Lockheed Martin Global Inc., New Delhi V. DDIT, New Delhi

ITA 6356/DEL/2012

• Counselvise Citation: 635620114 RSA 2012
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Assessee Lawyers: VIKAS SRIVASTAVA; SUMIT MANGAL S
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.6356/DEL/2012 ASSESSMENT YEAR : 2009-10 LOCKHEED MARTIN GLOBAL INC. DDIT, C/O LOCKHEED MARTIN INDIA PVT. LTD., CIRCLE-3 (1) , THE GRAND PLAZA, THE GRAND HOTEL, N. DELHI. NELSON MANDELA ROAD, VASANT KUNJ, PHASE-II, NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABFL AABFL AABFL AABFL- -- -5293 5293 5293 5293- -- -R RR R APPELLANT BY : SHRI VIKAS SRIVASTAVA, & SHRI SUMIT MANGAL, ADVOCATES. RESPONDENT BY : SHRI SANJEEV SHARMA, DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER U/S 143(3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 PASSSED ON 15.10.2012 IN PURSUANCE OF DIRECTION OF DRP DATED 29 .9.2012. THE ASSESSEE HAS TAKEN 26 GROUNDS OF APPEALS. HOWEVER, THE CRU X OF GROUNDS OF APPEAL IS THE GRIEVANCE OF THE ASSESSEE THAT I T HAS BEEN WRONGLY HELD TO BE PE OF FOREIGN COMPANY AND FURTHE R HAS BEEN WRONGLY ATTRIBUTED WITH THE INCOME TO THE EXTENT OF 35% OF INCOME OF THAT FOREIGN COMPANY. 2. THE BRIEF FACTS OF THE CASE ARE THAT SIX C-130 AIRC RAFTS WERE SOLD BY US GOVT. TO INDIAN GOVT. WHICH WERE PURCHASED BY US GOVT. FROM LOCKHEED MARTIN GLOBAL INC. USA. THE ABOVE SAID COMP ANY HAD BEEN WORKING IN INDIA THROUGH ITS SUBSIDIARY LOCKHEED MARTI N GLOBAL INC. US ITA NO6356/DEL/2012 2 IN THE FORM OF A LIAISON OFFICE IN INDIA. THE ASSESSIN G OFFICER HAS HELD THAT THIS LIAISON OFFICE WAS IN FACT PE OF US COMPANY IN INDIA AND HAS ATTRIBUTED 35% OF INCOME OF HOLDING COMPANY OF US C OMPANY WHICH WAS EARNED BY IT ON SALE OF SIX C-130 AIRCRAFTS TO GOVT . OF INDIA BY US GOVT. AND THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE U S. 3. AT THE OUTSET, THE LD AR PLACED BEFORE THE BENCH A CHART DEPICTING HOLDING STRUCTURE OF THE ENTIRE GROUP AND IT WAS POINTED OUT THAT LOCKHEED MARTIN CORPORATION (US) WAS A MANUFACT URER OF AIRCRAFTS WHICH HAD SOLD ITS AIRCRAFTS TO US GOVT. WHO ULTIMATE LY SOLD THESE AIRCRAFTS TO GOVT. OF INDIA. HE FURTHER SUBMITTED THA T THIS MANUFACTURER HAD A SUBSIDIARY IN US WITH THE NAME AND STYLE AS LOCK HEED MARTIN GLOBAL INC. US WHICH HAS PRESENCE IN INDIA IN THE FO RM OF LIAISON OFFICE. HE FURTHER SUBMITTED THAT AGREEMENT BETWEEN THE US G OVT. AND INDIAN GOVT. WAS EXECUTED OUTSIDE INDIA AND DELIVERY OF AIRC RAFTS ALSO TOOK PLACE OUTSIDE INDIA AND AIRCRAFTS WERE BROUGHT TO IND IA BY INDIAN PILOT IN THE YEAR 2010 AND 2011. ON THE BASIS OF THESE FACTS, I T WAS SUBMITTED THAT SINCE AIRCRAFTS WERE SOLD BY US GOVT. TO INDIAN G OVT. AND ASSESSEE WAS NOT A PARTY TO THE AGREEMENT, THEREFORE HOLDING OF ASSESSEE AS PE OF ITS HEAD OFFICE IN US WAS N OT JUSTIFIED SPECIALLY KEEPING IN VIEW THE FACT THAT PARENT COMPANY WAS ITSELF NOT A MANUFACTURE R OF THESE AIRCRAFTS AND WAS A SERVICE PROVIDER ONLY. HE FURTHE R CONTENDED THAT THE ASSESSEE HAD BEEN WORKING IN INDIA AS A LIAISON OFFIC E OF ITS PARENT COMPANY IN US FOR THE LAST SO MANY YEARS AND CONTINUED TO BE REPRESENTED BY SUCH LIAISON OFFICE FOR EIGHT MONTHS IN THE YEAR UNDER CONSIDERATION AND AFTER WHICH IT INCORPORATED ITSELF INTO A PRIVATE LIMITED COMPANY AND THEREFORE HE PLEADED THAT DURIN G THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE REMAINED INTO EXIST ENCE ONLY FOR ABOUT FOUR MONTHS. CITING FROM VARIOUS PAGES OF ASSESSMENT ORDER AND ADDITIONAL EVIDENCE AS ADMITTED BY THIS TRIBUNAL VIDE ORDER DATED ITA NO6356/DEL/2012 3 12.,7.2013 OUR ATTENTION WAS INVITED TO THE FACT THA T ASSESSEE WAS NOT A PARTY TO THE CONTRACT WHICH WAS ENTERED INTO BETWE EN GOVT. OF INDIA AND UNITED STATES OF AMERICA AND HE FURTHER ARGUED T HAT DELIVERY OF AIRCRAFTS DID NOT TAKE PLACE IN THE YEAR UNDER CONSI DERATION AND THE SUPPLY TOOK PLACE IN THE FINANCIAL YEAR 2010 -11 AND 2011-12 AND THEREFORE NOTHING HAD ACCRUED IN THE YEAR UNDER CON SIDERATION. CONTINUING HIS ARGUMENTS HE SUBMITTED THAT MUCH BEFOR E EXECUTION OF LETTER OF AGREEMENT (LOA) BETWEEN GOVT. OF INDIA AN D GOVT. OF US THE LOCKHEED MARTIN GLOBAL INC. HAD ENTERED INTO FIVE Y EARS OPTION CONTRACT WITH THE US GOVT. BY WHICH US GOVT. SECURED THE RIGH TS TO PURCHASE C- 130 AIRCRAFTS THROUGH LMC AND THIS CONTRACT TOOK PLAC E OUTSIDE INDIA AND ACCRUED PRIOR TO US GOVT. DECISION TO SELL C-130 AIRCRAFTS TO GOVT. OF INDIA. HE FURTHER ARGUED THAT ASSESSING OFFICER HAD CONSIDERED THE REVENUE OF C-130 AIRCRAFTS CONTRACT AS USD 962 MILLI ONS WHEREAS THE CONTRACT PRICE OF CONTRACT BETWEEN LMC AND US GOVT. WAS ONLY OF USD 500 MILLION ONLY. HE FURTHER CONTENDED THAT CONTRAC T BETWEEN US GOVT. AND INDIAN GOVT. CONSISTED OF PURCHASE OF AIRCRAFTS FRO M OTHER SUPPLIERS ALSO WHICH THE ASSESSING OFFICER HAS IGNORED. HE FURTHER ARGUED THAT ASSESSMENT WAS COMPLETED ON THE BASIS THAT LETTER OF AGRE EMENT BETWEEN US GOVT. AND INDIAN GOVT. WAS NOT FILED WIT H ASSESSING OFFICER. IN THIS RESPECT HE SUBMITTED THAT AGREEMENT WAS A SECRET DOCUMENT AND MOREOVER THE ASSESSEE WAS UNDER A BONA FIDE BELIEF T HAT IT WAS NOT HAVING A COPY OF SUCH AGREEMENT AND THEREFORE IT WAS SUBMITTED TO THE ASSESSING OFFICER THAT HE COULD GET THE COPY OF THIS AGR EEMENT FROM THE MINISTRY OF DEFENCE WHICH HE DID NOT DO AND MADE ADDITION HOLDING THE ASSESSEE AS PE. IN VIEW OF THE ABOVE ARGUMENT, IT WA S SUBMITTED THAT ASSESSMENT WAS COMPLETED ONLY ON THE BASIS OF SURMISES, CONJECTURES AND ASSUMPTIONS. ITA NO6356/DEL/2012 4 4. THE LD DR, ON THE OTHER HAND, SUBMITTED THAT ASSESSE E DID NOT COOPERATE WITH THE ASSESSING OFFICER AND THEREFORE THE ASSESSING OFFICER ON THE BASIS OF INFORMATION AVAILABLE COMPLET ED THE ASSESSMENT. HE FURTHER ARGUED THAT ADDITIONAL EVIDENCE IN THE FORM OF COPY OF LETTER OF AGREEMENT FOR SALE OF AIRCRAFTS COU LD HAVE BEEN GIVEN TO ASSESSING OFFICER OR DRP WHICH ASSESSEE DID NOT DO DELIB ERATELY AND THE CONTENTION OF ASSESSEE THAT IT WAS A SECRET DOCUMENT IS NOT CORRECT AS NOTHING IS WRITTEN ON THE COPY OF LETTER OF AGREEM ENT THAT IT WAS A SECRET DOCUMENT. CONTINUING HIS ARGUMENT HE SUBMITTED THAT PRIMARY EVIDENCE WAS WITH THE ASSESSEE AND IN THE ABSENCE OF COOP ERATION FROM ASSESSEE THE ASSESSING OFFICER WAS COMPELLED TO COMPLET E THE ASSESSMENT FROM THE MATERIAL AVAILABLE. THE LD DR ALSO I NVITED OUR ATTENTION TO ADDITIONAL EVIDENCE FILED BY THE REVEN UE ON 20.9.2013 AND SUBMITTED THAT THESE DOCUMENTS WERE AVAILABLE IN PUBLI C DOMAIN AND HAD BEEN DOWN LOADED FROM THE WEBSITE AND THESE EVIDE NCES WERE NECESSARY FOR THE CAUSE OF JUSTICE AND THEREFORE NEED T O BE ADMITTED AS ADDITIONAL EVIDENCE. 5. THE LD AR HAD NO OBJECTION FOR ADMISSION OF ADDITI ONAL EVIDENCE AND THEREFORE WE HAVE ADMITTED THE SAME. FURTHER AR GUING THE LD DR INVITED OUR ATTENTION TO VARIOUS CLAUSES OF ADDITIONAL EVIDENCE FILED BY THE LD AR AND SUBMITTED THAT THE CLAUSES FORMING PART OF LETTER OF AGREEMENT ARE IMPORTANT CLAUSES WHICH WERE NOT CONSIDE RED BY ASSESSING OFFICER AS THIS WAS NOT FILED AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAGE 10,11,12, 14 & 15 WHEREIN VARIOU S CLAUSES FOR SUPPLY, SURVEYS, TRAINING, DETAIL OF PAYMENTS ETC. WERE PLACED. IN VIEW OF THIS THE LD DR SUBMITTED THAT IN ALL FAIRNESS THE CA SE OF THE ASSESSEE SHOULD BE REMITTED BACK TO THE OFFICE OF ASSESSING OFFIC ER WHO ON THE BASIS OF LETTER OF AGREEMENT FILED BY THE ASSESSEE AS ADDI TIONAL ITA NO6356/DEL/2012 5 EVIDENCE AND ON THE BASIS OF ADDITIONAL EVIDENCE FILE D BY THE REVENUE SHOULD EXAMINE THE CASE OF ASSESSEE FROM ALL ANGLES. 6. IN HIS REJOINDER, THE LD AR FILED EXTRACTS FROM DE FENCE PROCUREMENT POLICY MANUAL 2009 AND INVITED OUR ATTE NTION TO CLAUSE 10.17 REGARDING DISCLOSURE ON SPECIFICATIONS WHEREIN I T WAS WRITTEN THAT EXCEPT WITH THE WRITTEN CONSENT OF BUYER THE SELLER W OULD NOT DISCLOSE THE CONTRACT OR ANY PROVISION SPECIFICATION, PLAN, DR AWING, PATTERN, SAMPLE OR INFORMATION THEREOF TO ANY PERSON OTHER THA N THE PERSON EMPLOYED BY THE SELLER FOR EXECUTING THE CONTRACT AN D THEREFORE HE ARGUED THAT THE DOCUMENT WAS NECESSARILY A SECRET DOCUM ENT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE APPEAL OF THE ASSESSEE WAS EARLIER HEARD ON 4.7.2013 FOR THE LIMITED P URPOSE OF ACCEPTANCE OF ADDITIONAL EVIDENCE AND ADDITIONAL EV IDENCE SUBMITTED BY THE ASSESSEE WAS ADMITTED VIDE ORDER DATED 12.7.2013 AND THE CASE WAS LISTED FOR HEARING ON MERITS ON VARIOUS DATES AND WA S FINALLYT HEARD ON 11.11.2013. WE FIND THAT THE MOST IMPORTANT DOCUM ENT IN THE PRESENT CASE IS LETTER OF AGREEMENT WHICH WAS NOT AVAIL ABLE TO ASSESSING OFFICER OR DRP AND IT HAS BEEN FILED AND ADMIT TED BY THIS TRIBUNAL AS ADDITIONAL EVIDENCE VIDE TRIBUNAL ORDER DATED 12.7.2013. THE AGREEMENT CONTAINS IMPORTANT CLAUSES WHICH COULD H AVE BEARING ON THE ASSESSMENT AND WHICH WERE NOT CONSIDERED BY THE A SSESSING OFFICER WHILE FRAMING THE ASSESSMENT. THE LD DR HAS ALSO FILED ADDITIONAL EVIDENCE WHICH HAS BEEN ADMITTED DURING T HE COURSE OF APPELLATE PROCEEDINGS. THEREFORE, IN THE INTEREST OF SUBSTANTIAL JUSTICE, WE SET ASIDE THE APPEAL FILED BY THE ASSESSEE TO THE OFF ICE OF ASSESSING OFFICER WHO WOULD RE-ADJUDICATE THE CASE OF ASSESSEE KEE PING IN VIEW THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AS WELL AS BY REVENUE. ITA NO6356/DEL/2012 6 NEEDLESS TO SAY THAT ASSESSEE WILL BE GIVEN A PROPER OPPOR TUNITY OF BEING HEARD AND AT THE SAME TIME W E DIRECT THE ASSESSEE TO PROVIDE FULL COOPERATION TO ASSESSING OFFICER SO THAT ASSESSMENT COU LD BE COMPLETED WITHIN A REASONABLE TIME FRAME. 8. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND DAY OF NOVEMBER, 2013. SD/- SD/- (R.P. TOLANI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 22.11.2013. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 11.11.2013 DATE OF DICTATION 12.11.2013 DATE OF TYPING 12.11.2013 DATE OF ORDER SIGNED BY 22.11.2013 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.