SMS GROUP GMBH (FORMERLY SMS SIEMAG AG),NEW DELHI vs. ACIT, CIRCLE- 3(1)(2), INTL. TAXATION, NEW DELHI

ITA 2144/DEL/2012Status: DisposedITAT Delhi09 April 2025AY 2007-08Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI S. RIFAUR RAHMAN (Accountant Member)37 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the consideration for drawings and designs, integral to equipment supply, was not taxable as Fees for Technical Services but as Business Profits, provided it was inextricably linked to the sale of plant and equipment and not attributable to a Permanent Establishment in India. The levy of Section 234B interest was also addressed based on statutory amendments.

What were the facts?

The assessee, a foreign company, appealed against the taxability of income from supply of equipment, drawings, and designs, and the levy of interest. The core dispute revolved around whether these were business profits or fees for technical services, and the existence of a Permanent Establishment in India.

What were the issues?

The key issues were the characterization of income from supply of drawings and designs as business profits versus fees for technical services, and the determination of a fixed place Permanent Establishment in India.

Which sections of the Income-tax Act were involved?

Section 9(1)(vii),Section 143(3),Section 144C,Section 234B,Section 263(1)

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Cases cited in this judgment(11)Show list

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IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER Assessment Year: 2008-09 With Assessment Year: 2007-08 With Assessment Year: 2007-08 With Assessment Year: 2009-10 With Assessment Year: 2010-11 With Assessment Year: 2011-12 Vs. Addl. DIT/DDIT, M/s. SMS Siemag AG (formerly SMS Demag AG) Circle-2(2), Intl. Taxation, C/o- Mohinder Puri & Co., New Delhi CA, 1A-D, Vandhna, 11 Tolstoy Marg, New Delhi PAN: AADCS1173J (Appellant) (Respondent) With Assessment Year: 2012-13 With Assessment Year: 2013-14 With Assessment Year: 2014-15

With Assessment Year: 2015-16 With Assessment Year: 2016-17 M/s. SMS Group GmbH Vs. ACIT/DCIT/JCIT (former known as SMS (Intl. Taxation), Siemsag AG), Circle-3(1)(2), C/o- Mohinder Puri & Co., New Delhi CA, 1A-D, Vandhna Building, 11 Tolstoy Marg, New Delhi PAN: AADCS1173J (Appellant) (Respondent) With Assessment Year: 2015-16 With Assessment Year: 2016-17 M/s. SMS Mevac UK Ltd., Vs. ACIT/DCIT/JCIT C/o- Mohinder Puri & Co., (Intl. Taxation), CA, 1A-D, Vandhna Building, Circle-3(1)(2), 11 Tolstoy Marg, New Delhi New Delhi PAN: AAMCS7193M (Appellant) (Res

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