Raytheon Company, Gurgaon V. ADIT, New Delhi

MA 25/DEL/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8680 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 1999-2000
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAGESHER RAO
• Assessee Lawyers: B R R KUMAR
• Keywords: Permanent establishment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F NEW DELHI DELHI BENCH : F NEW DELHI DELHI BENCH : F NEW DELHI DELHI BENCH : F NEW DELHI BEFORE SHRI R.P.TOLANI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER MA NO. 25/DEL/12 (IN ITA NO. 3073/D/2009) ASSTT. YEAR 1999-00 M/S. RAYTHEON COMPANY. C/O S.R. BATLIBOI & CO. GOLF VIEW CORPORATE TOWER B, SECTOR 42, SECTOR ROAD, GURGAON 122 002. VS. DEPUTY DIRECTOR OF INCOME TAX, CIRCLE 2(1) INTERNATIONAL TAXATION, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI NAGESHER RAO, ADVOCATE RESPONDENT BY: SHRI B.R.R. KUMAR, SR. DR DATE OF HEARING : 13-07-2012 DATE OF PRONOUNCEMENT : 13-07-2012 ORDER PER K.G. BANSAL, AM: IN THIS CASE, THE TRIBUNAL HAD PASSED THE ORDER ON 17.6.2011, IN WHICH THE APPEAL OF THE ASSESSEE WAS TREATED AS PAR TLY ALLOWED. THE ASSESSEE MOVED A MISCELLANEOUS APPLICATION ON 10.2. 2012 STATING THAT CERTAIN MISTAKES APPARENT FROM RECORD HAVE CREPT IN THE ORDER, WHICH MA NO. 25/DEL/12 ASSTT. YEAR 1999-2000 2 REQUIRE RECTIFICATION. THE APPLICATION WAS ARGUED B Y THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. SR. DR ON 13.7.2012. VARIO US ISSUES RAISED IN THE COURSE OF THE DISCUSSION ARE DISCUSSED HEREUNDER. 2. THE FIRST MISTAKE IS STATED TO BE IN PARAGRAPH 7 .7 ON PAGE NOS. 50 & 51, THE RELEVANT PORTION OF WHICH READS AS UNDER :- HOWEVER, IT ALSO EMERGES CLEARLY THAT AFTER CLEARA NCE OF GOODS IN INDIA, THE POSSESSION WAS HANDED OVER TO THE ASSESSEE AND IT BECAME RESPONSIBLE FOR ANY DAMAGE TO THE GOO DS. IN OTHER WORDS, THE EQUIPMENT AND THE SOFTWARE EMBEDDED THER EIN WERE HANDLED BY THE ASSESSEE ONCE THESE WERE CLEARED IN INDIA. OBVIOUSLY STORAGE WOULD REQUIRE SPACE AND ALSO OVERALL SUPERV ISION OF THE EQUIPMENT TO ENSURE THAT NO DAMAGE OCCURRED TO IT B Y NEGLIGENCE OR OTHERWISE. THE STORAGE AS WELL AS SUPERVISION WAS T HE RESPONSIBILITY OF THE ASSESSEE AND AS MENTIONED EARLIER, THE STORA GE SPACE WAS AVAILABLE TO THE ASSESSEE IN INDIA. THESE ACTIVITIE S CANNOT BE SAID TO BE PRELIMINARY OR AUXILIARY IN NATURE AS THE EQUIPM ENTS WERE REQUIRED TO BE INSTALLED. THEREFORE, IT IS HELD THA T ONCE THE GOODS WERE CLEARED IN INDIA, THE PE CAME INTO EXISTENCE. IN VIEW OF THIS FINDING, IT IS NOT NECESSARY FOR US TO GO TO THE MA TTERS REGARDING INSTALLATION PE ETC. ACCORDINGLY, IT IS HELD THAT T HE PE OF THE ASSESSEE CAME INTO EXISTENCE FROM THE DATE THE EQUIPMENT WA S RECEIVED IN INDIA BY THE AAI, CLEARED BY IT AND HANDED OVER TO THE ASSESSEE FOR THE PURPOSE OF INSTALLATION. GROUND NOS. 10, 11 AND 12 ARE DISPOSED OFF ACCORDINGLY. 2.1 IT IS SUBMITTED THAT THE ASSESSEE DID NOT HAVE ANY STORAGE SPACE AVAILABLE IN INDIA AND THUS MERE CUSTODY DID NOT CR EATE ANY PERMANENT ESTABLISHMENT (PE) IN INDIA. IT IS FURTHER SUBMITTE D THAT THE ASSESSEE DID NOT HIRE ANY PLACE FOR STORAGE. THUS, EVEN ON HANDL ING OVER OF THE EQUIPMENT BY THE AIRPORTS AUTHORITY OF INDIA (AAI), NO PE CAME INTO EXISTENCE. IN REPLY, THE LD. SR. DR SUBMITTED THAT IT IS NOT NECESSARY THAT THE ASSESSEE SHOULD HIRE OR OWN ANY PLACE OR PREMIS E FOR PE TO COME INTO MA NO. 25/DEL/12 ASSTT. YEAR 1999-2000 3 EXISTENCE. THE ONLY REQUIREMENT IS THAT THE ASSESSE E SHOULD HAVE A PLACE IN INDIA FROM WHICH THE BUSINESS IS PARTLY OR WHOLL Y CARRIED ON. 2.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS MADE BEFORE US. THE TRIBUNAL HAD GIVEN A CLEAR FINDING T HAT THE EQUIPMENT WAS HANDED OVER TO THE ASSESSEE ONCE IT WAS CLEARED BY THE AAI ON PAYMENT OF CUSTOMS DUTY. THE ASSESSEE WAS RESPONSIBLE FOR INSU RING THE EQUIPMENT AND ALSO FOR SUPERVISION THEREOF SO AS TO AVOID DAM AGE TO IT BY NEGLIGENCE OR OTHERWISE. OBVIOUSLY, PLACE WILL BE REQUIRED TO KEEP THE EQUIPMENT. SINCE SUPERVISION ETC. WAS THE RESPONSIBILITY OF TH E ASSESSEE, IT IS ALSO CLEAR THAT THE ASSESSEE HAD EXCESS TO THE PLACE WHE RE THE EQUIPMENT WAS KEPT. IT HAS ALSO BEEN HELD THAT SUCH ACTIVITY WAS NOT PRELIMINARY OR AUXILIARY IN NATURE AND, THEREFORE, PE CAME INTO EX ISTENCE AT THE MOMENT WHEN GOODS WERE HANDED OVER TO THE ASSESSEE BY THE AAI. THIS IS THE ESSENCE OF THE DECISION TAKEN BY THE TRIBUNAL. THE ASSESSEE MAY OR MAY NOT HAVE GRIEVANCE WITH THIS DECISION, BUT THE DECI SION CANNOT BE SAID TO BE SUFFERING FROM ANY MISTAKE APPARENT FROM THE REC ORD. THUS THERE IS NO REASON TO RECTIFY THIS PART OF THE ORDER. 3. THE SECOND MISTAKE IS STATED TO HAVE OCCURRED ON PAGE NO. 71 IN PARAGRAPH NO. 11.1. THE RELEVANT PORTION OF THE PAR AGRAPH READS AS UNDER :- THUS, AS MENTIONED ABOVE, THE CONSIDERATION CAN BE SEGREGATED AND THE CONSEQUENCE OF INABILITY TO PRO DUCE THE ORDERS OF CUSTOMS AUTHORITIES OR ANY OTHER RELIABLE EVIDEN CE WILL LEAD TO THE CONCLUSION THAT SUCH SEGREGATED AMOUNTS WILL HAVE T O BE ESTIMATED MA NO. 25/DEL/12 ASSTT. YEAR 1999-2000 4 IN ABSENCE OF ANY OBJECTIVE FACTS ON RECORD PLACED BY THE ASSESSEE. AS WILL BE SEEN LATER, THE FACTS IN THIS REGARD ARE DISTINGUISHABLE FROM THE FACTS OF MOTOROLA INC., RELIED UPON BY THE LD. COUNSEL. 3.1 IT IS SUBMITTED THAT THERE IS A MISTAKE WHEN IT IS MENTIONED THAT THE FACTS IN THIS REGARD ARE DISTINGUISHABLE FROM THE F ACTS OF MOTOROLA INC. RELIED UPON BY THE LD. COUNSEL. ON THE OTHER HAND, THE LD. SR. DR SUBMITTED THAT THERE IS NO MISTAKE IN THIS PART OF THE ORDER AS IN THE CASE OF MOTOROLA INC., THE ASSESSEE HAS PRODUCED ORDERS FROM CUSTOMS AUTHORITY IN REGARD TO PAYMENT OF DUTY ON IMPORT OF EQUIPMENT AND SOFTWARE. 