Shanghai Electric Group Co. Ltd., Noida V. ACIT (International Taxation), Circle-3(1)(2), New Delhi

ITA 4644/DEL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1483 (ITAT-DELHI)
• Duration Of Justice: 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Appeal Filed On: 22-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Application of stay; Set aside
• Section: 234B; 201; 44BB; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4644/DEL./2019 (ASSESSMENT YEAR : 2016-17) AND STAY NO.624/DEL/2019 (IN ITA NO.4644/DEL./2019) (ASSESSMENT YEAR : 2016-17) M/S. SHANGHAI ELECTRIC GROUP CO.LTD., VS. ACIT, 188, LINCHUN ROAD, CIRCLE 3(1)(2), SHANGHAI CITY, INTERNATIONAL TAXATION, CHINA 201 100. (PAN : AAPCS1357N) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. MANASVINI BAJPAI, ADVOCATE REVENUE BY : SHRI N.K. BANSAL, SENIOR DR DATE OF HEARING : 04.06.2019 DATE OF ORDER : 10.06.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. SHANGHAI ELECTRIC GROUP CO. LTD. (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25.04.2019 PASSED BY THE AO IN CONSONANCE WITH THE ORDERS PASS ED BY LD. ITA NO.4644/DEL./2019 2 DRP/TPO UNDER SECTION 143 (3)/144C (13) OF THE INCO ME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2 016-17 ON THE GROUNDS INTER ALIA THAT :- . 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : THE TAXPAYER, M/S. SHANGH AI ELECTRIC GROUP CO. LTD. (SEC) IS A FOREIGN COMPANY INCORPORA TED UNDER THE LAWS OF PEOPLES REPUBLIC OF CHINA, WHICH IS INTO T HE BUSINESS OF SUPPLY OF BOILER, TURBINE & GENERATOR (BTG) EQUIPME NT TO VARIOUS COMPANIES (PROJECT OWNERS) SETTING UP POWER PLANTS IN INDIA. THE TAXPAYER COMPANY IS ALSO RENDERING OFFSHORE SERVICE S IN RESPECT OF ERECTION, TESTING AND COMMISSIONING OF SUCH BTG EQU IPMENTS. THE TAXPAYER COMPANY DURING THE YEAR UNDER ASSESSMENT E NGAGED IN EXECUTION OF CONTRACTS WITH REFERENCE TO OFFSHORE S UPPLY TO JINDAL PROJECT AND LAGUNA PROJECT. THE TAXPAYER ALSO PROV IDED OFFSHORE SERVICES QUA ERECTION, TESTING OR COMMISSIONING AND SUPERVISION OF ERECTION AND TESTING AND COMMISSION OF SUCH BTG EQU IPMENTS AT PROJECT OWNERS SITE OF ROSA PROJECT, LAGUNA PROJEC T, HYDEL PROJECT AND JINDAL PROJECT. THE TAXPAYER HAS OFFERED ITS I NCOME FROM AFORESAID ONSHORE ACTIVITIES TO TAX UNDER SECTION 4 4BBB OF THE ACT. AO, AFTER RELYING UPON THE ORDER PASSED BY THE LD. DRP FOR AYS ITA NO.4644/DEL./2019 3 2007-08 TO 2009-10 AND 2011-12 TO 2014-15 TAXED THE REVENUE OF THE TAXPAYER FROM ONSHORE SERVICES AT A NET PROFIT RATE OF 25% ON THE GROUND THAT THE PROVISIONS CONTAINED U/S 44BBB ARE NOT APPLICABLE TO THE TAXPAYER AND SUPERVISORY RECEIPTS ARE SUBJECT TO TAX AS PER NORMAL PROVISIONS OF THE ACT AND THEREBY ASSESSED THE TOTAL INCOME AT RS.3,70,18,304/-. AO ALSO LEVIED I NTEREST U/S 234B OF THE ACT. 3. FEELING AGGRIEVED, THE TAXPAYER HAS COME UP BEFO RE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL CHALLE NGING THE IMPUGNED ORDER PASSED BY THE AO. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 5. GROUND NO.1 IS GENERAL IN NATURE, HENCE DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. TAXABILITY OF OFFSHORE SUPPLY GROUNDS NO.2.1 TO 2.9 6. AT THE VERY OUTSET, LD. AR FOR THE TAXPAYER BROU GHT TO THE NOTICE OF THE BENCH THAT THIS ISSUE HAS ALREADY BEE N DECIDED AGAINST ITA NO.4644/DEL./2019 4 THE TAXPAYER IN AY 2015-16 IN ITA NO.3932/DEL/2018 ORDER DATED 06.06.2018 BY FOLLOWING THE DECISION RENDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2014-15 IN ITA NO.4164/D EL/2017 VIDE ORDER DATED 15.09.2017 . THE LD. SENIOR DR FOR THE REVENUE AGREED WITH THE CONTENTIONS RAISED BY THE LD. AR FO R THE TAXPAYER. 7. BARE PERUSAL OF THE GROUNDS OF APPEAL RAISED BY THE TAXPAYER IN AYS 2014-15 & 2015-16 AS WELL AS IN THE YEAR UND ER ASSESSMENT GO TO PROVE THAT THE IDENTICAL ISSUE HAS ALREADY BE EN DECIDED AGAINST THE TAXPAYER BY CONFIRMING THE ASSESSMENT ORDER BY RETURNING FOLLOWING FINDINGS :- 2. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE R ELEVANT MATERIAL ON RECORD. THE ASSESSEE IN THE INSTANT APP EAL IS AGGRIEVED AGAINST THE REJECTION OF CLAIM U/S 44BB O F THE ACT/ALLEGATION OF EXISTENCE OF FIXED PERMANENT ESTA BLISHMENT; TAXABILITY OF OFFSHORE SUPPLY; AND CHARGEABILITY OF INTEREST U/S 234B OF THE ACT. IT IS NOTICED, AS HAS ALSO BEEN AD MITTED BY BOTH THE SIDES, THAT SIMILAR ISSUES WERE RAISED IN THE A PPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2007-08 TO 20 13-14. THE TRIBUNAL, VIDE ITS ORDER DATED 14.07.2017 IN ITA NOS.224/DEL/2014 ETC., HAS DISMISSED ALL THE GROUND S RAISED BY THE ASSESSEE EXCEPT FOR THE LEVY OF INTEREST U/S 23 4B. THE LD. AR FAIRLY CONCEDED THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT APPEAL ARE, MUTATIS MUTANDIS, SIMILAR TO THOSE OF T HE EARLIER DISPOSED OF BY THE BENCH. RESPECTFULLY FOLLOWING TH E PRECEDENT, WE DISMISS ALL THE GROUNDS TAKEN BY THE ASSESSEE EX CEPT THE GROUND NO.5 RELATING TO LEVY OF INTEREST U/S 234B, WHICH IS HEREBY ALLOWED. 8. SO, FOLLOWING THE DECISION RENDERED BY THE COORD INATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AYS 2014 -15 AND 2015- 16, GROUNDS NO.2.1 TO 2.9 HAVE BEEN DETERMINED AGAI NST THE TAXPAYER. ITA NO.4644/DEL./2019 5 GROUND NO.3 9. LD. AR FOR THE TAXPAYER CONTENDED THAT GROUND NO .3 AS TO LEVY OF INTEREST U/S 234B HAS BEEN DECIDED IN FAVOU R OF THE TAXPAYER IN AYS 2014-15 AND 2015-16. THIS FACTUAL AND LEGAL POSITION HAS NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REVENUE . SO, FOLLOWING THE DECISION RENDERED BY THE COORDINATE B ENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AYS 2014-15 AND 2015-16, INTEREST LEVIED BY THE AO U/S 234B IS HEREBY DELETE D, HENCE GROUND NO.3 IS DETERMINED IN FAVOUR OF THE TAXPAYER. 10. RESULTANTLY, THE APPEAL FILED BY THE TAXPAYER I S PARTLY ALLOWED. 11. IN VIEW OF THE FACT THAT APPEAL BEARING ITA NO.4644/DEL/2019, IN WHICH THE PRESENT STAY APPLICA TION WAS FILED, HAS SINCE BEEN DISPOSED OFF VIDE THIS COMPOSITE ORD ER, THE PRESENT STAY APPLICATION IS HEREBY DISMISSED HAVING BEEN BE COME INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF JUNE, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 10 TH DAY OF JUNE, 2019 TS ITA NO.4644/DEL./2019 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.