SIEMENS MOBILITY GMBH,GERMANY vs. ASSISTANT COMMISSIONER OF INCOME TAX(INTERNATIONAL TAX), 4(2)(1), MUMBAI

6. The AO/DRP failed to appreciate that no copyright right has been parted with by the Appellant in the software supplied. They, therefore, erred in holding that consideration for supply of software will result in royalty income.

7. The AO/DRP erred in holding that the Appellant and Siemens Limited allegedly constituted an Association of Persons (AOP) in respect of contract with Chennai Metro Rail Corporation Limited (CMRL").

8. In the alternative and without prejudice to the above, the AO/DRP ought to have held that income in respect of contract with CMRL, to the extent it is taxable, should be assessed individually in the hands of the Appellant and Siemens Limited and not in the hands of an alleged AOP.

9. The AO erred in giving the findings that there exists an AOP relying on decisions which have been overruled by higher authorities.

10. The AO/DRP erred in taxing the income arising from offshore supply of equipment in relation to CMRL contract overlooking the provisions in the Act and the tax treaty between India and Germany.

11. Without prejudice to grounds 1 and 3 above, on the facts and circumstances of this case, and in law, the AO erred in not granting credit for tax deducted at source on accrual basis when the income has been assessed to tax on accrual basis thereby granting short credit of tax deducted at source Siemens Mobility GmbH amounting to Rs. 1,87,44,250. The credit of tax deducted at source has been granted of Rs. 6,05,73,450 in the Computation Sheet as against Rs. 7,93,17,700. Thus, the credit of tax deducted at source on accrual basis is consequential only in case it is upheld that the corresponding income is to be offered to tax on accrual basis.

12. Without prejudice, the AO erred in granting short credit of tax deducted at source of Rs. 84,51,790. The credit of tax deducted at source has been granted of Rs. 6,05,73,450 in the Computation Sheet as against Rs. 6,90,25,240 in the Assessment Order 13. On the facts and circumstances of the case, and in law, the AO erred in levying interest under Section 234A and 234B of the Act 14. The AO erred in initiating penalty proceedings under Section 270A of the Act.

2. The assessee is a company tax resident of Germany engaged in the business of research and development, production, sales and distribution as well as operation and maintenance of products, systems, installation and solution within the mobility sector. The assessee filed the return of income for AY 2021-22 on 10.03.2022 declaring a total income of Rs. 54,42,88,95/-. The return was selected for scrutiny and the statutory notices were duly served on the assessee. During the year under consideration the assessee has derived income by way of "Royalty, Fees for technical services" under various agreements / contracts entered into with different entities in India to the tune of Rs. 54,42,88,925/- which is offered to tax at 10% as per the DTAA between India and Germany. The assessee during the year under consideration has receipts from Chennai Metro Rail Corporation Ltd. (CMRL) towards contract for design, manufacture, supply, installation, test and commission of signally, platform screen doors and telecommunications. The contract was transferred to the assessee from Siemens AG w.e.f. 01.08.2018. The AO noticed that an amount of Rs. 27,85,63,237/- pertaining to the contract on has not been offered to tax on the ground that they pertain to offshore supplies of Siemens Mobility GmbH goods which are not taxable in India. The AO further noticed that an amount of Rs. 1,19,721/- received for offshore supply of software is also not offered to tax in India. The AO issued a show-cause notice to the assessee as to why these receipts are not taxable in India. The assessee submitted that the transfer of title of the equipments and material is passed on to CMRL at CIF Port of Shipment and accordingly the payments received by the assessee are not taxable in India. The assessee further submitted that the equipments have been supplied outside India and therefore, income arising there from is not taxable in India. The AO did not accept the submissions of the assessee and proceeded to treat 5% of the total receipts as taxable income in India @ 40%. The AO also added 5% of the software receipts as taxable in India. The AO further made an addition of Rs. 2,44,93,109/- towards supply of software treating the same as Royalty. The AO made an addition of Rs. 66,57,38,607/- as addition towards fees for technical services not offered to tax on accrual basis. The assessee filed objections before the DRP against the draft assessment order passed by the AO. The DRP vide directions dated 27.09.2023 confirmed the various additions made by the AO. The assessee is in appeal before the Tribunal against the final order of assessment passed by the AO pursuant to the directions of the DRP.

3. Ground No.1 is general not warranting any separate adjudication. Ground No.2 pertains to the arithmetical error in the computation annexed to the final order of assessment where the gross total income is mentioned as Rs. 71,67,05,874/- whereas as per the assessment order, the assessed income is computed at Rs. 70,41,65,874/-. In this regard we direct the AO to verify and re- compute the correct income taking into consideration our decision in the ensuing paragraphs with regard to the additions made in the final assessment order.

Siemens Mobility GmbH 4. Ground No.3 is with regard to the addition made towards fees for technical services to be offered to tax on accrual basis. In this regard the ld. AR submitted that the issue is covered by the decision of the Co-ordinate Bench in the case of Siemens AG vs. DDIT (IT) (ITA No. 2153 & 2179/Mum/2014 dated 07.06.2024). The ld. AR submitted that it is an undisputed fact that the contract with CMRL has been taken over by the assessee from Siemens AG and therefore, the impugned receipts are identical to the receipts in the hands of Siemens AG. Accordingly, the ld. AR argued that the decision of the Co-ordinate Bench in the case of Siemens AG with regard to the impugned receipts being taxable on accrual basis is applicable to assessee's case also.

5. The ld. DR on the other hand relied on the order of the AO.

6. We heard the parties and perused the material on record. We notice that the Co-ordinate Bench while considering the issue of taxability of FTS on receipt basis as per the DTAA between India and Germany in the case of Siemens AG (supra) has held that “78. The assessee is a non-resident Company, incorporated in Germany, having taxable income in India. With regard to FTS and royalty is has shown income on receipt basis as per the India Germany DTAA. The issue before us is, whether the income of the assessee is to be taxed on receipt basis as against accrual basis. The ld. AO has relied upon the judgment of Hon'ble Madras High Court in the case of Standard Triumph Motors Ltd.(119 ITR 573) which has held that in case of non- resident, Section 5(2)(a) of the Income tax Act i.e., will have no application and taxability will be determined only under Section5(2)(b) of the Income Tax Act, i.e., by accrual. Subsequently, the Supreme Court in the case of Standard Triumph Motor Co Ltd. v. CIT[1993] 201 ITR 391 (SC) held that in the particular case, the credit entry to the account of the assessee non-resident in the books of Indian company amounted to receipt by the non-resident. Further, in the case of the assessee this issue has been settled by the Tribunal right from A.Yrs.1990-91,1991-92,1994-95,1996-97,1997- 98,2001-02,2002-03 and 2003-04. The ld. AO has not accepted the decision of the Tribunal stating that Revenue has preferred an appeal before the Hon’ble Bombay High Court.

Siemens Mobility GmbH 79. The ld. DRP held that Hon’ble Bombay High Court in assessee’s own case has accepted the contentions of the assessee in A.Y.1986-87 to 1992-93, 1996-97, 1997- 98 and2001-02 wherein the Hon'ble Bombay High Court has considered the various ITAT decisions in assessee's own case and the stand of the assessee has been upheld that the receipt is to be taxed on actual receipts. Therefore, the AO is directed not to bring tax the income on account of royalty and FTS on accrual basis but to tax the same on receipt basis. After considering the submissions and decisions of the Tribunal and the Hon’ble Bombay High Court in the case of the Tribunal, this issue is decided in favour of the assessee that income on account of Royalty and FTS can be taxed only on receipt basis.

1. 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2…… 3. The tem “royalties’ as used in this Article means payments of any kind received as a consideration for the use…………………..

4. The term "fees for technical services" as used in this Article means payments of any amount inconsideration and so on 5…. 6….. 7….. (emphasis supplied) 81. Thus, as per the tax treaty, Royalty and fees for technical services income should be taxable only upon payment i.e. on receipt basis. If this position has been accepted by the Tribunal in assessee’s own case for the earlier years and also by the Hon’ble Bombay High Court, the details of which are as under:- AY of order 2003-04 1183 of 2011 10.01.2013 2001-02 1458 of 2010 22.10.2012 1997-98 1033 of 2011 22.11.2012 1996-97 124 of 2010 22.10.2012 1986-87 to 1992-93 2356,2357,2384,2386,2387,2428,2429 of 2011 07.03.2013 AY ITA No. Date of order 2006-07 8094/Mum/2010 06.05.2014 2005-06 1174/Mum/2010 30.05.2014 2004-05 4502/Mum/2009 18.05.2012 1998-99 & 1999-00 6133/Mum/2002 7589/Mum/2003 07.12.2009 1994-95 1499/M/1998 27.06.2005 1990-91 and 191- 1499/M/1998 04.07.2005 Siemens Mobility GmbH 92 82. Hence, we do not find any reason to take any different position. Before us the ld. DR had submitted that there is a reference in the case of Ampacet Cyprus Ltd. vs. DCIT reported in (2020) 119 Taxmann.com277 (Mumbai Trib) wherein the Tribunal has referred the matter to special Bench. In the context of the India- Cyprus Tax treaty where the issue is whether interest received should be taxed on receipt basis or on accrual basis. Since in assessee’s own case this issue stands settled by the Tribunal and by the Hon’ble Bombay High Court which is binding on us and therefore, reliance placed by the ld. DR in the aforesaid matter to refer to the Special Bench is declined. Thus, this ground raised by the Revenue is dismissed.”