3.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS MADE BEFORE US. THE BACKGROUND FACTS ARE THAT THE ASSESS EE WAS UNABLE TO PRODUCE ANY DOCUMENT REGARDING PAYMENT OF CUSTOMS D UTY ON EQUIPMENT AND SOFTWARE. AS AGAINST THIS, TWO SEPARATE ORDERS WERE PRODUCED IN THE CASE OF MOTOROLA INC. IN THIS PART OF THE ORDER, TH E TRIBUNAL HAS SOUGHT TO DISTINGUISH BETWEEN THE FACTS OF THE TWO CASES AS A BOVE. NECESSARY CONSEQUENCE OF FAILURE TO PRODUCE ORDERS FROM THE C USTOMS AUTHORITIES WOULD BE THAT THE ARGUMENT THAT CONSIDERATION FOR E QUIPMENT AND SOFTWARE CANNOT BE SEGREGATED IS NOT ACCEPTED. THUS , WE DO NOT FIND ANY ERROR IN THIS PART OF THE ORDER ALSO. 4. THE THIRD MISTAKE WAS STATED TO BE IN PARAGRAPH NO. 14.1 ON PAGE NOS. 82 & 83 OF THE ORDER. IN THIS PARAGRAPH, IT WA S HELD THAT ATS IN DELHI WAS HANDED OVER TO THE AAI IN MARCH, 1998, AFTER CO NDUCTING SITE MA NO. 25/DEL/12 ASSTT. YEAR 1999-2000 5 ACCEPTANCE TEST. THIS IS PRIOR TO THE RELEVANT PREV IOUS YEAR. THEREFORE, NO INCOME ACCRUES TO THE ASSESSEE IN THIS YEAR FROM IN STALLATION CONTRACT OF ATS IN DELHI. HOWEVER, THE ATS IN MUMBAI WAS HANDED OVER IN JUNE, 1998. THEREFORE, PROFIT IN RESPECT OF INSTALLATION CONTRA CT AND SERVICES RENDERED IN THIS CONNECTION IN MUMBAI ARE TAXABLE IN THIS YE AR. THE LD. COUNSEL WAS NOT ABLE TO POINT OUT ANY MISTAKE IN FACTS. HE WAS ALSO NOT ABLE TO POINT OUT ANY MISTAKE IN THE CONCLUSION ARRIVED AT IN THI S PARAGRAPH. THE CONCLUSION THAT PROFIT FROM INSTALLATION AND SERVIC E CONTRACT IN RESPECT OF ATS IN MUMBAI IS TAXABLE IN THIS YEAR IS CORRECT ON THESE ADMITTED FACTS. THUS, THE APPLICATION DOES NOT SURVIVE ON THIS ISS UE ALSO. 5. THE FOURTH MISTAKE IS POINTED OUT IN PARAGRAPH N O. 14.3 IN WHICH THE MATTER REGARDING CHARGEABILITY OF INTEREST UNDER SE CTIONS 234B, 234C AND 220(2) WAS RESTORED TO THE FILE OF THE AO FOR TAKIN G A FRESH DECISION AFTER COMPUTING PROFIT OF THIS YEAR. 5.1. IT IS SUBMITTED THAT THE ASSESSEE HAD RAISED A SUBSTANTIVE GROUND THAT THESE INTERESTS ARE NOT CHARGEABLE. THEREFORE, THE TRIBUNAL SHOULD HAVE DECIDED THE MATTERS RATHER THAN RESTORING THEM TO THE FILE OF THE AO. IN REPLY, THE LD. SR. DR SUBMITTED THAT THE TRIBUNA L IN ITS WISDOM RESTORED THE MATTER TO THE FILE OF THE AO AND, THEREFORE, TH ERE IS NO MISTAKE APPARENT FROM RECORD. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. WE ARE OF THE VIEW THAT THE TRIBUNAL HAS DECIDED THE MATTER IN THE WAY IT THOUGHT PROPER, LO OKING TO THE FACT THAT MA NO. 25/DEL/12 ASSTT. YEAR 1999-2000 6 THE COMPUTATION OF INCOME ITSELF RESTORED TO THE FI LE OF THE AO. THEREFORE, WE DO NOT FIND ANY MISTAKE IN THIS PART OF THE ORDE R ALSO. 6. IN THE RESULT, THE APPLICATION IS DISMISSED. SD/- SD/- [R.P. TOLANI] [K.G. BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT