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Income Tax Appellate Tribunal, DELHI BENCH ‘D’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI AVDHESH KUMAR MISHRA
This appeal for the Assessment Year (hereinafter, the ‘AY’) 2010- 11 filed by the assessee is directed against the order dated 23.10.2017 passed under section 147/144C(13) r.w.s.143(3) of the Income Tax Act, 1 GE Nuovo Pignone SPA 1961 (hereinafter, the ‘Act’) by the Deputy Commissioner of Income Tax, Circle-1(3)(1),(International Taxation), New Delhi [hereinafter, the ‘Assessing Officer’/‘AO’].
Vide 20 grounds, the issues raised in this appeal are as under: - (i) Re-opening of the assessment (Ground Nos. 2 and 3) (ii) Taxability of income from Offshore supplies (Ground Nos. 4 to 11) (iii) Profit attributable to PE in India (Ground Nos. 12 to 19) (iv) Levying of interest under section 234B of the Act (Ground Nos. 20).
The brief facts giving rise to this appeal are that the assessee, a non-resident, incorporated in Italy, is a supplier of compressors, pumps and its accessories/spare parts, etc. It also provides services in oil and gas industry. The appellant/assessee filed its original Income Tax Return (hereinafter, the ‘ITR’) on 15.10.2010 declaring income of INR 586,728,699/-. Later on, the case of the assessee was reopened under section 148 of the Act based on the incriminating material gathered during the course of survey operations carried out at the business/office premises of General Electric International Operation Company Inc., India liaison Office on 02.03.2007. In response to the notice under section 148 of the Act, the assessee filed its ITR on 30.03.2012declaring income of Rs.58,67,28,699/- (as declared in the 2 GE Nuovo Pignone SPA original ITR). Consequent to the above-mentioned survey, it was held in the assessments of AYs 2001-02 to 2008-09 that the assessee was having business connection as well as Permanent Establishment (hereinafter, the ‘PE’) in India; hence, its income was taxable in India. Therefore, the AO taxed 35% of total business profit pertaining to marketing activities carried out by the assessee in India in the assessment of AYs 2001-02 to 2008-09. Further, the income declared as FTS was also taxed under section 44DA of the Act. Based on the findings of earlier years, the assessment of the relevant AY was also done accordingly as there was no change in facts of the case. The draft assessment at income of Rs. 82,95,49,379/- of the relevant AY was completed vide draft order dated 26.12.2016. Aggrieved, the assessee went before the Dispute Resolution Pannel (hereafter, the ‘DRP’). However, it did not succeed there. Consequentially, the final assessment was completed, vide impugned order, at income of Rs. 82,95,49,379/-.
Before us, the Ld. Authorized Representative (hereinafter, the ‘AR’), at the outset, submitted that the Ground No. 1 being general in nature, was not pressed. Further, he submitted that the issue of reopening raised vide Ground Nos. 2 and 3 and the issue of income derived from offshore supplies raised vide Ground Nos. 4 to 11 had GE Nuovo Pignone SPA been decided against the appellant/assessee in its own case for the AY 2009-10 by the Hon’ble Delhi High Court in the & CM Appl. 23000/2019 and W.P(C) 6494/2019 dated 19.09.2024. Hence, these issues should be decided accordingly.
4.1 The Ld. AR further submitted that the issue of profit attributable to PE in India raised vide Ground Nos. 12 to 19, had been also decided partly against the assessee vide the above-mentioned High Court order (supra). He therefore, requested for part relief on this score in view of the above-mentioned order of the Hon’ble High Court in the appellant/assessee’s own case for the AY 2009-10. In the impugned assessment order, the AO had apportioned the profits attributable to the PE @ 3.5% whereas the Hon’ble High Court had upheld the rate of 2.6% of total sales in the preceding year.
The Ld. Commissioner of Income Tax-Departmental Representative (hereinafter, the ‘CIT-DR’) was not having much to say. Even though, he requested for dismissal of appeal.
We have heard both the parties and are of the considered opinion that this appeal is squarely covered by the decision of the Hon’ble Delhi High Court in the case of the assessee in (supra). Accordingly, following the reasoning given by the Hon’ble High Court in GE Nuovo Pignone SPA the case of the appellant/assessee in (supra) for the AY 2009-10, the issue of reopening of the case raised vide Ground Nos. 2 to 3 and the issue of income derived from offshore supplies raised vide Ground Nos. 4 to 11 are dismissed.
As far as the issue of profit attributable to PE in India raised vide Ground Nos. 12 to 19 are concerned, the finding of the Tribunal on this issue in the case of the appellant/assessee for the AY 2009-10 was upheld by the Hon’ble Delhi High Court in para 27 & 28 of the said order in (supra). Keeping in view, the reasoning given by the ITAT and the Hon’ble High Court in this regard in the appellant/assessee’s own case in (supra), we hereby direct the AO to apply the rate of 2.6% of total sale instead of 3.5% for working out the profits attributable to PE in India.
The issue of chargeability of interest under section 234B of the Act, being consequential in nature, stands dismissed.