING, SANAPATI BAPAT ROAD, DADAR (W), MUMBAI 400 028. / VS. ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - 2(2), FIRST FLOOR, SCINDIA HOUSE, N.M. ROAD, BALLARD ESTATE, MUMBAI 400 038. ./ PAN : AADCV2727K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MILIND KOTHARI / RESPONDENT BY : SHRI JASBIR CHOUHAN, CIT / DATE OF HEARING : 15.12.2016 / DATE OF PRONOUNCEMENT : 11 .01.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 28.3.2014 IS AGAINST THE ORDER OF THE AO / DIRECTION OF DRP, MUMBAI. IN THIS APPEAL, ASSESSEE RAISED FIVE MAIN GROUNDS AND THE SAME ARE AS UNDER: - 1. OBJECTION AGAINST TREATING THE CONTRACT ENTERED INTO BETWEEN THE APPELLANT AND STEEL AUTHORITY OF INDIA LIMITED AS A COMPOSITE CONTRACT. 2. OBJECTION AGAINST TREATING THE CONSORTIUM OF THE APPELLANT AND BEEKAY ENGINEERING CORPORATION AS A ASSOCIATION OF PERSONS. 3. OBJECTION AGAINST CONCLUSION THAT THE CONTRACT ENTERED INTO BETWEEN THE APPELLANT, BEEKAY AND SAIL HAS BEEN ARTIFICIALLY DIVIDED INTO PARTS SO AS TO AVOID TAX LIABILITY. 4. OBJECTION AGAINST TREATING INCOME FROM OFFSHORE SUPPLY OF DESIGN AND ENGINEERING AND OFFSHORE SUPPLY OF PLANT AND EQUIPMENT AS TAXABLE IN INDIA. 5. OBJECTION AGAINST APPLICATION TO RULE 10 FOR DETERMINATION OF INCOME. 2. AT THE OUTSET, LD AR FOR THE ASSESSEE SUBMITTED THAT THE GRO UNDS IN THE APPEAL NEED TO REVISIT THE FILE OF THE AO / DRP QUA THE RECENT CBDT CIRCULAR NO. 7 OF 2016, DATED 7.3.2016 RELATING TO CLARIFICATION REGARDING THE TAXABILITY OF CONSORTIUM MEMBERS. 3. BRIEFLY NARRATING THE FACTS OF THE CASE, LD AR SUBMITTED THAT THE ASSESSEE IS A MEMBER OF THE CONSORTIUM WITH BEEKAY ENGINEERING ENTERPRISES FOR EXECUTING A 2 CONTRACT FROM SAIL. IN THE ASSESSMENT, AO HELD THAT INCOME OF THE ASSESSEE IS TAXABLE IN INDIA AND THE CONTRACT IN QUESTION CONSTITUTES A COMPOSITE CONTRA CT. AO HELD THAT THE INCOME FROM OFFSHORE SUPPLY OF DESIGN AND ENGINEERING AND OFFSHORE SUPPLY OF PLANT AND EQUIPMENT ARE TAXABLE IN INDIA. FURTHER, IT IS SUBMITTED THAT THE STATUS OF CONSORTIUM WAS DISTURBED AND THE AO THRUST ON THE ASSESSEE AS MEMBER OF THE ASSOCIATION OF PERSONS (AOP). IN THIS CONNECTION, LD AR SUBMITTED THAT THE CBDT ISSUED A CIRCULAR PROVIDING CERTAIN GUIDELINES IN CONNECTION WITH THE TAXATION OF AOP QUA THE CLAIM OF CONSORTIUM. IN THIS REGARD, LD AR SUBMITTED THAT THE ISSUE RAISE D IN HERE MAY BE REMANDED TO THE FILE OF THE AO. 4. ON HEARING THE LD REPRESENTATIVES OF BOTH THE PARTIES, WE FIND THAT THE SAID CIRCULAR IS CERTAINLY RELEVANT AND THE SAME WAS ISSUED ONLY ON 7.3.2016. WHEREAS, THE DRP - II, MUMBAI FINALISED THE OBJECTIONS ONLY ON 17.12.2013 IE IN THE ABSENCE OF THE SAID CIRCULAR. CONSIDERING THE SAME, WE FIND MERIT IN THE REQUEST OF THE LD AR, FOR WHICH LD DR HAS NO OBJECTION AND REMAND THE ISSUE TO THE FILE OF THE AO. AO IS DIRECTED TO EXAMINE THE APPLICABILITY OF THE SAI D CIRCULAR TO THE FACTS OF THE PRESENT CASE AND DECIDE THE ISSUE FRESH AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, ALL THE ISSUES RAISED IN THE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 T H JANUARY, 2017. S D / - S D / - ( RAM LAL NEGI ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 11.01.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 3 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI