SIEMENS AKTIENGESELLSCHAFT,WERNER-VON-SIEMENS-STR. ONE, MUNICH vs. ASSISTANT/ DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX) - 4(2)(1), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “I” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA Nos.4393 & 6728/MUM/2024 (AYs: 2020-21 and 2021-20) Siemens Aktiengesellschaft vs. ACIT (International Tax) - 4(2)(1), Siemens Aktiengesellschaft, Air India Building, 17th Floor, Room Werner-Von-Siemens-Str. 1, No. 1708, Nariman Point, Mumbai- Munich, Germany-80333. 400021. PAN/GIR No: AABCS8516K (Appellant) (Respondent) Assessee by Shri Nitesh Joshi/Bhavin Sangoi Revenue by Shri Arju Garodia (CIT DR) Date of Hearing 09.06.2026 Date of Pronouncement 08.09.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

These two appeals emanate from the final assessment order passed under section 143(3) r.w.s 144C(13) of the Income-tax Act, 1961 (in short, ‘Act’) by the ITO, Int. Tax, Circle 4(2)(1), Mumbai [in short, ‘AO’] dated 23.09.2023 and 19.12.2023 for the assessment years (AY) 2020-21 and 2021-22 respectively pursuant to the directions issued by the Dispute Resolution Panel- 2, Mumbai (DRP). Since the facts and grounds are similar, with the consent of both parties, the appeals were clubbed and heard together and a common order is being passed for the sake of convenience and brevity. ITA No.4393/Mum/2024 (AY: 2020-21) is taken as the “lead case.” 2. The grounds of appeal raised by the assessee in ITA No.4393/Mum/2024

(AY 2020-21) are as under:

“Ground No. 1 to 3: General

Ground No. 4: Income taxed on accrual basis as against receipt basis

Ground No. 5 to 7: Income from supply of software erroneously treated as Royalty

Ground No. 8 to 13: Formation of Association of Persons (AOP') by virtue of consortium contract between the Appellant and Siemens Limited ('SL') entered into with Power Grid Corporation of India Limited (PGCIL), Delhi Metro Rail Corporation ('DMRC') and others

Ground No. 14 to 19: Miscalculation and incorrect levy of certain line items in CS-1 and CS-2

Ground No. 20: Short grant of credit of TDS

Ground No. 21 to 28: Transfer Pricing Adjustment

of order passed u/s 143(3) r.w.s. 144C(13) of the Act. Subsequently, vide letter

dated 28.01.2026 the assessee filed amended addition grounds of appeal because

certain facts were not covered in the additional grounds filed on 16.12.2025. The

amended additional grounds are as under:

i. Demand letter ('DL') I and Computation Sheet ('CS') I make a reference to DIN added manually and carry a manual signature;

ii. DL. 2 and CS 2 though refers to separate DIN generated but does not carry the signature of the AO, and

iii. The DL 1 and DL. 2 has no resemblance to the demand outstanding as appearing on the e-proceeding tab on e-filing income-tax portal of the Income-tax department, and

iv. Neither DL I nor DL 2 have been served on it. The said letters have been downloaded by the Appellant being DL 1 on 1 July 2024 from e- proceeding tab and DL. 2 on 5ª July 2024 from same tab on e-filing income-tax portal.

(AY 2021-22) are as under:

“Ground No. 1: Order passed under Section 143(3) r.w.s. Section 144C(13) of the Act shall be issued within the timelines as specified under Section 153 of the Act.

Ground No. 2 to 3: General

Ground No. 4: Income taxed on accrual basis as against receipt basis

Ground No. 5 to 7: Income from supply of software erroneously treated as Royalty

Ground No. 8 to 13: Formation of Association of Persons ('AOP") by virtue of consortium contract between the Appellant and Siemens Limited ('SL") entered into with Power Grid Corporation of India Limited (PGCIL), Delhi Metro Rail Corporation ('DMRC) and others

Ground No. 17: Short grant of credit of TDS

Ground No. 18 to 24: Transfer Pricing Adjustment

validity of order passed u/s 143(3) r.w.s. 144C(13) of the Act. Subsequently, vide

letter dated 16.12.2025 the assessee filed amended addition grounds of appeal

because certain facts were not covered in the addition ground filed on

16.12.2025. The amended additional grounds are as under:

ITA No.4393/Mum/2024 (AY 2020-21)

for AY 2020-21 declaring total income of Rs.4,63,82,78,660/-. The assessee is a

tax resident of Germany and non-resident in India. The assessment was

completed u/s 143(3) r.w.s. 144C(13) of the Act, pursuant to the directions of the DRP. The assessee had earned income by way of royalty, fees for technical

services (FTS) and interest from various Indian entities. The AO held that the

aforesaid income was taxable on accrual basis instead of receipt basis and,

accordingly, determined royalty, FTS and interest income at Rs.4,53,20,39,096/-.

The AO further treated receipts of Rs.25,84,29,501/- towards software as royalty

taxable under Article 12 of the India-Germany DTAA.

5.1 Further, the AO has also made an addition on account from income from

offshore supply from composite contract. The relevant facts as noted by the AO

are as follows:

“During the year under consideration, the assessee, Siemens AG ('SAG' or 'the Assessee') has receipts (on accrual basis) from Power Grid Corporation of India Limited (PGCIL') (HVDC Pugalur and North Trichur and others), Delhi Metro Rail Corporation Limited ('DMRC') Contracts CE 07 and 08 and Metro-Link Express For Gandhinagar And Ahmedabad Company Limited ('MEGA'). The receipts as per the submissions of the assessee are for offshore supplies. The assessee as per the 26AS statement has received from Delhi Metro Rail Corporation Limited, Power Grid Corporation of India Limited and Metro-Link Express amount of Rs.1,75,85,611, 2,15,96,83,036 and 5,30,04,884 respectively The total receipts (on accrual basis) amounting to Rs. 2,23,02,73,532/- pertaining to these parties have not been offered for taxation by the assessee on the grounds that they pertain to offshore supplies of goods which are not taxable in India. The assessee has contract with PGCIL also, however as per submissions made by the assessee offshore supply receipt is not there in the current year. Since the issue has been a recurring one, as last year the contract with PGCIL is discussed to understand the taxability of offshore supplies. The contracts with other entities is similar and hence contract with PGCIL is taken as an example for discussion.” 5.2 Further, pursuant to the order of the TPO u/s 92CA(3), a transfer pricing

adjustment of Rs.43,49,53,064/- was made. Accordingly, the total income of the

assessee was assessed at Rs.5,33,69,35,340/-, as against the returned income of Rs.4,63,82,78,660/-. Interest u/s 234B, 234C and 234D was also levied and

penalty proceedings u/s 270A of the Act were also separately initiated.

assessee filed appeal before the Tribunal. At the outset, both the parties fairly

admitted that similar issues as those involved in the present appeal have been

consistently considered by the co-ordinate Bench in assessee’s own case for

various assessment years. The Ld. AR has filed copies of the Tribunal orders for

AYs 2012-13 to 2016-17, 2017-18 & 2018-19 and 2008-09 and 2009-10. The

appellant has also filed a consolidated chart incorporating various grounds in the

impugned years and the decisions of ITAT in different AYs where the grounds

were covered. It was also submitted that the latest order of the ITAT was for

assessment years 2012-13 to 2016-17 in ITA Nos. 2159 & 5593/Mum/2017, ITA

No.7322/Mum/2018 and ITA No.7192/Mum/2019 and ITA No.1253/Mum/2021

dated 29.04.2026. We have heard both sides and perused the materials on

record.

require any specific adjudication.

accrual basis. This is a recurring issue and has been decided by the Tribunal in the latest order in ITA No.2159/Mum/2017 & Ors. dated 29.04.2026. The relevant

part is reproduced below for ready reference:

“77. Ground No.1 of Revenue’s appeal refers to direction of the ld. DRP to tax royalty in FTS on receipt basis which according to department shall be on accrual basis.

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Respectfully following the aforesaid decision of the Coordinate Bench in assessee’s own case, wherein the issue has been examined in detail after considering the relevant statutory provisions, judicial precedents and the factual matrix, we find no reason to deviate from the view already taken. Since the facts and circumstances in the year under consideration are identical, and no distinguishing feature has been brought to our notice by either side, the findings and directions contained in the said order are squarely applicable to the present assessment year. Accordingly, this issue is decided in terms of the directions contained therein, and the Assessing Officer is directed to give effect to the same.”

8.1 Since the facts and circumstances in the year under consideration are

identical, and no distinguishing feature has been brought to our notice by either

side, the findings and directions contained in the said order are applicable to the 15 present assessment year. Accordingly, this issue is decided in terms of the

directions contained therein, and the grounds are, accordingly, allowed.

royalty by the AO. The Ld. AR has submitted that this issue is covered by the ITAT

order in ITA No.2159/Mum/2017 & Ors. dated 29.04.2026 (supra). The co-

ordinate Bench in the above case followed earlier decision of ITAT in appellant’s

own case for AY 2009-10 in ITA No.2153/Mum/2014 dated 11.03.2024. The Ld.

CIT-DR fairly admitted that the impugned issue is covered by a number of

decisions of Tribunal in appellant’s own case. For ready reference, relevant part

of the order in ITA No.2159/Mum/2017 (supra) is reproduced below:

“6. Issue No. 3: Software Royalty We have perused the submissions advanced by both sides in light of the records placed before this Tribunal. The issue relates to characterization of receipts from software as royalty. The Coordinate Bench in assessee’s own case for A.Y. 2009–10 has elaborately adjudicated this issue and observed as under:-

• Firstly, the software provided are standard off-the-shelf software. • Secondly, the assessee grants a non-exclusive and non-transferable license to its customers, allowing them to copy the software for single user use only on their equipment. • Thirdly, the end-user license agreement includes several restrictions, prohibiting the use of the software for purposes other than those specified in the agreement or the creation of copies for commercial exploitation. • Fourthly, even in cases where the relevant hardware and software are itemized separately on the same invoice, or when separate invoices are issued, or when updates to the software are supplied, or additional features are validated at a later date, such 16 distinctions should not affect the stance. These software products are exclusively compatible with the equipment manufactured by the assessee and hold no utility on similar equipment produced by its competitors. • Lastly, the software supplied by the assessee, as delineated in the three invoices mentioned in the DRP's directions, is exclusively designed for utilization with the Medical Diagnosis Devices manufactured by the assessee.

10.1 Apart from that, we find that this issue stands covered by the decision of the Tribunal in assessee’s own case in various assessment years details of which are as under:-

Sr. No. Assessment Year ITA No. Date of Order 1. 2006–07 8094/Mum/2010 06/05/2014 2. 2005–06 1174/Mum/2010 20/05/2014 3. 2004–05 4502/Mum/2009 18/05/2012 4. 2003–04 2520/Mum/2008 09/07/2010 5. 2002–03 2099/Mum/2007 10/12/2008 6. 2001–02 1957/Mum/2007 08/12/2008

“6. We have heard the rival submissions and perused the relevant material on record. There is no dispute on the fact that the assessee had not separately sold software but it was part and parcel of the equipment supplies to M/s Siemens Limited. The case of the assessee is that it should be taken at "Business Profits as per Article 7 to DTAA between India and Germany. On the other hand the Department wants it to be considered as falling under Article 13, being the royalty. We have to decide whether the sum of Rs.5.29 crores is to be considered as "Business profits" or "royalty. The Special Bench of the Tribunal in the case of Motorola Inc. Vs. DCIT (2005) 95 ITD 269 (Delhi)(SB) has considered this aspect and held that "the payment made to the assessee for use of software in the equipment did not amount to royalty either under the Income-tax Act or the DTAA." The facts involved in the instant case are akin to those considered by the Special Bench in the afore-noted case. The Learned Department Representative could not point out any distinguishing feature in the facts of the instant case vis-a-vis that decided by the Special Bench. Respectfully following the view taken by the Special Bench in this aspect of the matter, we are of the considered opinion that the amount received by the assessee towards supply of software cannot be segregated from the supply of equipment and hence that portion cannot be considered as "royalty". We, therefore, approve the view taken by the learned CIT(A) on this issue.”

• The first category deals with cases in which computer software is purchased directly by an end-user, resident in India, from a foreign, non-resident supplier or manufacturer. • The second category of cases deals with resident Indian companies that act as distributors or resellers, by purchasing computer software from foreign, non-resident suppliers or manufacturers and then reselling the same to resident Indian end-users. • The third category concerns cases wherein the distributor happens to be a foreign, non-resident vendor, who, after purchasing software from a foreign, non- resident seller, resells the same to resident Indian distributors or end-users. • The fourth category includes cases wherein computer software is affixed onto hardware and is sold as an integrated unit/equipment by foreign, non-resident suppliers to resident Indian distributors or end-users.

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---- Thus, the ratio and principle laid down by the Hon’ble Supreme Court is clearly applicable on the facts of the assessee’s case and accordingly we hold that consideration received for supply of software cannot be taxed as royalty under India German DTAA.

Thus, the ratio and principle laid down by the Hon’ble Supreme Court is clearly applicable on the facts of the assessee’s case and accordingly we hold that consideration received for supply of software cannot be taxed as royalty under India German DTAA.

Accordingly, we hold that this issue is covered in favour of the assessee not only in its own case as well as by the judgment of the Hon’ble Supreme Court and therefore, we hold that income derived by the assessee from supply of software cannot be subject to taxation as royalty either under Income Tax Act or under the treaty. Thus, ground Nos. 2-5 raised by the assessee are allowed.”

6.1. Respectfully following the aforesaid decision of the Coordinate Bench in assessee’s own case, wherein the issue has been examined in detail after considering the relevant statutory provisions, judicial precedents and the factual matrix, we find no reason to deviate from the view already taken. Since the facts and circumstances in the year under consideration are identical, and no distinguishing feature has been brought to our notice by either side, the findings and directions contained in the said order are squarely applicable to the present assessment year. Accordingly, this issue is decided in terms of the directions contained therein, and the Assessing Officer is directed to give effect to the same.”

9.1 The Ld. CIT-DR has not been able to distinguish the above case, either on

facts or in law. Hence, following the decision cited supra, the grounds are allowed.

