DDIT (I.T) - 1(2), MUMBAI V. M/s. DOOSAN HEAVY INDUSTRIES & CONST. CO. LTD., MUMBAI

ITA 746/MUM/2007

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4056 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 15-07-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 22-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDER KUMAR
• Keywords: Reason to believe; Reassessment proceedings
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI . . , ! , ' # BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 3930 / / 2006 A.Y. 2000-01 ITA NO. : 3930/MUM/2006 (ASSESSMENT YEAR: 2000-01) JT. DIT (OSD)-(I.T.) RG.1 1 ST FLOOR SCINDIA HOUSE BALLARD ESTATE MUMBAI. VS DOOSAN HEAVY INDUSTRIES & CONSTRUCTION CO. INDIA PROJECT OFFICE : 1508, MAKER CHAMBERS V, NARIMAN POINT, MUMBAI-400 021 .: PAN: AAACK8466B (APPELLANT) (RESPONDENT) . : 3897 / / 2006 A.Y. 2000-01 ITA NO. : 3897/MUM/2006 (ASSESSMENT YEAR: 2000-01) DOOSAN HEAVY INDUSTRIES & CONSTRUCTION CO. INDIA PROJECT OFFICE, 1508, MAKER CHAMBERS V NARIMAN POINT, MUMBAI-400 021 .: PAN: AAACK8466B VS ASST. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)- 1(2),MUMBAI. (APPELLANT) (RESPONDENT) & . : 746 / / 2007 A.Y. 2003-04 ITA NO. : 746/MUM/2007 (ASSESSMENT YEAR: 2003-04) DDIT (INTERNATIONAL TAXATION)-1(2) ROOM NO.117, 1 ST FLOOR, SCINDIA HOUSE, BALLARD PIER, MUMBAI. VS M/S DOOSAN HEAVY INDUSTRIES & CONSTRUCTION CO. LTD. INDIA PROJECT OFFICE, (FORMERLY KOREAS HEAVY INDUSTRIES AND CONSTRICTION CO. LTD.) C/O PREICEWATERHOUSE & CO. CAS, 8 TH FLOOR, C-WING, KAMALA MILLS COMPOUND, LOWER PAREL, MUMBAI- 400 013. .: PAN: AAACK8466B ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 2 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KANCHA N KAUSHAL & DHANESH BAFNA REVENUE BY : SHRI NARENDER KUMAR ! /DATE OF HEARING : 15-07-2013 '# ! / DATE OF PRONOUNCEMENT : 19-07-2013 ' O R D E R ! , : PER VIVEK VARMA, JM: THREE APPEALS ARE FILED PERTAINING TO THE SAME ASS ESSEE. AS THE GROUNDS/ISSUES EMANATING ARE COMMON, WE ARE PASSING A COMMON ORDER, FOR THE SAKE OF CONVENIENCE AND BREVITY, ITA NO. 3930/MUM/2006 : APPEAL FILED BY THE DEPARTM ENT : THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE O RDER OF THE CIT(A)-XXI, MUMBAI, DATED 27.03.2006, WHEREIN THE FOLLOWING GRO UNDS HAVE BEEN TAKEN. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT NOTICE ISSUED U/S 148 IS BAD IN LAW AND THEREFORE, SET-ASIDE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE PROFIT FRO M SALE OF EQUIPMENT IS NOT TAXABLE IN INDIA IN THE HANDS OF T HE ASSESSEE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) ON THE ABOVE GROUND(S) BE SET-ASIDE AND THAT OF THE ASSESSI NG OFFICER RESTORED. 2. REGULAR ASSESSMENT, IN THE INSTANT YEAR, WAS FRA MED U/S 143(1) DATED 26.03.2003. 2. DOOSAN HEAVY INDUSTRIES & CONSTRUCTION COMPANY L TD. (ORIGINALLY KOREA HEAVY INDUSTRIES & CONSTRUCTION CO. LTD.) (DO OSAN), IS A COMPANY TAX RESIDENT IN SOUTH KOREA. THE COMPANY IS A PROJE CT CONTRACTOR. THE ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 3 ASSESSEE ENTERED INTO A CONTRACT WITH KONDAPALLI PO WER CORPORATION LTD. (KPCL), AP, TO SET UP THE PROJECT ON A TURNKEY BASI S. KPCL AWARDED THE ONSHORE PROJECT TO HANJUNG DCM LTD.(HANJUNG) AND OF FSHORE PROJECT TO DOOSAN, VIDE AGREEMENTS DATED 01.02.1998. THE ASSES SEE COMPANY ON SECURING THE OFFSHORE PROJECT, ASSIGNED/ SUB-CONTRA CTED THE SAME TO ENCON SERVICES LTD. FOR A CONSIDERATION OF RS. 99,7 9,20,000/- 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSE SSMENT YEAR 2001-02, THE AO NOTICED THAT THE ASSESSEE HAD LODGE D AN INSURANCE CLAIM FOR THE LOSS OF ITS EQUIPMENT DUE TO THE BARG E, WHICH WAS CARRYING THE EQUIPMENT, HAD CAPSIZED. THE ASSESSEE, THEREFOR E, LODGED THE CLAIM FOR USD 103 MILLION, WHEREAS, THE INSURANCE COMPANY MADE A PAYMENT OF INR RS. 15 MILLION, TOWARDS THE REPAIRS ON EQUIP MENT NAMELY GT2. THE ASSESSEE COMPANY, THEREFORE, FILED A CIVIL SUIT IN THE CIVIL COURT AT SECUNDERABAD, AGAINST THE INSURANCE COMPANY FOR THE RECOVERY OF ITS CLAIM ON THE LOSS OF ITS EQUIPMENT. 4. ON THE BASIS OF THE DETAILS OF THIS CIVIL SUIT, THE AO REOPENED THE ASSESSMENT PROCEEDINGS IN THE INSTANT YEAR, AS THE AO WAS UNDER THE BELIEF, THAT THE OFFSHORE CONTRACT FOR USD 103 MILL ION WAS SIGNED BETWEEN LANCO KONDAPALLI POWER PROJECTS LTD AND HAN JUNG. SINCE THE CLAIM WAS MADE BY THE ASSESSEE, THEREFORE, THE ASSE SSEE HAD NOT DISCLOSED THE PORTION OF USD 102 MILLION IN ITS RET URN. HE, THEREFORE, REOPENED THE PROCEEDINGS TO BRING TO TAX USD 51.5 M ILLION IN THE CURRENT ASSESSMENT YEAR. ACCORDING TO THE AO, THEREFORE, OF FSHORE CONTRACT WAS TAXABLE IN INDIA AND PASSED THE IMPUGNED ASSESSMENT ORDER. 5. BEFORE THE REVENUE AUTHORITIES, IT WAS ARGUED TH AT THERE WAS NO SUFFICIENT REASON TO BELIEVE TO INITIATE REASSESSME NT PROCEEDINGS. IT WAS ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 4 ALSO ARGUED THAT IN 2001-02, I.E. IMMEDIATE SUBSEQU ENT YEAR, WHEN THE ISSUE OF INSURANCE CLAIM CROPPED UP, THE AO DID NOT MAKE ANY ADDITION IN RESPECT OF THE OFFSHORE CONTRACT, AFTER HAVING T AKING INTO CONSIDERATION THE EVIDENCE AND DOCUMENTS PLACE BEFORE HIM. IT WAS ALSO POINTED OUT THAT ENTIRE FACTS WITH REGARD TO SIGNING OF THE AGR EEMENT WAS ALREADY BEFORE THE AO, WHO TOOK INTO CONSIDERATION, AND ONL Y THEN HAD FRAMED THE REGULAR ASSESSMENT. IN THE SENSE, THE AO HAD ON LY CHANGED HIS OPINION, WITHOUT BRINGING HOME ANY EVIDENCE, WHICH WOULD SHOW THAT THERE WAS AN ESCAPEMENT OF INCOME. 6. THUS ON THESE ARGUMENTS, THE CIT(A), GAVE A DETA ILED FINDING ON THE ISSUE, WHICH IS, 3.7 EXAMINATION OF THE-RECORDS OF PROCEEDINGS OF A. Y.2001-02 REVEALS THAT THE DOCUMENTS AS MENTIONED BY THE AR IN HIS SUBMISSIONS WERE FILE D BEFORE THE AO. COPY OF THESE DOCUMENTS HAS ALSO BEEN FILED BEFORE ME. THE OFFSHO RE EQUIPMENT SUPPLY CONTRACT WAS ENTERED INTO BETWEEN KPCL AND HANJUNG ON 01.02.1998 FOR THE SUPPLY OF EQUIPMENT IN RELATION THE POWER PLANT BEING SET UP BY KPCL. THE DETAILS OF THE ITEMS TO BE SUPPLIED WERE MENTIONED IN THE SCOPE OF WORK ANNEXED TO THE AGREEMENT AS PER PARA-2.0 OF THE AGREEMENT. THE PRICE OF THE EQUIPMENT TO BE SUPPLIE D AS PER THIS CONTRACT WAS US$ 103 MILLION AS MENTIONED IN ATTACHMENT-2 OF THE CONTRAC T. THUS US$ 103 MILLION IS THE PRICE PAID BY KPCL FOR THE EQUIPMENT PURCHASED FROM HANJU NG. IT HAS BEEN MENTIONED BY THE APPELLANT THAT THIS PRICE HAS BEEN PAID IN FOREIGN EXCHANGE OUTSIDE INDIA AND THAT THE SUPPLIES AS PER THE AGREEMENT HAVE BEEN TAKEN OUTSI DE INDIA BY KPCL. AS EVIDENCE OF HAVING DELIVERED THE GOODS OUTSIDE INDIA, THE APPEL LANT HAS FILED A COMMERCIAL ADVICE DATED 08.02.1999 ISSUED BY ALSTOM GAS TURBINES, S.A . SENDING THE EQUIPMENT TO KPCL FOR DELIVERY AT CHENNAI. COPY OF BILL OF ENTRY HAS ALSO BEEN FILED AS A SAMPLE TO SUPPORT THAT THE EQUIPMENT HAS BEEN IMPORTED BY KPCL AND TH EREFORE DELIVERY HAS ALSO BEEN TAKEN OUTSIDE INDIA. SIMULTANEOUSLY THERE IS ANOTHE R CONTRACT BETWEEN KPCL AND KOREA HEAVY INDUSTRIES & CONSTRUCTION LTD DATED 01.02.199 8 WHICH PROVIDED THAT THE APPELLANT COMPANY WOULD PROVIDE ONSHORE CIVIL AND CONSTRUCTIO N SERVICES REGARDING THE SETTING UP OF THE POWER PLANT. THE ORIGINAL ASSESSMENT WAS COM PLETED U/S.143(3) IN WHICH THE AO HAD EXAMINED THE FACT THAT THE APPELLANT COMPANY HA S SUBCONTRACTED ITS ONSHORE CIVIL CONSTRUCTION SERVICES TO ENCON SERVICES LTD. DURING THE PROCEEDINGS OF A.Y.2001-02, THE ISSUE OF THE CIVIL SUIT FILED FOR RECOVERY OF INSUR ANCE AMOUNT WAS EXAMINED BY THE ,AO AND NO ADVERSE VIEW WERE TAKEN IN THE ASSESSMENT OF A.Y.2001-02. HOWEVER, THE APPELLANT HAD MENTIONED IN PARA-5 OF THE CIVIL SUIT THAT IT HAS AGREED TO SUPPLY EQUIPMENT, MATERIALS AND DESIGN FOR THE CONSTRUCTIO N OF POWER PLANT OF KPCL AND THE VALUE OF THE CONTRACT WAS US$ 103 MILLION. PERHAPS 1EAD ON THIS ASSERTION IN THE CIVIL SUIT PETITION, AO HAS MENTIONED IN HIS REASONS TO B ELIEVE THAT THE RECOVERY SUIT OF INSURANCE WAS FILED ON BEHALF OF THE ASSESSEE EVEN THOUGH THE OFFSHORE SUPPLY CONTRACT OF US$ 103 MILLION WAS WITH A DIFFERENT PERSON. 3.8 AS MENTIONED ABOVE, THE OFFSHORE EQUIPMENT SUPP LY CONTRACT WAS BETWEEN KPCL AND HANJUNG. ON THE OTHER HAND, ONSHORE CIVIL AND C ONSTRUCTION SERVICES CONTRACT WAS ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 5 BETWEEN KPCL AND THE APPELLANT COMPANY. PARA-9 OF T HE ONSHORE CIVIL AND CONSTRUCTION SERVICES CONTRACT PROVIDES FOR THE INS URANCE AND IT READS AS UNDER: 9.0 INSURANCE 9.1 THE CONTRACTOR SHALL PROVIDE OR ARRANGE ITS OWN COST AND (IN THE JOINT NAMES OF THE OWNER AND THE CONTRACTOR UPTO THE TAKING OVER OF A PART AND IN THE NAME OF THE OWNER THEREAFTER) COMPREHENSIVE INSURANCE TO THE PROJECT. THE INSURANCE SHALL COMMENCE FROM COMMENCEMENT OF WORK UNDER THE CONTRACT AND SHALL B E EFFECTIVE UPTO THE TAKING OVER OF THE COMBINED CYCLE PLANT. THE INSURANCE POLICIES SH ALL ALSO PROVIDE FOR MAINTENANCE COVER UPTO THE TAKING OVER OF THE COMBINED CYCLE PL ANT. SUCH INSURANCE WILL INCLUDE, THE FOLLOWING: 1. MATERIAL DAMAGE INSURANCE INCLUDING MATERIAL TRA NSIT INSURANCE (ALSO KNOWN AS CONSTRUCTION ALL RISK INSURANCE) 2. MARINE ADVANCE LOSS OF PROFIT INSURANCE 3. DELAY IN START-UP OR ADVANCE LOSS OF PROFIT POLI CY (TO COVER INCREASED COST OF WORKING AND TWELVE MONTHS REVENUES CORRESPONDING TO FIXED CHARGES WHICH ARE US$ 0.01628/KWH PLUS RS.0.4776/KWH) TO COMMENCE DURING THE CONDUCT OF PERFORMANCE ACCEPTANCE TEST FOR PART 3 4. THIRD PARTY LIABILITY INSURANCE INCLUDING CROSS LIABILITY 5. PUBLIC LIABILITY INSURANCE 6. EMPLOYERS LIABILITY/WORKMENS COMPENSATION 7. EMPLOYEE ACCIDENT/SICKNESS/MEDIC/AIM/PERSONAL AC CIDENT/ TRAVEL INSURANCE 8. PROFESSIONAL INDEMNITY 9. MOTOR-OWN DAMAGE AND LIABILITY INSURANCE THE ADVANCE LOSS OF PROFIT INSURANCE SHALL PROVIDE FOR AN INDEMNITY PERIOD TO COVER INCREASED COST OF WORKING AND 12 MONTHS LOSS OF REV ENUES FOR BOTH -MARINE ALOP AND ADVANCE LOSS OF PROFIT INSURANCE. 39:- BASED ON THIS RESPONSIBILITY, THE APPELLANT HA D PURCHASED AN INSURANCE POLICY FROM UNITED INDIA INSURANCE COMPANY LTD. NO.052000/44/11 /4529/44085/98 DATED 23.03.1999. SCHEDULE TO THIS INSURANCE POLICY PROVI DED DETAILS OF THE PROPERTY INSURED. IT ALSO PROVIDED THAT THE KPCL IS THE PRINCIPAL AND TH E APPELLANT COMPANY WAS A CONTRACTOR. THE MATERIAL PROPERTIES INSURED WERE AL SO IDENTIFIED IN THE POLICY. TOTAL PREMIUM PAYABLE WAS MENTIONED IN THE SCHEDULE TO TH E POLICY AND IT WAS ALSO PAID BY THE APPELLANT. THE SCOPE OF WORK OF THE ONSHORE CIVIL AND CONSTRU CTION SERVICES CONTRACT IS MENTIONED IN THE CONTRACT DATED 01.02.1998 AND IT READS AS UN DER: I. SCOPE OF WORK 1. THE SCOPE OF WORK SHALL COMPRISE THE CIVIL, EREC TION AND THE CONSTRUCTION AT THE SITE IN RESPECT OF THE FACILITY THE FOLLOWING B ROAD CATEGORIES AND AS MORE PARTICULARLY SPECIFIED IN THE TECHNICAL SPECIFICATI ONS OF THE CONTRACT. - UNLOADING AND HANDLING AT INDIAN PORT AND PORT CL EARANCE OF ALL EQUIPMENT/MATERIALS OF NON-INDIAN ORIGIN; INLAND TR ANSPORTATION TO SITE AND INLAND INSURANCE; RECEIPT, UNLOADING, HANDLING AND STORAGE AT SITE, ERECTION, TESTING, START-UP/COMMISSIONING AND PERFORMANCE TES TING OF ALL EQUIPMENT/MATERIALS AND SUPERVISION DURING THE EREC TION! COMMISSIONING FOR THE FACILITY; - CONSTRUCTION OF ALL ASSOCIATED CIVIL, STRUCTURAL AND ARCHITECTURAL WORKS INCLUDING THE MATERIALS REQUIRED FOR THE FACILITY; 2. DETAILS ARE AS PER THE ATTACHED. 3.10 THE INSURANCE POLICY WAS TAKEN BY THE APPELL ANT IN PURSUANCE OF ITS RESPONSIBILITY AS MENTIONED IN THE SCOPE OF WORK. IT WAS IN THIS P ROCESS OF TRANSPORTATION THAT A BARGE CARRYING GAS TURBINE (GT) AND GAS TURBINE GENERATOR (GTG) HAD CAPSIZED AND SUNK INTO THE WATERS AND BECAME A TOTAL LOSS. SINCE THES E TWO ITEMS WERE INSURED, THE APPELLANT MADE A CLAIM ON THE INSURANCE COMPANY FOR THE RECOV ERY OF CLAIM. THE MATTER HAD NOT ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 6 BEEN SETTLED. A CIVIL SUIT WAS FILED BY THE APPELLA NT IN THE CITY CIVIL COURT AT SECUNDERABAD. - WHILE DETAILING THE SUIT THE APPELL ANT HAS MENTIONED IN PARA-5 OF THE SUIT IS AS UNDER: 5. MAIN SUPPLY CONTRACT UNDER THE TERMS OF CONTRACT DATED 15T FEBRUARY 1998 (SUPPLY CONTRACT) BETWEEN PLAINTIFF AND LKPL, PLAINTIFF AGREED TO SUP PLY EQUIPMENT, MATERIALS AND DESIGN FOR THE CONSTRUCTION OF LKPLS COMBINED CYCLE POWER PLANT AT KONDAPALLI IDA, ANDHRA PRADESH IN INDIA (THE KONDAPALLI PROJECT9. THE VA LUE OF THIS SUPPLY CONTRACT WAS ABOUT USD 103 MILLION 3.11 BEFORE READING TOO MUCH INTO PARA-5, IT IS NE CESSARY TO UNDERSTAND THE BRIEF REFERENCE TO THE PARTIES INVOLVED IN RELATION TO TH E SUBJECT MATTER OF SUIT AS INNUMERATED IN PARA-4 OF THE SUIT: 4. A BRIEF REFERENCE TO THE PARTIES INVOLVED IN RE LATION TO THE SUBJECT MATTER OF THIS SUIT IS AS FOLLOWS: A. LANCO KONDAPALLI POWER PVT. LIMITED (FORMERLY A PUBLIC LIMITED COMPANY)(LKPL) IS THE OWNER OF THE KONDAPALLI POW ER PROJECT. B. PLAINTIFF IS THE EPC CONTRACTOR FOR THE KONDAPAL LI POWER PROJECT, AND AN ASSURED UNDER THE POLICY ISSUED BY DEFENDANT. I. ENCON SERVICES LIMITED (ENCON) IS THE SUB-CONT RACTOR OF PLAINTIFF FOR TRANSPORTATION OF THE GT & GTG FROM KAKINADA TO MAC HILIPATNAM. J. SEAWAYS SHIPPING LIMITED (SSL) WAS APPOINTED B Y ENCON FOR INLAND TRANSPORTATION OF GT & GTG FROM KAKINADA TO MACHILI PATNAM, AND WAS THE CHARTERER OF JALA HAMSA AND AMETHI-I. N. AISTOM ARE THE SUPPLIERS OF THE GT & GTG, FROM W HOM PLAINTIFF ARRANGED TO PROCURE THE REPLACEMENT EQUIPMENT FOR ENSURING COMP LETION OF THE PROJECT. IT IS THEREFORE APPARENT THAT THE APPELLANT DID NOT DECLARE ITSELF AS THE OWNER OF THE GOODS BUT RATHER DECLARED AS EPC CONTRACTOR FOR THE KONDAPALLI POWER PROJECT AND THAT KPCL IS THE OWNER OF THE PROJECT. IN THE CONTEXT OF THE OVERALL CONTRACT FOR THE SUPPLY OF EQUIPMENT, ONSHORE CIVIL AND CONSTRUCTION SERVICES CONTRACT, RESPONSIBILITY FOR THE TRANSPORTATION, ET C., THE AVERMENT OF THE APPELLANT IN PARA-5 OF THE CIVIL SUIT, PLAINTIFF A GREED TO SUPPLY EQUIPMENT, MATERIALS AND DESIGN FOR THE CONSTRUCTION OF KPCL P OWER PLANT PRIMARILY REFERS TO A ROLL IN THE POWER PROJECT CAN BE APPRECIATED. THE VALUE OF THE SUPPLY CONTRACT MENTIONED AT US$ 103 MILLION IS SAME AS TH AT MENTIONED IN THE OFFSHORE EQUIPMENT SUPPLY CONTRACT. ON THE BASIS OF THE WORDS USED IN THE PARA-5 OF THE CIVIL SUIT, IT CANNOT BE ESTABLISHED THAT THE APPELLANT HAS SUPPLIED THE EQUIPMENT, MATERIAL AND DESIGN. THE OFFSHORE EQ UIPMENT SUPPLY CONTRACT IS VERY CLEAR. IT PROVIDES THAT THE EQUIPMENTS SHALL B E SUPPLIED BY HANJUNG TO KPCL. ONSHORE CIVIL AND CONSTRUCTION SERVICES CONTR ACT PROVIDES THAT THE POWER PLANTS HAS TO BE CONSTRUCTED BY THE APPELLANT COMPANY BY USING NOT ONLY THE EQUIPMENT SUPPLIED BY HANJUNG, BUT ALSO EQUIPME NTS WHICH THE APPELLANT HIMSELF MAY CONSTRUCT AND COMMISSION. THE OVERALL R ESPONSIBILITY OF THE CONSTRUCTION AND ERECTION OF POWER PLANT WAS THEREF ORE ON THE APPELLANT COMPANY AS PER THE ONSHORE CONTRACT. IT WAS ALSO RE SPONSIBLE FOR THE ONSHORE TRANSPORTATION AND HANDLING OF THE EQUIPMENT, MATER IAL AND OTHER THINGS. IT WAS ALSO RESPONSIBLE TO TAKE OUT INSURANCE IN THIS REGA RD TO PROTECT FROM LOSS. IT IS THEREFORE CLEAR THAT THE WORD SUPPLY IN PARA-5 ON LY REFERS TO THE RESPONSIBILITIES OF APPELLANT OF SETTING UP THE POW ER PROJECT AS PER THE ONSHORE CONTRACT. THE AO IN THE COURSE OF ASSESSMENT FOR AY 2001-02 HAD EXAMINED THE ONSHORE CONTRACT, OFFSHORE CONTRACT, CIVIL SUIT FIL ED FOR THE RECOVERY OF INSURANCE CLAIMED AND OTHER RELEVANT PAPERS FILED B Y THE APPELLANT. NO ADVERSE FINDINGS WERE ACCORDED IN THE ASSESSMENT OF A.Y.200 1-02. WHILE ISSUING NOTICE U/S.148, AO HAS RECORDED REASONS U/S.147. HE HAS ON LY MENTIONED THAT THERE IS A CONTRACT FOR SUPPLY OF EQUIPMENT WORTH US$ 103 MILL ION. HE HAS HOWEVER FAILED ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 7 TO ESTABLISH EVEN PRIMA-FADE AS TO HOW INCOME ARISI NG OUT OF THIS OFFSHORE EQUIPMENT SUPPLY CONTRACT IS TAXABLE IN THE HANDS O F APPELLANT. HE HAS MENTIONED ABOUT APPELLANT HAVING FILED A RECOVERY S UIT FOR THE INSURANCE CLAIM. THE AO HAS NOT REACHED TO ANY PRIMA-FACIE CONCLUSIO N THAT THERE IS AN ESCAPEMENT OF INCOME IN RESPECT OF THE SUPPLY OF EQ UIPMENT AS PER THE OFFSHORE EQUIPMENT SUPPLY CONTRACT. I AM THEREFORE OF THE OP INION THAT THE AO DID NOT HAVE ANY REASON TO BELIEVE FOR ISSUE NOTICE U/S.148 . 3.12 WHILE DEALING WITH THE OBJECTION RAISED BY THE APPELLANT, AO HAS DEALT THAT ISSUE IN PARA- 10 OF HIS ORDER. THE AO HAS SIMPLY REFERRED T O THE JUDGMENTS IN 5 CASES BUT HAS FAILED TO BRING ANY DISCUSSION ON RECORD AS TO HOW HE HAD REASON TO BELIEVE BEFORE ISSUING NOTICE U/S.148. THERE IS NO DISCUSSION ON THE MATER IAL LEADING TO THE ISSUE OF NOTICE. THERE IS NO MENTION OF ANY ERROR OF JUDGMENT IN THE REGUL AR ASSESSMENT PASSED. 7. THE CIT(A), THUS, SET ASIDE THE INITIATION OF RE ASSESSMENT PROCEEDINGS UNDER THE PROVISIONS OF SECTION 147/148 . 8. AGAINST THIS ORDER, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 9. IN THE COURSE OF HEARING BEFORE US, THE DR, AS S UCH, COULD NOT POINT OUT ANYTHING WHICH WAS EITHER NEW OR EMANATIN G FROM THE DOCUMENTS, WHICH COULD SUGGEST ANYTHING, AGAINST TH E ASSESSEE, THAT THERE WAS AN ESCAPEMENT OF INCOME OR, NON DISCLOSUR E OF PRIMARY FACTS, TO JUSTIFY ACTION FOR INITIATION OF REASSESSMENT PR OCEEDINGS. 10. THE AR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE CIT(A). 11. SINCE THE ORDER OF THE CIT(A) IS ELABORATE AND REASONABLE TO HOLD THAT ACTION OF THE AO TO REOPEN THE ASSESSMENT UNDE R SECTION 148, AS BAD IN LAW, ALSO FINDS OUR APPROVAL AND WHICH WE SU STAIN. IN THESE CIRCUMSTANCES, WE DO NOT WISH TO DISTURB THE FINDIN GS OF THE CIT(A), TO HOLD THAT REASSESSMENT PROCEEDINGS WERE BAD IN LAW, AND ALL CONSEQUENTIAL PROCEEDINGS ARE ANNULLED. ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 8 12. GROUND NO. 2, PERTAIN TO ALLEGED PROFIT FROM SA LE OF EQUIPMENT. THOUGH THE GROUND BECOME INFRUCTUOUS IN VIEW OF OUR DECISION, HOLDING THE ASSESSMENT PROCEEDINGS TO BE BAD IN LAW. 13. HOWEVER, THE ISSUE IS COVERED BY THE DECISION I N ITS OWN CASE IN ITA NO. 4327/MUM/2008 AND 4326/MUM/2008 FOR ASSESSMENT YEARS 1999- 2000 AND 2002-2003, WHEREIN THE COORDINATE BENCH HA S HELD THAT THERE HAS BEEN NO SALE OF EQUIPMENT. THIS OBSERVATION, HA S BEEN CONSISTENTLY HELD BY THE APPELLATE AUTHORITY IN THE PRECEDING YE ARS. 14. SINCE THE ISSUE AND GROUNDS FRAMED TAKEN IS IDE NTICAL, WE DO NOT WISH TO DISTURB THE FINDINGS OF THE CIT(A), WHICH W E SUSTAIN AND WHICH HAS BEEN CONSISTENTLY FOLLOWED BY THE COORDINATE BE NCH AS WELL. WE, THEREFORE, REJECT GROUND NO. 2 ON MERITS AS WELL. 15. GROUNDS NO. 3 & 4 ARE GENERAL. 16. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ITA NO. 3897/MUM/2006: APPEAL FILED BY THE ASSESSEE . 17. THE ASSESSEE HAS RAISED THE GROUNDS, WHICH ARE ELABORATE, BUT PERTAIN TO ONE ISSUE. 18. THE SOLITARY ISSUE PERTAINS TO TAXABILITY OF IN WARD REMITTANCE, OF RS. 57,44,649/-, RECEIVED FROM HO. 19. THE AR POINTED OUT THAT THE ISSUE WAS DECIDED I N FAVOUR OF THE ASSESSEE IN ITA NO. 4327/MUM/2008 AND 4326/MUM/2008 , IN ITS OWN ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 9 CASE, WHEREIN THE ITAT RECORDED THE FINDING THAT TH E ASSESSEE HAD RECEIVED THE REMITTANCE AS REIMBURSEMENT OF EXPENSE S, WHICH COULD NOT BE TREATED AS INCOME OF THE ASSESSEE. AS IN THAT OR DER, IN THE INSTANT CASE AS WELL, THE AO OR THE DR HAS NOT BEEN ABLE TO CONT ROVERT THEIR FACT. 20. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH WE SET- ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIR ECT THE AO TO DELETE THE ADDITION OF RS. 57,44,649/- 21. THE APPEAL, THUS, FILED BY THE ASSESSEE IS ALLO WED. ITA NO. 746/MUM/2007, APPEAL FILED BY THE DEPARTMEN T : 22. THE APPEAL, FILED BY THE DEPARTMENT, PERTAINS T O ASSESSMENT YEAR 2003-04, WHEREIN, THE FOLLOWING GROUNDS HAVE BEEN R AISED. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE REMITTANCE REC EIVED FROM THE HEAD OFFICE OF RS. 1,32,11,506/- IS NOT TAXABLE AS INCOME OF THE ASSESSEE AND ACCORDINGLY IN DELETING THE ADDITION . 23. IDENTICAL GROUND WAS RAISED BY THE ASSESSEE IN ITA NO. 3897/MUM/2006, WHEREIN, WE HAVE DELETED THE ADDITIO N, FOLLOWING THE DECISION IN ASSESSEE OWN CASE IN ASSESSMENT YEAR 20 02-03. 24. RESPECTFULLY FOLLOWING THE ORDER, WE REJECT THE SOLITARY GROUND OF APPEAL ON THE IDENTICAL AND SAME REASONING, GIVEN B Y US. 25. THUS, THE APPEAL FILED BY THE DEPARTMENT IS DIS MISSED. ITA 3930/MUM/06 ITA 3897/MUM/06 ITA 746/MUM/07 DOOSAN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD. 10 26. IN THE RESULT, ITA NO. 3930/MUM/2006 : APPEAL FILED BY THE DEPARTM ENT IS DISMISSED. ITA NO. 746/MUM/2007, APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ITA NO. 3897/MUM/2006: APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JULY, 2013. SD/- SD/- ( . . ) ( ! ) (R.S. SYAL) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 19 TH JULY, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-1, MUMBAI. 4) ' '( DIT(E)/ CONCERNED , MUMBAI / THE DIT(E)/CONCERNED.., MUMBAI. 5) -./ 0 , ' ! 0 , 12 / THE D.R. A BENCH, MUMBAI. 6) /3 4 COPY TO GUARD FILE. '56 / BY ORDER / / TRUE COPY / / 7 / 8 9 ' ! 0 , 12 DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * ASHISH KUMAR SINGH, PS * '6 1 ;8