7. From the perusal of the above findings of the Co-ordinate Bench, it is clear that the impugned issue is a recurring one and that the Hon'ble Bombay High Court and the Co-ordinate Bench have been consistently holding that the income is not taxable on accrual basis but on receipt basis. Therefore, respectfully following the decision of the Hon'ble High Court and the Co-ordinate Bench, we hold that the FTS receipts of the assessee are taxable on receipt basis and not on accrual basis. The ground raised by the assessee in this regard is allowed.

8. Grounds No.4 to 6 raised by the assessee pertain to amount received towards supply of software by the assessee being treated as Royalty. The ld. AR submitted that this issue also stands covered by the decision of the Co-ordinate Bench in the case of Siemens AG and this fact is substantiated by the findings of the DRP where the DRP has relied on its own decision in the case of Siemens AG for AY 2018-19 to uphold the addition made by the AO.

Siemens Mobility GmbH 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:- AY of Order 2006-07 8094/Mum/2010 06.05.2014 2005-06 1174/Mum/2010 20.05.2014 2004-05 4502/Mum/2009 18.05.2012 2003-04 2520/Mum/2008 09.07.2010 2002-03 2099/Mum/2007 10.12.2008 2001-02 1957/Mum/2007 08.12.2008 11. The Tribunal in A.Y.2001-02 has held that supply of software is not taxed as ‘royalty’ which has been followed in the subsequent Tribunal orders from A.Y.2002-03 to 2006-07. The relevant extracts are as under:- “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."

6. During the year under consideration, the assessee had supplied equipment to the various parties in India. The software required for the said equipment was also supplied by the assessee to its Indian customers. During the course of assessment proceedings, the A.O. verified the relevant invoices and found on such verification that the software in some cases was supplied by the assessee independently without any reference to the supply of corresponding equipment. He therefore treated the income earned by the assessee from the supply of software as in the nature of royalty and the same was brought 10 tax in the hands of the assessee as income from royalty. On appeal, the Ld. CIT(A) held that the value of software could not be taxed as royalty in the hands of the assessee following the decision of the Tribunal in assessee's own case on similar issue for the earlier yearsie.2001-02 & 2002-03. He also took note of the fact that a similar issue was decided by his predecessor in favour of the assessee in assessment years 2003-04 & 2004-05.

13. Now, this issue of taxation of royalty under the DTAA has been decided by the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence PrivateLimitedvs.CIT reported in (2021) 432 ITR 471(SC). The Hon'ble Supreme Court vide its order grouped various appeals before it into following four categories: - - 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 distribute or happens to be a foreign, non- resident vendor, who, after purchasing software from a foreign, non-resident seller, resells the same to resident Indian distributers 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 14. The Hon'ble Supreme Court held that the amounts paid by resident Indian end-users / distributors to non-resident computer software manufacturers / suppliers, as consideration for the resale/use of the computer software, is not Siemens Mobility GmbH payment of royalty for the use of copyright in the computer software and that the same does not give rise to any income taxable in India in all the categories of transactions mentioned above.

Facts in Engineering Analysis Centre of Facts in the case of Excellence (P.) Ltd. assessee 1 GRANT OF LICENCE. Samsung grants The Purchaser shall have you a limited non-exclusive license to the perpetual and non- install, use, access, display and run one exclusive right to use the copy of the Samsung Software on a single Software Product on the Samsung Mobile Device, local hard devices for which it is disk(s) or other permanent storage media intended, whereby each of one computer and you may not make Software Product may Samsung Software available over a only be used on one network where it could be used by device at any given time. multiple computers at the same time.

3. LIMITATIONS ON END USER RIGHTS The Purchaser shall not You shall not, and shall not enable or change, reverse engineer permit others to, copy, reverse engineer, or reverse compile the decompile, disassemble, or otherwise Software Products and attempt to discover the source code or shall not extract any parts algorithms of, the Software (except and thereof. Furthermore, the only to the extent that such activity is Purchaser shall not expressly permitted by applicable law remove any alpha notwithstanding this limitation), or numeric identifiers, modify, or disable any features of, the markings and Copyright Software, or create derivative works notices from the data based on the Software. You may not rent, carriers and shall copy lease, lend, sublicense or provide such in their unchanged Siemens Mobility GmbH commercial hosting services with the form. The above Software. provisions shall apply analogously to all associated documentation. 4 You may not transfer this EULA or the The Supplier shall grant rights to the Samsung Software granted the Purchaser the right to herein to any third party unless it is in transfer the right to use connection with the sale of the mobile granted to it to a third device which the Samsung Software party. In such case, an accompanied. In such event, the transfer agreement is to be must include all of the Samsung Software concluded with the third (including all component parts, the media party by which the third and printed materials, any upgrades, this party shall not be granted EULA) and you may not retain any copies any rights of use over and of the Samsung Software. The transfer above those granted by may not be an indirect transfer, such as a the Supplier to the consignment. Prior to the transfer, the end Purchaser user receiving the Samsung Software must agree to all the EULA terms. 5 2. License Grant The Purchaser shall not "The Program is owned by IBM or an change, reverse engineer IBM supplier, and is copyrighted and or reverse compile the licensed, not sold. Software Products and Licensee receives a license to the shall not extract any parts Programs from Assimil8 Limited through thereof. Furthermore, the a sublicensing agreement between IBM Purchaser shall not and Assimil8 Limited. Assimil8 Limited remove any alphanumeric grants Licensee a non- exclusive license to identifiers, markings and (1) use the Program up to the Authorized Copyright notices from Use specified in the PoE the data carriers and (2) make and install copies to support shall copy such in their such Authorized Use, unchanged form. The and above provisions shall (3) make a backup copy, all provided that apply analogously to all a. Licensee has lawfully obtained the associated Program and complies with the terms of documentation. the Agreement; b. The backup copy does not execute The Purchaser may make unless the backed-up Program cannot up to three copies of the execute Software Product to be c. Licensee reproduces all copyright used for back-up purposes notices and other legends of ownership on only.

Siemens Mobility GmbH each copy, or partial copy of the Program. d……….. e. Licensee does not: (1) use, copy, modify, or distribute the Program except as expressly permitted in this agreement; (2) reverse assemble, reverse compile, otherwise translate, or reverse engineer the program, except as expressly permitted by law without the possibility of contractual waiver; (3) use any of the Program's components, files, modules, audiovisual content, or related licensed materials separately from that program; or (4) sublicense, rent, or lease the Program 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.

16. During the course of hearing, the ld. DR had strongly relied upon the observation made in the assessment order and submitted that a review petition had also been filed before the Hon'ble Supreme Court in the matter of Engineering Analysis Centre of Excellence Pvt. Ltd., However, the same is not entertained because judgment of the Hon’ble Supreme Court as on to dfay is binding on us. Moreover, there are various other decisions of the Hon’ble High Courts on this issue which has been highlighted before us, the same is not being reproduced. 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 theassesseeare allowed.”

“4.6. Conclusions regarding the Case based on Facts and circumstances: The following facts and inferences are drawn in the case:

1. 1. The actual taxable entity in this case is an AOP comprising of Siemens Mobility Gmbh (successor to Siemens AG) and Siemens Limited (India) and is a resident of India. Accordingly, no benefit of India- Germany DTAA could be afforded to the association.

2. The off-shore supplies have been made by the applicant on CIF on Indian port of disembarkation basis. for onshore activities (viz. onshore supplies and onshore services). The term 'Cost, Insurance, Freight, implies that the Siemens Mobility GmbH AOP/assessee has the obligation of Cost and Freight, with the additional responsibility that it has to procure marine insurance against the PGCIL' risk of loss or of damage to the goods during the carriage. In such cases, the delivery of the goods are to be taken as having been made in India. Therefore, the profit on offshore supplies made by the AOP are liable to be taxed in India on the ground that the sale is completed in India.

The 'association' proposed as above by applicant Siemens AG has been accepted by employer CMRL subject to the condition that Siemens AG takes the overall responsible and remains liable for the execution of all the works and commissioning of the project. Hence, Siemens AG is the overall in charge of the Contract and lead member of the association.

Further, it is not known whether Siemens Limited (India) would have such qualification for eligibility of the relevant contract. Hence, independently. Siemens Limited (India) may be ineligible for undertaking the contract. However. due to the involvement of Siemens AG, the contract has been successfully achieved Hence, in true essence, the Contract is a single project which has been conferred on Siemens AG.

Hence, it is abundantly clear that the underlying Contract is an indivisible one for the design manufacture installation of Signalling. Platform doors and Telecommunications related to Chennai Metro Project.

4.7. In light of the above discussion, the contentions of the assessee are not acceptable. Therefore, it is hereby held that the revenues stated to be emanating from the off-shore supply contract are liable to tax in India in the hands of the Association of Persons (AOP) formed by the assessee Siemens Mobility Gmbh and Siemens (India) Limited 4.8 During the course of assessment proceedings no India-specific account has been furnished by the assessee so that its income from operations in India can be determined and proper allocation may be made to profits attributable to Indian operations in respect equipment supplies. In such a situation, there is no aption but to perforce resort to estimation of the taxable profits of the assessee as per Rule 10 of the Income Tax Rules. In this case, Rule 10(ii) will not be applicable Siemens Mobility GmbH in the instant case since the global profits and gains of the assessee have not been computed in accordance with the provisions of the Indian Income Tax Act. The income of the assessee is, therefore, liable to be computed as per Rule 10(i) read with Rule 10(iii) of the Income Tax Rules, which provides that income of the assessee may be determined at a reasonable percentage of the turnover.

Off-shore supply companies world over earn their income primarily from the margin earned in manufacturing and sales process. The assessee vide letter dated 16.12.2022 has submitted that the profitability of mobility division of the Siemens AG for Oct 2020 to Sept 2021 is 9.3% for Oct 2018 to Sept 2019 is 11% and October 2019 to September 2020 is 9.1%. Thus the average of 10% profitability is taken for FY 2020-21. Further, since some parts of the operations have been carried out in the respective country of residence, Germany, it is also reasonable to estimate that the residence and source country have a 50:50 right over the income so received by the assessee. Hence, the net taxable income from off-shore supplies is 5% in case of the assessee. Since, the tax rate in India for foreign companies is 40%, it is estimated that the tax payable by assessee Siemens Mobility Gmbh in India is 2% of the gross receipts from Off-shore supply of the equipment( cess and surcharge extra).

4.9. However, it has been held in the above discussion that the income from Offshore supplies have accrued to the A.O.P. comprising of assessee Siemens Mobility Gmbh and Siemens (India) Limited. Obviously, the relevant A.O.P. would be a resident of India for tax purposes. Therefore, the tax liability arising to the A.O.P. is liable to be determined and levied by the Assessing Officer concerned exercising jurisdiction over the resident A.O.P. The substantive determination and assessment of income of the A.O.P. is to be referred to Assessing Officer having jurisdiction over the relevant case. Hence, the demand arising from off-shore supplies in case of the assessee are only protectively assessed by this Order. However, in any eventuality, if it is held in any proceedings that taxability do not arise in the case of the referred A.O.P. as above or, in any proceedings the taxability of the A.O.P. gets quashed/deleted, in such circumstances, the above-referred income is liable to be treated as substantially assessed in hands of the assessee foreign company and accordingly, the tax demand will fall due in case of the assessee.

Accordingly a sum of Rs.1,39,28,161,/- being 5% of total receipts of Rs 27,85,63,267/-from Offshore Supply of Goods is taxed as income from composite contract liable for taxation in India @ 40% (plus cess/surcharge).”

Siemens Mobility GmbH 12. The ld. AR submitted that no assessment in the hands of AOP on substantive basis is done by the Revenue and therefore the protective assessment in the hands of the assessee without substantive assessment cannot be done. On merits the ld. AR submitted that the supply of equipments happened outside India on CIF basis and therefore the receipts in the hands of the assessee towards the supply cannot be taxed in the hands of the assessee.

9. We find that assessee has raised ground No. 12 for A.Y. 2018-19 challenging the addition of Rs. 13,86,600/- made u/s. 69A of the Act on account of alleged unaccounted cash. 9.1 We have heard rival submissions and perused the materials available on record. The search and survey action initiated on ABIL group on 21-7-2017. In the search and survey action, the address of the assessee was covered and the case of the assessee was also centralized u/s. 127(2) of the Act. During the course of search proceedings, the cash of Rs. 13,86,600/- was found and it was explained that the said cash belongs to M/s. Fisher Health Resorts (P.) Ltd., having address at 2413, Kumar Capital, East Street, Pune-411001. M/s. Fisher Health Resorts (P.) Ltd., is engaged into the business of running health and fitness club having PAN AAACF2830J. A statement of oath of Shri Manoj Shah, GM (Finance) was recorded by the search party on 22-7-2017 wherein Siemens Mobility GmbH he had stated that total cash-in-hand of entity and all individuals is Rs. 13,98,728/-. However, during the search conducted u/s.132 of the Act at the registered office of the assessee, cash of Rs. 27,85,300/- was found in the cabin of Shri Keval Jain. It was submitted to the search party that an amount of Rs. 13,98,728/- belong to various group entities of the assessee and certain individuals which was also reconciled with their books of account. With regard to query raised by the search party for the excess cash of Rs. 13,86,600/-, Shri Manoj Shah stated that the said excess cash belongs to Fisher Health Resorts (P.) Ltd. It was also submitted that the assessee and Fisher Health Resorts (P.) Ltd., had common Director and hence, the cash belonging to Fisher Health Resorts (P.) Ltd., was kept in the premises of the assessee. It was also submitted that the source of such cash for Fisher Health Resorts (P.) Ltd., was from subscription from members for health club facilities. The ld. AO however, disregarded these contentions of the assessee and proceeded to tax the aforesaid excess cash of Rs. 13,86,600/- in the hands of the assessee on protective basis u/s. 69A of the Act. The ld. AO does not make any mention as to whether any substantive addition was indeed made for the same excess cash of Rs. 13,86,600/- in the hands of Fisher Health Resorts (P.) Ltd. or any other person. The ld. CIT(A) observed that there is no evidence that Fisher Health Resorts (P.) Ltd., had owned up this cash and no confirmation from the company has been filed regarding cash belonging to them and not to the assessee. He also observed that no explanation has been given by the assessee that this cash has been considered in the hands of Fisher Health Resorts (P.) Ltd., Accordingly, he upheld the action of the ld. AO. 9.2 From the aforesaid narration of facts, it could be seen that only protective addition has been made in the excess cash of Rs. 13,86,600/- in the hands of the assessee company. We find that assessee right from the date of search had given an explanation that the excess cash of Rs. 13,86,600/- belongs to Fisher Health Resorts (P.) Ltd., The assessee had also given an explanation that in view of the common Directors, assessee company and Fisher Health Resorts (P.) Ltd., the said cash of Rs. 13,86,600/- was found in the premises of the assessee. Normally protective assessment is made only if the revenue entertains doubt as to in whose hands a particular income is to be assessed. This is primarily done to protect the interests of the revenue. Hence, either in the hands of the assessee, addition u/s. 69A should have been made on substantive basis and in the hands of the Fishers Health Resorts (P.) Ltd., it should have been made on protective basis or vice versa. Very strangely, addition has been made u/s. 69A of the Act in the hands of the assessee company on protective basis. The ld. AR made a statement made from Bar that no substantive addition at all were made for this excess cash in the hands of any other party including Fisher Health Resorts (P.) Ltd. We also find that these deficiencies was not sought to be corrected by the ld. CIT(A), Siemens Mobility GmbH despite the fact that the ld. CIT(A) having co-terminus powers with that of the ld. AO and the statute had conferred on him the power of enhancement of income by converting the protective addition into a substantive addition in the hands of the assessee company. Now, the short point that arises for our consideration is that whether any protective addition could at all survive when no substantive addition at all were made in the hands of any other person. We find that this issue has been addressed by the Co-ordinate Bench of Kolkata Tribunal in detail in the case of Vikash Iron & Steel (P.) Ltd. v. ITO [IT Appeal Nos. 332-334 (Kol.) of 2012, and ITO v. Vikash Iron & Steel (P.) Ltd. [IT Appeal Nos. 473 to 475 (Kol.) of 2011, dated 1-7-2015]. For the sake of convenience, the entire order is reproduced hereunder:— 'These appeals of the assessee and the Revenue are directed against separate orders of the CIT(A)-I, Kolkata in Appeal Nos. 173-175/CIT(A)- I/Ward-3(2)/10-11 dated 20-12-2011 and Appeal Nos. 509-511/CIT(A)- I/3(2)/09-10 dated 15-12-2010 respectively. Assessments were framed by I.T.O., Ward-3(2), Kolkata u/s 147/145(3) of the Income-tax Act, 1961 (hereinafter referred to as "the act") for A.Ys. 2003- 04, 2004-05 and 2008-09 vide its order dated 30-11-2010.

2. The first common issue in these appeals of assessee is against assumption of jurisdiction by AO u/s 147/145(3) or 143(3) of the Act for making protective addition despite the fact that there is no substantive addition. For this the assessee has raised common grounds in its appeals and the ground as raised in for A.Y. 2003-04 reads as under :— "1. For that in the facts and circumstances of the case, the Ld. A.O. erred in making protective additions in an order u/s 147/145(3) and as such the entire order is void ab initio since an order passed u/s 147/145(3) cannot be on the basis of suspicion or doubt while a protective addition is made only when there is a doubt. The action of the A.O. was wholly unreasonable, uncalled for and bad in law. The ld. CIT(A) was unjustified in confirming the action of AO." Similarly the assessee has also raised the issue under rule 27 of Income- tax (Appellate Tribunal) Rules, 1963 whereby the ld. Counsel for the assessee raised the same issue qua the revenue's appeal also and he wanted to support the order of CIT(A) on this issue. As we have reproduced the ground raised by assessee in ITA No. 332/Kol/2012, the issue is crystallized.

Siemens Mobility GmbH 3. At the outset, the ld. Counsel for the assessee Sr. Advocate Shri R.P. Agarwal submitted the reasons recorded for issuing notice u/s 148 of the Act and almost similar reasons in the impugned assessment years. The relevant reasons as reproduced by CIT(A) for A.Y. 2005-06 reads as under :— "Return of income was filed on 31-10-2005 showing returned income Nil. A survey operation u/s 133A was carried out in the business premises of the assessee company on 26-2-2008. Later Shri Vikash Agarwal, the Director was examined on oath u/s 131 of the Income-tax Act, 1961 and his statements were recorded. He has confessed that the Company did not carry out any trading activity but only gave accommodation entries to interested parties on which it got commission. Later he has also confessed that the company has offered an additional income of Rs. 2,25,000/- for Asst. Year 2005-06 for taxation. He has also admitted that the assessee company has some undisclosed bank accounts. Therefore, this is a clear case of income escaping assessment. Issue notice u/s 148 of the Income-tax Act, 1961." The ld. Counsel for the assessee made a categorical statement that no substantive addition is made only protective assessments are made in the hands of the assessee company. On query from the Bench the ld. JCIT, Sr. DR Shri Prabal Chowdhury fairly conceded that no substantive addition is made in the hands of any person but only protective addition is made. But he relied on the orders of the authorities qua the assessee's appeal. Qua Revenue's appeal, he relied on the assessment order. We find that this issue dealt with by CIT(A) vide para 5.1. of his appellate order which reads as under :— "5.1 The argument of the appellant is misplaced in view of the fact that addition has been made on the basis of information collected during the course of survey, enquiry and investigation made by the A.O. The protective addition was made in order to protect the interest of the revenue on the basis of the information received from the A.O. of the persons with whom the appellant has made transactions. Since the addition is protective and subject to outcome of assessment in the case of persons with whom appellant has made transactions, the appellant has no basis to be aggrieved. It amounts to the appellant's insistence to make the assessment on the basis of its own statement given without allowing for cross verification with the other persons transaction. In fact, the A.O. has resorted to protective addition only when the related persons did not corroborate to the statement given by the appellant on oath. In that case, Siemens Mobility GmbH the statement of the appellant on oath may require further probe. Thus, the addition of the A.O. on protective basis is held to be correct. Thus, the appellant fails to get relief on this issue."

15. In this regard it is also relevant to notice that the coordinate bench in the case of Siemens AG (supra) has considered the issue of whether Siemens AG and Siemens Limited constitute an AOP and held that – “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.

Siemens Mobility GmbH 18. Ground No.12 pertains to the short credit of TDS and in this regard we direct the AO to examine the claim and allow the same in accordance with law.