Siemens Ltd. At the outset, the Ld. AR submitted that similar issue has been

decided in favour of the appellant by the Tribunal in a number of assessment years. The Ld. CIT-DR did not controvert the above assertion of the Ld. AR. The

relevant part of the order for AY 2012-13 in ITA No.2159/Mum/2017 (supra) is

reproduced below for ready reference:

We have perused the submissions advanced by both sides in light of the records placed before this Tribunal. This issue pertains to the existence of an Association of Persons (AOP) and its taxability. It is noted that the Coordinate Bench in A.Y. 2009–10 has elaborately adjudicated this issue and observed as under:- “17. Ground Nos. 6-8 of assessee’s appeal and ground No.2-3 of Revenue’s appeal regarding Constitution of AOP which has been argued at length by both the parties. 18. The brief facts qua the issue are that the assessee, Siemens AG has received payments from various entities like Delhi Metro Rail Corporatin (DMRC), Reliance Industries Ltd, MCC PTA India Corp. Pvt. Ltd. Tata Power Ltd. Chemtrois Engineering Ltd. etc. in respect of off-shore supplies of electrical equipments etc., as well as services. During the year under consideration DMRC project itself involves 75.81% of the total turnover of off-shore supplies and 96.13% of the turnover of off-shore services and the controversy revolves around this contract, whether the project done by Siemens Ltd. Seimens AG constitue AOP a separate tax entity. 19. Delhi Metro Rail Corporation Limited ('DMRC') sought to extend Line-3 in Phase- II of the Mass Rapid Transport Systems for Delhi under the Japanese Yen Credit Loan. In this regard, it had inter alia invited tenders for design, manufacture, supply, installation, testing and commissioning of train control and signaling system on the extensions, integration with existing Line-3 systems for the BS03 project. Considering the terms and conditions of the tender documents, the assessee, Seimens AG and Siemens Limited desired to participate in the project and mutually agreed to work together in good faith on an exclusive basis during the preparation and submission of the tender proposal for the project and to execute the project in their respective and independent scope of work if the tender proposal was accepted. For this purpose, a Memorandum of Understanding dated 11.09.2006 (MOU) was entered into between the assessee and Siemens Limited. The relevant MoU has been filed in the paper book from pages 540-562. The clauses therein, as may be relevant to adjudicate the issues under consideration, are as under: i. That the said arrangement was established only for the limited purpose of representation and dealings with DMRC with independent and separate scope of work as set-forth therein. That the parties shall be liable jointly and severally vis- à-vis DMRC for the obligations of the project in accordance with the terms and conditions of the tender documents. However, such joint and several liability shall not extend to any third party other than DMRC, nor for any purpose other than the project and each party shall be liable in respect of its separate and independent scope of work set forth therein (refer clause 1.2)

ii. Nothing in the BS03 contract shall be deemed to constitute, create, give effect to or otherwise recognize a corporation, association, partnership, joint venture or formal or informal business entity of any kind. It shall also not be construed as providing for common management, capital contribution and sharing of profit and losses arising out of the project. (refer clause 1.3)

iii. The scope of work to be carried out by Siemens Limited was as specified in MOU (refer Clause 5) and such scope of work to be carried out by the assessee was as specified in the MOU (refer Clause 6) iv. Each party shall be solely and entirely responsible to the other party for the performance of the contract in respect of its scope of work and for any or all liabilities arising in connection therewith. In this regard, each party would indemnify and hold harmless the other party from all costs, claims, actions, expenses or liabilities incurred by or imposed upon the other party as result of or in connection with its failure, breach, delay or any other default in the performance of its obligations (refer clause 9.1) v. The payment terms were as agreed in Clause 10 thereof entitling Siemens Limited to invoice and receive payment from DMRC for the scope of its work as set out in clause 5, while Siemens AG to invoice and receive payment from DMRC for the scope of its work as set out in clause 6. 20. Before us, Ld. Sr. Counsel Mr, Pardiwala submitted that the scope of work to be carried out by each of the parties to the agreement was separate and identifiable. Since, each party had to independently carry out the work falling within its respective scope there was no joint management and control except for co- ordination required for smooth execution of the project. Though, they were jointly and severally liable to DMRC, they have agreed to indemnify the other party for loss suffered by them in view of any default by either party. That the arrangement was to directly receive consideration relating to the individual scope of work carried out by the respective parties and there was no sharing of profits or losses. Theoretically, it was possible that one of the parties may make a profit while the other may make a loss. It has been submitted that, a bare perusal of the MOU shows that no Association of Person ('AOP') came into existence Limited) between the assessee and Siemens Limited 21. Since, the assessee, Seimens AG and Siemens Limited were successful in the tender, the project was awarded to them, and a contract dated 08 10.2007 was entered into between DMRC on one side (as the Employer) and the assessee and Siemens Limited on the other side (as the Contractor/s). Relevant contract has been placed before us at pages 510 to 582 of the Paper-book. 22. It has been pointed out from the contract of DMRC and as from the MoU, that there were four streams of income which has arisen from the execution of the said project being income from: (a) offshore supply of equipment, (ii) offshore rendering of services, (iii) onshore supply equipment and (iv) onshore rendering of services. Of the above, the assessee had to perform the former two activities and Siemens Limited had to perform the later two. In respect of individual work to be carried out by each of the parties they have raised their respective invoices and received payments in respect thereof. Siemens Limited has offered the income arising to them from the onshore supply of equipment and the onshore rendering of services which position

stands accepted in the assessment order passed in their case on a substantive basis. Similarly, the income arising from offshore rendering of services has been offered for tax by the assessee herein which has been accepted by the AO in the assessment order passed by him. 23. Thus, the issue arising in the grounds before us is, whether the said arrangement will constitute AoP between the assessee, Seimens AG and Siemens Ltd. 24. In the draft assessment order, the ld. AO has alleged that the income earned by the assessee from BS03 contract is in the nature of composite contract and the income therefrom is subject to tax on account by and large on the following observations made by him:- - The BS 03 Contract is a singular one even with a lump-sum payment for all services and supplies. - The BS 03 Contract is an indivisible one having closely inter-related elements of on-shore as well as off-shore supplies as well as services. - In sum and substance, the BS 03 contract is a composite one with no specific assignment or distribution of scope of work. Even para 5 and 6 of the MoU merely fixes the responsibility by making one of the parties as 'member-in- charge' and the paras do not specify that the relevant works have to be performed by the designated members only - On a reading of the contract entered into in the context of the object sought to be achieved by the contract, the conclusion is inevitable that it is a contract for installation and commissioning of equipment(s) which the tenderer itself has supplied and has been commissioned through an associated enterprise upon association and assignment by the tenderer. Hence, it is an indivisible and composite contract. - Through the cross-fall breach clause enshrined in Clause 9, the very nature of the contract becomes singular and composite. Any claims for an artificial division of the contract can be ignored. - In performance of the Contract, the assessee along with, Siemens Limited (SL), India, entered into an 'Consortium' arrangement (The term 'arrangement' is used as no 'Agreement" in that respect has been furnished by the Assessee) in respect of which no detail has been furnished. Hence, such an consortium arrangement appears to be informal but binding due to associated nature of the 2 parties. In such a scenario, association of 2 persons, viz., Siemens AG and Siemens Limited (India) has been formed to undertake the contract.

- It is noteworthy that despite consortium of part of the contract, Siemens AG was to be solely bound by the terms of the tender and was to be liable to the Consortium Leader/lead partner for the performance of all obligations under the contract - The Permanent Establishment of Siemens AG in this case, Siemens Limited (India), is directly involved in the relevant contract as an 'associate of parts of the contract and directly stands to profit from the involve transaction. 25. Based on the above finding, the AO has alleged the existence of an AOP between the Seimens AG and Siemens Limited and held that the income from offshore supplies should be taxed in the hands of the said AOP. Accordingly, the AO proposed that the income arising from offshore supplies was taxed in the hands of the AOP on substantive basis and in assessee's hand only on protective basis. 26. The ld. DRP vide its directions held that the issue relating to constitution of the AOP cannot been gone into and the issue relating to taxability of offshore supply of equipment is considered on the basis as if a substantive assessment thereof has been made in the assessee's hands. The ld.DRP relied upon the judgment of the Hon’ble Supreme Court in the case of Ishikawajma-Harima Heavy Industries Limited (2007) 158 Тахman 259 (SC) and the tax Treaty between India and Germany including the protocol thereto and concluded that the income arising from the offshore supply of equipment is not chargeable to tax in India. The DRP has also followed the judgment of the Hon'ble Bombay High Court in the assessee's own case in ITA No.1033 of 2010 for the AY 1997-98 and ITA No.5591 of 2010 for AY 1999-00 which is to the same effect. 27. However, pursuant to ld. DRP’s direction, the ld. AO while passing the final assessment order replicated the entire text from the draft assessment order and followed the DRP directions of non- taxability of offshore supplies in the hands of assessee. While the DRP's directions regarding the non-taxability of income from offshore equipment supply thus remain unchallenged by the Revenue before this Tribunal. Hence, the matter concerning the constitution of an AOP is the only issue for adjudication before this Tribunal. 28. We have heard both the parties and also perused the observation and the findings of the ld. AO whether the contract receipts from DMRC would be taxed as AOP of Siemens AG and Siemens Ltd. The term AOP has not been defined under the provisions of the Income-tax Act, 1961 ('the Act'). However as per Section 2(31) of the Act while defining "person' includes under clause (v) "an association of persons or body of individuals whether incorporated or not." The explanation to Section 2(31) of the Act clarifies that an AOP shall be deemed to be a person whether or not such association was formed, with the object of deriving income, profits or gains. 29. As the term AOP has not been defined in the Act, one has to consider certain judicial precedents to determine the characteristics of an AOP. The concept of when an AOP comes into existence can be fairly clear as a result of several Supreme Court decisions on the subject. The Supreme Court in the case of CIT v. Indira Balkrishna [1960] 39 ITR 546 (SC) has held that to constitute an AOP, earning of income by joining together in a venture and sharing of profits or loss is essential. Further the Supreme Court in the case of G. Murugesan & Bros. v. CIT [1973] 88 ITR 432 (SC) held that the finding members "joined for common purpose or common action" or they helped in producing income to form an AOP is essential. Thus, it is evident that there must be a common design to produce income and in the absence of such a common design, there cannot be an association. Mere existence of common interest or the fact that the persons receive income jointly or that they are joint owners of the income yielding property is not enough. 30. From the above-mentioned decisions, it can be concluded that the following are the essential ingredients of an AOP: - joining together by two or more persons, - volition or will to come together, - for the purpose of producing income, - common management of affairs, and - sharing of profit or loss between the members of AOP. These ingredients are cumulative and not exclusive. All of them must be present for an entity to constitute an AOP. Even if one of the ingredients is absent, then such an association cannot be assessed in the status of a ΛΟΡ. 31. Before us ld. Sr. Counsel Mr. Pardiwala submitted that none of these conditions have been fulfilled in the present case therefore, no AoP has come into existence. He submitted that now this issue stands squarely covered by the decision of the Hon’ble Delhi High Court in the case of Linde AG, Linde Engineering Division vs DDIT [2014] 365 ITR 1 (Delhi), wherein, the High Court has discussed this issue in paragraphs 25 to 70 held that under these circumstances no AOP was constituted. He submitted that it is admitted by the AO in the assessment order that the facts in the present case are similar to that of Linde AG as he has extensively relied upon the order of Linde AG by the AAR which now stands reversed by the Delhi High Court. Further, he submitted that it is an admitted fact that the facts of the present case are more or less similar to that of Linde AG. The ld. AO has strongly relied upon the decision of AAR in the case of Hyundai Rotem Co. reported in 323 ITR 277. Before us assessee submitted similarities between assessee’s case and the case of CIT vs. Linde AG, Linde Engineering Division vs. DDIT in the following manner:- …….. …….. 32. Thus, he submitted that the judgment of the Hon’ble Delhi High Court is squarely applicable on the facts of the assessee’s case and therefore, it cannot be held that this contract resulted into any kind of AoP. 33. Reliance was also placed on the decision of the Hon’ble Delhi High Court in the case of CIT vs. Oriental Structural Engineers (P.) Ltd. [2015] 374 ITR 35 (Delhi) which has relied on the Principles laid down in Linde AG (supra), and has held that JV was not an association of persons and liable to be taxed on that basis.

DMRC and the assessee entered into a contract on 08.10.2007. In the contract DMRC has been described as "Employer" and the Consortium comprising of Siemens (India) Limited and the assessee Siemen AG (Transport Systems TS R.A.) has been described as

"Contractor". It has been mentioned that Siemens (India) Limited and Siemens AG would be jointly and severally liable for undertaking the contract, and collectively referred to as the Contractor It is relevant to set down the terms of the contract at this stage:

Clause 4 Value of Work and Completion Time The Employer agrees to pay for the total cost of the Works and the Contractor agrees to accept the sums mentioned below in the Following currencies, to be the total cost for the Work carried out by him. Total Fixed Lump Sum Price.

Foreign Currencies: Euro 23,573, 726 (Euro Twenty Three Million Five Hundred Seventy Three Thousand and Seven Hundred 'Twenty Six only); and In Local Currencies: INR 347,476,911 INR Three Hundred Forty Seven Million Four Hundred Seventy Six Thousand and Nine Hundred Eleven only)

Hence, in this case the Contract document is a singular one even with a lump-sum payment for all services and supplies. 8. Further, the Annexure A to the MoU consists of a list of schedules which only list down the value of activities and does not clearly spell out the recipient of the amounts: Hence, it is clear that the Contract is an indivisible one having closely inter-related elements of on-shore as well as off-shore supplies as well as services. Apart from the Contract BS-03, another old Contract 3503 has also been awarded to the relevant consortium: The Contract Agreement (3S 03) dated. 10.09.2004 between DMRC and Siemens AG (Transport Systems)-Siemens (India) Limited Consortium as per Clause 1 mentions that: "Clause 1 DMRC agrees to hire and the Contractor agrees to be hired to implement the design, manufacture, supply, install and commission Train Control & Signaling and Telecommunication systems 3S03 of the Mass Rapid Transport System - Phase One Project under the terms and conditions specified in this Contract Agreement and the other Contract Documents attached... Hence, the Contract of 3S 03 is akin to the BS 03Contract are described in detail. Therefore, it is clear and evident that in sum and substance, the BS 03 as well as 3S 03 contract is a composite one with no specific assignment or distribution of scope of work. Even the para 5 and 6 of the MoU merely fixes the responsibility by making one of the parties as 'member-in charge' and the paras do not specify that the relevant works have to be performed by the designated members only. 9. Composite Nature of the Contract The MoU relevant to the BS 03 Contract mentions at Clause 3(6) that "Joint and Several Liability" means that the members of the consortium shall be jointly and severally liable to the Employer for the fulfillment of the terms of the Contract. However, between the members of the consortium, each Party shall indemnify and hold harmless the other party to this MOU from all costs, claims, actions, expenses or liabilities incurred by or imposed upon the other Party as a result of or in connection 28 with its failure, breach, delay, or other default in the performance of its respective obligations under the Contract. Hence, in this case, even there no separate and independent contracts. The purpose of the Contract can be laid down to be as under: ".. to implement the design, manufacture, supply, install and commission Train Control & Signaling system for Extension of Line 3 of the Mass Rapid Transport System (MRTS) -Phase I Project..." However, the purpose for which the tender was invited by DMRC was for commissioning of Train Control & Signaling System. It was not for supply of offshore equipments and training independently of the designing, installation and commissioning project. Nor was it for independent installation and commissioning, divorced from the design and supply of the equipments necessary. Such a contract has necessarily to be read as a whole and is not capable of being split up. On analysis the terms of contract in the context of the tender floated and the purpose sought to be achieved, it is clear that the contract involved herein is a composite contract and it cannot be dissected into parts. Clearly, for the purpose of taxation, the contract can be considered as one, for installation and commissioning of a railway MRTS project in India.

On a reading of the contract entered into in the context of the object sought to be achieved by the contract, the conclusion is inevitable that it is a contract for installation and commissioning of equipment(s) which the tenderer itself has supplied and has been commissioned through an associated enterprise upon association and assignment by the tenderer. Hence, it is an indivisible and composite contract.

The object in floating the tender is to get the MRTS commissioned and installed at sites indicated, in furtherance of Train Control& Signaling system. Hence, on a look at the contract in the light of the objective sought to be achieved, there appears to be no substance in the argument that the contract contains multiple distinct pats and they have to be separated for the purpose of taxation. It cannot be held that both the parties to the contract intended to treat the claimed scopes of work to be treated separately. Thus, on a true construction of the contract in question, it is clear that the income there-under has arisen to the assessee in Indian a composite manner.

"...4. Siemens Limited will be the Consortium Leader with the mandate to sign and submit all documents required to be submitted by the consortium in accordance with the requirement included in the Project Tender documents/bid documents, as well as to act as liaison officer for the consortium members each of whom has independent and defined scope of work under this MOU " 29 Siemens Limited shall be the member exclusively and independently in charge of the Consortium in so far as the competence limited to onshore activities under the offer is Concerned...

Siemens AG shall be the member in charge of the Consortium in so far as the technical competence in relation to do sign, manufacture, offshore supply of the products and Technical support services in relation there to under the offer are Concerned..." Siemens AG and Siemens Limited agree to co-operate with each other in the Project on an exclusive basis as a consortium members and will be Jointly and Severally liable for the execution of the Contract work...

Liability of Parties: The lead partner in charge shall be authorized to incur liabilities, receive payments and receive instructions for and on behalf of other partner subject to that- Each Party shall be solely and entirely responsible to the other Party for the performance of the Contract in respect of its Scope of Work and for any and all liabilities arising in connection therewith. Each Party shall indemnify and hold harmless the other party from all costs, claims, actions, expenses or liabilities incurred by or imposed upon the Party as a result of or in connection with its failure, breach, delay or other default in the performance of its obligations under the Contract referred to for the purposes of this clause as "default"...

Each Party shall undertake all reasonable efforts to mitigate the loss in the event of the other Party's default under the Contract.

Hence, through the cross-fall breach clause enshrined in Clause 9, the very nature of the contract becomes singular and composite.

Any claims for an artificial division of the contract can be ignored.

In the case of Dongfang Electric Corporation, China V. DDIT (IT)- 1(1), Kolkata, the following has been held: "While one may have legitimate issues as to whether these observations regarding "looking at the transactions as a whole and not adopting dissecting approach" can indeed be applied in all cases in which separate contracts are entered into for offshore supplies and onshore services, in our considered view, these observations are certainly applicable in the cases in which the values assigned to the onshore services are prima facie unreasonable vis-a-vis values assigned to the offshore supplies, which make no economic sense when viewed in isolation with offshore supplies contract. To that limited extent, our views are the same as of the learned Authority for Advance Ruling. In other words, the transactions are to be essentially looked at as a whole, and not on standalone basis, when the overall transaction is split in an unfair and unreasonable manner with a view to evade taxes. In order that such a situation can arise, it is sine qua non that while the assessee submits the bids for different segments (e.g. offshore and onshore in the present case) separately, these bids are considered together, as a single cohesive unit, by the other party, and this fact must be apparent from material on record. On the facts of this particular case, we have also noted that each set of contracts, i.e. offshore supply contract and onshore services and supply contract, has a cross fall breach clause which provides that a breach in one contract will automatically be classified as breach of the other contract. ... While these clauses undoubtedly give an indication that the offshore supplies contract' and 'onshore services and supplies contract' are required to be viewed as an integrated contract, this fact by itself does not indicate that the onshore services and supplies contract is understated so as to avoid tax in the source country...

Hence, it is crystal clear that the Contract can be treated as a single, indivisible, composite Contract, which has been claimed by the assessee to be artificially split into several related and dependent parts.

Hence from the above discussion , it is found that the assessee had entered into a contract with DMRC for off shore supply and services only, that the payment therefore was received outside India and that the transaction of sale was not taxable in India, In such a scenario, the following factors come into play in respect of the taxability of the underlying transaction to the instant contract. 11. Ratio of Roxar Maximum Reservoir Performance WLL: In the recent landmark ruling made by the Hon'ble Authority for Advance Rulings (AAR) In Re Roxar Maximum Reservoir Performance WLL (AAR), it has been held that a composite contract for installation & commissioning cannot be split so as to exempt the profits from offshore supply of goods. It has been held that:

Decisions and Rulings relied on by learned counsel of the assessee have now to be considered in the context of the pronouncement of the Supreme Court in Vodafone International Holdings BV Netherlands vs. Union of India and another (345 ITR 1 (SC). In that recent decision, a three judge bench of the Supreme Court has laid down that what is needed is to consider the transaction in its entirety and to look at the transaction as a whole. The Supreme Court has advocated that a transaction must be looked at and not looked through. The learned Chief Justice has held "it is the task of the Revenue / Court to ascertain the legal nature of the transaction and while doing so, it has to look at the transaction as a whole and not adopt a dissecting approach". This injunction has been followed by this Authority in its recent Ruling in AAR 962 of 2010 "

Though in Ishikawajima-Harima, a two judge bench of the Supreme Court had adopted a dissecting approach by dissecting a composite contract into two parts and holding one of the parts not amenable to taxation in India, this cannot be followed in view of the 3 Judge verdict in Vodafone International Holdings vs. UOI 345 ITR 1 (SC) where it has been held that a transaction has to be "looked at and not looked through" and seen as a whole and not by adopting a "dissecting approach". A contract for sale of goods differs from a contract for installation and commissioning of a project. The tests relevant for considering where the title to the equipment, passed would not be relevant while construing the terms of a supply and performance contract. On facts of this case, the contract is for Train Control & Signaling system of rail-based mass rapid transport system and not one for sale of equipment or fitting of the equipment. It is a composite & indivisible contract for supply and erection at sites within the territory of India and cannot be split. The income accrued in India and was assessable as business income.

It has been held by the Hon'ble AAR that:

A contract has to be read as a whole. The purpose for which the contract is entered into by the parties is to be ascertained from the terms of the contract. In the case on hand, ONGC clearly called for a contract for "services for supply, installation and commissioning of 36 manometer gauges". The purpose of the contract is the installation of the gauges at site to enable ONGC to carry out its operations. I have quoted earlier the relevant portion of the contract. On a reading of the same, there cannot be any doubt that the contract in question was for erection and commissioning of 36 manometer gauges for the use of ONGC. The contract is clearly not one for sale of equipment. Nor is it one for mere erection of the equipment. It is a composite contract for supply and erection at sites within the territory of India. What is paid for by ONGC is for the supply and erection done in India. The payment is received by the assessee for the performance of the contract as a whole in India. It is therefore clear that the income to the assessee accrued in India.

A contract for sale of goods differs from a contract for installation and commissioning of a project. The tests relevant for considering where the title to the equipment, passed would not be relevant while construing the terms of a supply and erection contract. Therefore the facts relied on by counsel for the assessee to argue that the title to the gauges passed outside the country, are of no avail. 12. Siemens AG and Siemens Ltd. (India) form an A_QP - Ratio of Alstom_T_ransport SA:

In this case for the purpose of obtaining the Contract, the assessee Siemens AG has formed a 'Consortium' with an associate enterprise, Siemens Limited (India), as 'Consortium Partner1 and has shared the responsibilities of the contracts. In performance of the Contract, the assessee along with, Siemens Limited (SL), India, entered into an 'Consortium' arrangement (The term 'arrangement' is used as no Agreement' in that respect has been furnished by the Assessee) in respect of which no detail has been furnished. Hence, such an consortium arrangement appears to be 32 informal but binding due to associated nature of the 2 parties. In such a scenario, association of 2 persons, viz., Siemens AG and Siemens Limited (India) has been formed to undertake the contract. However, it is noteworthy that despite consortium of part of the contract, Siemens AG was to be solely bound by the terms of the tender and was to be liable to the Consortium Leader/lead partner for the performance of all obligations under the Contract. As discussed in the above section, it is clear that the contract was one and indivisible and could not be split up as sought to be done by the assessee. The contract was one for Train Control & Signaling system of rail-based mass rapid transport system in India and the contract cannot be split up since essentially, it was a composite contract for the commissioning of an electrical transmission project. It appears that the contract has been deliberately split through an artificial 'consortium arrangement for no obvious reason of avoiding formation of a Permanent Establishment (At the site of installation and commissioning) in India and avoid taxability in India.

Further, clearly, the Members of the Consortium viz. Siemens AG and Siemens Limited (India), who have come forward to execute the Contract, form an 'Association of Persons' (AOP) within the meaning of section 2(31) of the Income Tax Act. The following traits exist in the case of performance of the contract:

(a) There was clearly a common purpose in their coming together and common management. (b) The coming together was with the intention to undertake an activity with a view to earn profits. ( c) They were acting in concert in furtherance of their respective businesses. (d) The association member permitted 'associate' is also the associated enterprise of the assessee. As per proper appreciation of facts, the tender floated by DMRC was a composite tender. The bid submitted by the association of which the Siemens (India) Limited is the leader was for the work tendered. Subsequently, the contract that was entered into by the Consortium with DMRC. The object of the contract and the purpose of the contract were the designing, installation and commissioning of the Train Control & Signaling system. The contract provided for the payment for the work in lump and it cast liability on the Consortium for carrying out the work. A contract has to be read as a whole in the context of the purpose for which it is entered into. A contract for the designing, installation and commissioning of a project like the present one cannot be split up into separate parts as consisting of independent supply or sale of equipments and for designing, installation at the work site, leading to the commissioning and SO on. In the case on hand, on a true construction of the contract between the parties (DMRC- Consortium), it is obvious that it is a contract, the sole purpose of which is installation and commissioning of a Train Control & Signaling system and its delivery to DMRC.

Further, as per recent AAR ruling in case Alstom Transport SA vs. DIT (AAR) (A.A.R. No. 958 of 2010), it has been held that composite contract cannot be split to exempt profits from offshore supply of goods and a joint contract constitutes an AOP.

Hence, it is concluded that the assessee Siemens AG and Siemens Limited (India) form an A.O.P.

Siemens (India) Limited and the assessee have got into the contract as Consortium partners.

The assessee and Siemens (India) Limited have come together for executing the project upon acceptance of the tender. The contract was for performing the entire work, and the two associates, Siemens AG & Siemens Limited (SL), India, came together to perform the contract.

The Members of the association were all in business and they came together in pursuance of an intention to promote their businesses.

The common object was to perform the contract and earn income there from.

There was a common object in the coming together. There was a common purpose and there was concerted action. It is a combination of persons formed for the promotion of a joint enterprise banded together, as per the language of the decision in B.N. Elias In re: B. N. Ellas, [1935] 3 I.T.R, 408]. On the facts of this case, it is clear that the assessee, alongwith the other member, formed an Association of Persons liable to be taxed as such.

The coming together of the members of the association is based on the tender floated for a particular work by DMRC. The coming together is to meet the performance obligations to the tenderer arising out of that tender notification. On winning the bid, the contract entered into is for the purpose of performing that obligation. Thus, the tender is the raise and entre and the contract with the tenderer is the foundation for the combination of the associates coming together to perform the obligation there under. After committing themselves to perform the contract in terms of the contract with the tenderer, however the members of the group divide the performance of the obligation that would not affect the nature and content of the obligation undertaken by them jointly. Their arranging the inter se relationship (As the 'Consortium members') while performing then obligation, cannot alter the status they acquire as association members in performing a joint obligation undertaken by the association.

The source of the receipt in this case is the contract with DMRC and not the contract inter se or the understanding among the members of the association. Therefore, it is clear that what is relevant in this context is to consider the legal rights and obligations arising out of and undertaken under that composite contact/transaction to determine the status of the association as a person. Hence, the Association Members including the assessee and its related concern Siemens Limited, India, is a resident of India fiscal territory and is liable to be assessed as an Association of Persons and the income from the transaction was chargeable to tax in India.

Gist of Alstom Case (2012-TI-28-ARA-INTL) as applied to the instant Proceedings: In the Alstom case, the following ratio have been laid down which is applicable to the case in hand: As per Ground No. (i), it has been held that though in Ishikawajima-Harima 288 ITR 408 (SC), Hyundai Heavy Industries 291 ITR 482 (SC) & Hyosung Corp 341 ITR 18 (AAR)it was held that that a composite contract was capable of being dissected and it was open to the assessee to raise the contention that parts of the contract should be treated separately for the purpose of deciding whether income from the performance of that part of the contract arose onshore or offshore and that part of the income attributable to offshore transaction cannot be taxed in India; this is no longer good law in view of the larger bench decision of the Hon'ble Apex Court in Vodafone International Holdings BV Netherlands where it has been held that the transaction has to be looked at as a whole and not by adopting a dissecting approach. As per Ground No. (ii), it has been held that, on facts, the contract entered was a composite one for which a lump-sum consideration was paid. Such a contract cannot be split up into separate parts as consisting of independent supply or sale of goods and for installation at the work site, leading to the commissioning and so on. The ratio of Linde AG (AAR 962/2010) & Roxar Maximum (AAR) have been followed in the case.

In Ground No. (iii) it has been enunciated that as the assessee and the others came together for jointly executing the project, they constituted an A.O.P. & were liable to be taxed as such. The fact that between themselves, the members of the Association divide the performance of the obligation does not affect the nature and content of the obligation undertaken by them jointly.

Findings of DRP: During the course of the proceedings before DRP , the findings of the DRP is as under:

"In the course of assessment proceedings, the assessing officer has made various additions under the Royalty and FTS on Accrual basis. The Assessing Officer has a/so held that the Income derived by the assessee under the consortium agreement with Delhi Metro Rail Corporation on account of offshore supply and offshore services is also liable to tax in India. In this regard, the AO has held that the income under the consortium agreement is liable to tax in the hands of an AOP consisting of the Assessee and Seimens limited i.e. another group company of the assessee. The AO has held that though the Income is primarily taxable in the hands of the AOP, in the event the income is subsequently held to be liable to be taxed in the hands of the assessee then the income on account of onshore supplies and services should also be considered as assessee's Income for the previous year .In this regard, the AO has estimated 5% of the total supplies as assessee's Income . 40. In rejoinder, ld. Counsel for the assessee submitted that in so far as reliance from the judgment of three Judges of the Hon’ble Supreme Court in the case of Vodafone International Holdings BV Netherlands vs. Union of India and another (supra) which has also been referred in AAr Ruling in the case of Linde AG, Linde Engineering Division, the same is not applicable in the fact of the present case and this has also been overruled by the Hon’ble Delhi High Court in the case of Linde AG, Linde Engineering Division (supra). Further, the Hon’ble Delhi High Court in the case of Nokia Networks OY [2012] 25 taxmann.com 225 which rejected the reliance placed by the Department on Vodafone International Holdings BV considering the same as not relevant and High Court relied on the Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd, (supra) and held that such contracts cannot be read as one by applying the “look at approach as prescribed in the decision of the Supreme Court in the case of Vodafone International Holdings BV. 41. After considering the aforesaid submissions and the facts as discussed above including the judgment referred and relied upon by both the parties, we find that this case is squarely covered by the decision of the Hon’ble Delhi High Court in the case of Linde AG which has been discussed in detail in the foregoing paragraphs including the judgment of AAR. From the perusal of the MOU dated 11/09/2006, it is clear that the parties had come together only with a view to participate in the tender where the scope of the work to be executed by each of the parties is separate and independent. There is neither any joint management nor any joint execution of the work. Further, there is no sharing of profits and losses between the parties and each of the party is entitled to the gross consideration to be received by them for executing their separate part of the work. Lastly, it has been agreed that though both the parties are jointly and severally liable to DMRC in respect of the entire contract, they have agreed to indemnify each other for losses suffered on account of defaults committed by the other. Thus, in these circumstances, we find that the prerequisite condition for constitution of an AOP being has not been fulfilled. 42. Once there are separate obligations to be performed and there is no overlapping of work and both the parties have their own monies payable under the contract independent of each other, then each party is entitled to raise the bill separately for the work carried out by it and assessee had received consideration separately for the supply carried out by it through offshore, it cannot be inferred that both the parties acted in consort to perform the contract together for the project. The nature of work undertaken is being executed by each member separately which has been clearly defined in Clause 5 and 6 of MOU. Once there is a separate invoicing and payments in respect of separate claim of work, then where is the question of treating them as AOP, because each member does not act as an agent of the other. In so far reliance placed on the ‘joint and several liability’ towards the DMRC as referred in Clause 9.1 has been imposed by DMRC, this was only to safeguard itself by having a better hold over the parties for timely and successful completion of the project which provides between the members of the consortium, each Party shall indemnify and hold harmless the other Party to its MOU from all costs, claims, actions, expenses or liabilities incurred by or imposed upon the other Party as a result of or in connection with its failure, breach, delay or other default in the performance of its respective obligations. 43. Lastly, Clause 1.3 of the MoU is very clear that nothing in the contract agreement shall be deemed to constitute, create, give effect to or otherwise recognize a corporation, association, partnership, joint venture or formal or informal business entity of any kind and the insurance qua the contract has been taken by each member separately and not by the consortium. Thus, we agree with the Ld. Sr. Counsel for the assessee that on these facts it cannot be held that there constitutes of AOP between Siemens AG and Siemens Ltd. Thus, this issue is decided in favour of the assessee and against department.” 7.1. Respectfully following the aforesaid decision of the Coordinate Bench in assessee’s own case, wherein the issue has been examined in detail after considering the relevant statutory provisions, judicial precedents and the factual matrix, we find no reason to deviate from the view already taken. Since the facts and circumstances in the year under consideration are identical, and no distinguishing feature has been brought to our notice by either side, the findings and directions contained in the said order are squarely applicable to the present assessment year. Accordingly, this issue is decided in terms of the directions contained therein, and the Assessing Officer is directed to give effect to the same.” 10.1 It is clear from the above decision of the co-ordinate Bench that the

Tribunal has followed the earlier decision in ITA No.2153/Mum/2014 for AY 2009-

10 dated 07.06.2024, where similar issue was decided in favour of the assessee.

No distinguishing facts has been brought on record by the Ld. CIT-DR to take a

different view. Hence, following the above decision, the grounds are allowed.

agreed that similar issue had been considered and decided by the Tribunal in

appellant’s own case across different assessment years starting from AY 2012-13.

The relevant part of the order for AY 2012-13 in ITA No.2159/Mum/2017 (supra)

is reproduced below for ready reference:

“8.6. The assessee's arguments and the contention of the Ld.AO have been examined. As far as taxability in hands of AOP, it is stated by assessee that ultimately no assessment in hands of AOP has been made in this case. Hence, the question of assessee and SL constituting an AOP is not gone into on substantive basis. It is observed that the Ld.AO held the impugned amounts to be liable to taxed in India both under the Act and under DTAA. In this connection, reliance was placed on the decision of the Authority for Advance Ruling(AAR) in the case of Roxar Maximum Reservoir Performance WLL reported in 349 ITR 189. In this said decision, the AAR referred to the decision of the Hon’ble Supreme Court in the case of Vodafone International Holdings BV Netherlands Vs. Union of India reported in in 345 ITR 1 and distinguished the earlier decision of the Hon’ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd., reported in (2007) in 158 Taxmann 259. The Ld.AO held that after the decision of Hon’ble Supreme Court in the case of the Vodafone(supra), the earlier decision of Hon’ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd.(supra), is no longer applicable. It is noted that the issue involved in present case is considered by Hon’ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd(supra) wherein it is categorically held that income from such offshore supply of goods is not liable to tax in India under the Act. In so far as taxability under the DTAA is concerned, it is observed that the Protocol in the Indo German DTAA specifically deals with the same. Therefore, respectfully following the decision of Hon’ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd., and provisions of the Protocol to Article 7 in the India Germany DTAA, the Ld.AO is directed not to tax the income arising from offshore supply of goods. As regards the reference to the decision of Hon’ble Supreme Court in the case of Vodafone International Holdings BV(supra), it is held that the observations of Hon’ble Supreme Court on the concept of ‘look-at' and look-through' principles are in an entirely different context. It is also observed in assessee's own case, coordinate bench of this Tribunal and Hon’ble Bombay High Court have decided the issue in its favour. In this connection, decision of Hon’ble Bombay High Court in assessee’s own case of A.Y:1999-2000 in ITA No. 5591 of 2010 A.Y. 1998-99 in ITA No. 5612 of 2010, and for A.Y. 1997-98 in ITA No.1033 of 2010 has been relied by the Ld.AR. Respectfully following these decisions in assessee's own case and applying the principles laid down by Hon’ble Supreme Court in the case of Ishikawajima Harima Heavy Industries Ltd.(supra), the Ld.AO is directed not to tax the income arising from offshore supply of goods. It is further noted that for assessment year 2009-10, this Tribunal gave a categorical finding that there is no PE in India. Further while considering Issue 4 herein above, it is held that no AOP is constituted in India due to the agreement between Siemens AG and Siemens Ltd. Respectfully following the aforesaid decision of the Coordinate Bench in assessee’s own case, wherein the issue has been examined in detail after considering the relevant statutory provisions, judicial precedents and the factual matrix, we find no reason to deviate from the view already taken. Since the facts and circumstances in the year under consideration are identical, and no distinguishing feature has been brought to our notice by either side, the findings and directions contained in the said order are squarely applicable to the present assessment year. Accordingly, this issue is decided in terms of the directions contained therein, and the Assessing Officer is directed to give effect to the same.”

11.1 The Ld. CIT-DR has not been able to distinguish the above case, either on

facts or in law. Hence, following the decision cited supra, the grounds are allowed.

errors in the final order by the AO. The assessee submitted that these grounds

are consequential in nature and therefore, need not be adjudicated separately,

once, issues from ground No.4 to 13 and 21 to 28 are decided by the Bench. The

grounds are disposed of accordingly.

that the AO has not granted credit on accrual basis. The issue as to whether the

receipts from royalty/FTS should be on cash or accrual basis has already been decided by us holding that the appellant is entitled to follow the cash system of

receipts. Hence, the issue become infructuous and accordingly not decided.

find that similar issue was decided by the co-ordinate Bench in appellant’s own

case for AY 2012-13 in ITA No.2159/Mum/2017 (supra). The relevant part of the

order is reproduced below for ready reference:

“9. We have perused the submissions advanced by both sides in light of the records placed before this Tribunal. The issue relates to transfer pricing adjustments. It is noted that Coordinate Bench in A.Y. 2009–10 has adjudicated this issue on identical facts by observing as under:- “76. We have heard the rival submissions and perused the relevant finding given in the impugned orders. One of the reasons given by the ld. TPO and the ld. DRP is that assessee has been earning to reconcile the value of transaction disclosed by the Indian AEs in the Form 3CEB if the value disclosed by the assessee in its return of income. The assessee had explained that the difference is for the reason that assessee accounts the amount on receipt basis whereas the Indian AE’s reports the transaction on accrual basis and this assessee has been doing in accordance with the provisions of the tax treaty. It is important to note here that, this position has also been upheld by the Hon’ble Bombay High court in assessee’s own case that it should be taxed on receipt basis. It was for this reason amounts recorded by the Indian AE cannot be the same. Apart from that, the assessee reports only those transactions that are subject to tax in India, i.e., element of Fees for Technical Services only, whereas Indian AEs report all the transactions like purchase / sale of goods, provision and availing of services, reimbursement / recovery of expenses whether income/expense. It is thus quite natural that there would be differences in the transactions reported by the assessee and the AE’s. Once this has been brought on records and assessee has given this explanation for reconciliation, then this cannot be the reason or ground for making adhoc adjustment @10% by taking 10% mark-up on the value of international transaction. Such an exercise is completely against the concept of transfer pricing revelation. The ld. TPO was bound to determine the ALP in accordance with the Rules after analyzing the nature of transaction and the arm’s length price after applying method provided under the Rules. If in the case of the Indian AE, the same transaction has been benchmarked and has been accepted to the ALP, then, unless there are different factors which need to be analyzed on the same transaction, it cannot be held that the same ALP cannot be accepted in the case of recipient foreign company. In fact it has been informed that ld. TPO has made adjustment under various heads which also includes payment of royalty. Any further adjustment is not called for in the case of the assessee to adopt a different ALP. Though the true course would have been that ALP of FTS and royalty should have been benchmarked separately as per the Rules, however, when assessee had carried out and furnished TP study report and also relied upon the margins declared by the Indian AEs after carrying out different study report, then without finding any defect in such TP analysis and determination of ALP by the assessee, ld. TPO could not have resorted to adhoc mechanism for adding 10% mark-up on adhoc basis. Thus, in absence of any contrary inference drawn by the ld. TPO on the TP study report of the assessee and at the same time in the case of Indian AE, same transaction has been benchmarked and ALP has been determined then we do not find any reason for taking adhoc 10% mark-up. Accordingly, the same is deleted. In the result, grounds No. 2 to 7 are allowed.” 9.1. Respectfully following the aforesaid decision of the Coordinate Bench in assessee’s own case, wherein the issue has been examined in detail after considering the relevant statutory provisions, judicial precedents and the factual matrix, we find no reason to deviate from the view already taken. Since the facts and circumstances in the year under consideration are identical, and no distinguishing feature has been brought to our notice by either side, the findings and directions contained in the said order are squarely applicable to the present assessment year. Accordingly, this issue is decided in terms of the directions contained therein, and the Assessing Officer is directed to give effect to the same.”

14.1 The Ld. CIT-DR has not been able to distinguish the case, either on facts or

in law. Hence, following the decision cited supra, the grounds are allowed.

Following the decision of Hon’ble Supreme Court in case of of NTPC Ltd. vs. CIT,

229 ITR 383 (SC) and the decision of the Hon’ble Jurisdictional High Court in case

of CIT vs. Pruthvi Brokers and Shareholders PVt. Ltd., 349 ITR 336 (Bom.), the

grounds are admitted. Since the appeal of the assessee has been allowed on

merits, these grounds are not required to be adjudicated and are kept open.

ITA No.6728/MUM/2024 (AY: 2021-22)

for assessment year 2021-22 are similar to the grounds and facts and

circumstances of the case for AY 2020-21; therefore, the findings given in the

appeal for AY 2020-21 in ITA No.4393/Mum/2024 (supra) shall apply mutatis

mutandis to the assessment year 2021-22. Accordingly, the appeal is allowed for

statistical purpose.

Following the decision of Hon’ble Supreme Court in case of NTPC Ltd. vs. CIT, 229

ITR 383 (SC) and the decision of the Hon’ble Jurisdictional High Court in case of

CIT vs. Pruthvi Brokers and Shareholders PVt. Ltd., 349 ITR 336 (Bom.), the

grounds are admitted. Since the appeal of the assessee has been allowed on

merits these grounds are not required to be adjudicated and are kept open.

statistical purpose.

Order is pronounced on 08.09.2026.

Sd/- Sd/- (SAKTIJIT DEY) (BIJYANANDA PRUSETH) VICE PRESIDENT ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 08.09.2026 Copy of the Order forwarded to: 42

Assistant Registrar ITAT, MUMBAI