Durr Systems AG, CHENNAI V. DCIT International Taxation 2(1), CHENNAI

MA 125/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 5004 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 10-06-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANITHA
• Keywords: Double taxation relief
• Section: 254(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER M.P. NO. 125/CHNY/2019 ( ./I.T.A. NO. 3109/CHNY/2017) [ [ / ASSESSMENT YEAR: 2014-15 M/S. DURR SYSTEMS AG (FORMERLY KNOWN AS DURR SYSTEMS GMBH), PRESTIGE POLYGON, NO.471, ANNA SALAI, CHENNAI 600 018. [PAN: AACCD 4307Q] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION 2(1), CHENNAI. ( / APPLICANT) ( / RESPONDENT) / APPLICANT BY : SHRI VIKRAM VIJAYARAGHAVAN, JCIT /RESPONDENT BY : SMT. ANITHA, JCIT /DATE OF HEARING : 30.08.2019 /DATE OF PRONOUNCEMENT : 21.11.2019 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: M/S. DURR SYSTEMS AG, THE ASSESSEE, FILED THIS MISCELLANEOUS PETITION AGAINST THE ORDER OF THIS TRIBUNAL IN ITA NO. 3109/CHNY/2017 DATED 27.03.2018 FOR ASSESSMENT YEAR 2014-15, :-2-: MP. NO.125/CHNY/2019 PLEADING , INTER ALIA, THAT THE TRIBUNAL MAY RECTIFY CERTAIN MISTAKES APPARENT ON RECORD ON THE FOLLOWING GROUNDS: 1. PURE SUPPLY CONTRACTS WITH OTHER COMPANIES MISTAKENLY ADDED TO FORD INDIA PE: DELINK FORD INDIA CONTRACT FOR OTHER COMPANY CONTRACTS: THE HON'BLE TRIBUNAL MAY BE PLEASED TO APPRECIATE THAT MAHINDRA AND MAHINDRA, HYUNDAI MOTORS, VOLKSWAGEN AND TATA MOTORS ARE PURELY SUPPLY CONTRACTS AND ONLY FORD INDIA CONTRACT IS INVOLVING SUPPLY & SERVICES UNLIKE AS STATED IN PARA 7.1 OF THE ITAT ORDER. SO THESE OTHER COMPANY CONTRACTS UNRELATED TO THE FORD INDIA CONTRACT AND ARE PURE SUPPLY CONTRACTS ON FOB BASIS HENCE THEY CANNOT FORM A PE IN INDIA BUT CONSTITUTE A SIMPLE SALE. THEREFORE, IT IS HUMBLY SUBMITTED THAT THE CONTRACTS BETWEEN DURR SYSTEMS GMBH (ASSESSEE) WITH COMPANIES OTHER THAN FORD INDIA AT THE VERY LEAST MAY BE EXCLUDED FROM INCOME CALCULATED FOR THE DURR SYSTEMS GMBH PE CREATED WITH FORD INDIA. WITHOUT PREJUDICE . AGGREGATION OF PE'S IS INCORRECT: THE HON'BLE TRIBUNAL MAY APPRECIATE THAT EVEN IF THESE SUPPLY CONTRACTS WITH MAHINDRA AND MAHINDRA, HYUNDAI MOTORS, VOLKSWAGEN AND TATA MOTORS WERE 'CONSIDERED TO CREATE PES, THEY WOULD BE INDEPENDENT PE'S IF ANY AND CANNOT BE AGGREGATED WITH FORD INDIA PE OF DURR GMBH AS PER ARTICLE 5 OF THE INDIA-GERMANY DTAA 2. INDIA-GERMANY DTAA ARTICLES TO BE APPLIED: STORAGE PE CLAUSE IN TREATY: THE HON'BLE TRIBUNAL MAY APPRECIATE THAT THAT THERE IS NO FINDING OF THE AO/DRP THAT THE ACTIVITIES UNDER THE FORD INDIA CONTRACT CONSTITUTE A STORAGE PE. WITHOUT PREJUDICE, THERE IS A SPECIFIC EXCLUSION IN CLAUSE 4(F) OF ARTICLE 5, BEING PREPARATORY OR AUXILIARY ACTIVITIES, INCLUDING STORING OF GOODS. :-3-: MP. NO.125/CHNY/2019 SPECIFIC CLAUSE IN PROTOCOL OUGHT TO BE APPLIED: THE PROTOCOL CLAUSE L(A) CLEARLY STATES THAT SUPPLY OF EQUIPMENT SHALL NOT BE ATTRIBUTED TO THE OPERATIONS IN INDIA AND THIS SPECIFIC EXCLUSION WHICH IS APPLICABLE TO ALL THE CONTRACTS OUGHT TO BE CONSIDERED AND THUS NEGATE ANY CONCEPT OF 'STORAGE PE' IN THE INSTANT CASE. 3. UNRELATED SUPPLIES TO DURR INDIA MISTAKENLY ADDED TO FORD INDIA PE: THE HON'BLE TRIBUNAL MAY APPRECIATE THAT THE AO/DRP HAS MISTAKENLY ADDED, ALONG WITH OTHER COMPANY CONTRACTS, SUPPLIES MADE TO DURR INDIA PVT LTD TOTALLY UNRELATED TO THE FORD INDIA PROJECT AND HELD IT TO CONSTITUTE A PE. THIS OUGHT TO BE RECTIFIED AS THE VERY SAME AO/DRP HAVE CONFIRMED THAT THERE HAVE BEEN PURE SUPPLIES MADE TO DURR INDIA ON PAGE 42 OF THE DRAFT ASST. ORDER. 2. THE LD.AR SUBMITTED ON THE ABOVE LINES TAKING US THROUGH VARIOUS MATERIAL IN THE PAPER BOOK AND ALSO FROM THE ORDER OF THIS TRIBUNAL. PER CONTRA, THE LD.DR COUNTERED THEM BY TAKING US THROUGH THE ORDERS PASSED BY THE AO, THE DRP AND ALSO FROM THE ORDER OF THIS TRIBUNAL. 3. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE MATERIAL. IN PARA 7.1 OF THE IMPUGNED ORDER, THE TRIBUNAL HAS OBSERVED AS UNDER:- 7.1 FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE WAS AWARDED TURNKEY PROJECTS BY AUTOMOBILE MANUFACTURERS LIKE FORD INDIA, MAHINDRA AND MAHINDRA, HYUNDAI MOTORS, VOLKSWAGEN AND TATA MOTORS. AFTER THE AWARD OF THE CONTRACT, THE CONTRACT WAS :-4-: MP. NO.125/CHNY/2019 SPLIT INTO THREE PARTS AT THE INSTANCE OF DURR GERMANY AND THREE PURCHASE ORDERS ARE ISSUE . 7.5 THEREFORE, WE DO NOT FIND MERIT IN THE SUBMISSIONS OF THE LD.AR AND HENCE THE CORRESPONDING GROUNDS FAIL. IN THIS REGARD, IT WAS SUBMITTED THAT MAHINDRA AND MAHINDRA, HYUNDAI MOTORS, VOLKSWAGEN AND TATA MOTORS ARE PURELY SUPPLY CONTRACTS AND ONLY FORD INDIA CONTRACT IS INVOLVING SUPPLY & SERVICES UNLIKE AS STATED IN PARA 7.1 OF THE ITAT ORDER . THEREFORE, THE FIRST FOUR LINES OF THE PARA 7.1 OF THE ORDER OF THE TRIBUNAL IN ITA NO.3109/CHNY/2017 DATED 27.03.2019 REQUIRE MODIFICATIONS AND HENCE THEY SHALL BE READ AS UNDER : 7.1 FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE WAS AWARDED TURNKEY PROJECTS BY AUTOMOBILE MANUFACTURER FORD INDIA. AFTER THE AWARD OF THE CONTRACT, THE CONTRACT WAS SPLIT INTO THREE PARTS AT THE INSTANCE OF DURR GERMANY AND THREE PURCHASE ORDERS ARE ISSUE.. 4. WITH REGARD TO THE OTHER SUBMISSIONS, SUPRA, WE HAVE GONE THROUGH THE IMPUGNED ORDER. FROM VARIOUS JUDGEMENTS OF THE SUPREME COURT AND OTHER HIGH COURTS, IT IS CLEAR, THAT THE TRIBUNALS POWER U/S. 254(2) IS NOT TO REVIEW ITS EARLIER ORDER, BUT ONLY TO AMEND IT WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD. AN :-5-: MP. NO.125/CHNY/2019 ERROR APPARENT ON THE RECORD MEANS AN ERROR WHICH STRIKES ONE ON MERE LOOKING AND DOES NOT NEED A LONG DRAWN OUT PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. THE ERROR SHOULD NOT REQUIRE ANY EXTRANEOUS MATTER TO SHOW ITS INCORRECTNESS. IF THE VIEW ACCEPTED BY THE TRIBUNAL IN THE IMPUGNED ORDER IS ONE OF POSSIBLE VIEWS, THE CASE CANNOT BE SAID TO BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. SINCE THE ASSESSEE IS NOT ABLE TO EXACTLY POINT OUT THE MISTAKES APPARENT FROM THE RECORD, THE OTHER ISSUES, SUPRA, ARE NOT MISTAKES APPARENT FROM RECORD AND HENCE THEY ARE DISMISSED. 5. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS PARTLY ALLOWED TO THE ABOVE EXTENT. ORDER PRONOUNCED IN THE COURT ON 21 ST NOVEMBER, 2019 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 21 ST NOVEMBER, 2019 RSR /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. ) (/CIT(A) 4. /CIT 5. /DR 6. [ /GF