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

ITA 3297/DEL/2023Status: DisposedITAT Delhi24 December 2025AY 2021-2239 pages
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What did the Tribunal hold?

The Tribunal held that the income from supervisory services should be determined based on the audited books of account, and since the audited books showed a loss, no income was taxable for that activity. The chargeability of interest under sections 234B and 234C was also addressed.

What were the facts?

The assessee, a German company, supplied equipment, designs, and supervisory services to Indian customers. The Assessing Officer (AO) sought to tax certain offshore supplies and onshore services, while the assessee offered some technical services and supervisory services for taxation. The dispute centered on the taxability of offshore supplies and the attribution of profits to a Permanent Establishment (PE) in India.

What were the issues?

The key issues were whether offshore supplies of equipment and designs were taxable in India and how to compute the profits attributable to the Permanent Establishment for supervisory services, particularly when the audited books showed a loss.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C,Section 5(2),Section 9(1)(i),Section 234B,Section 234C

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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI

Before: SHRI M. BALAGANESH & SHRI VIMAL KUMAR

For Appellant: Shri Percy Pardiwala, Sr. Adv, Shri C. S. Mathur, CA, Ms. Richa Agarwal, CA
For Respondent: Shri M. S. Nethrapal, CIT DR
Hearing: 12/11/2025Pronounced: 24/12/2025

Heard together (2 matters)

ITA No. 1592/Del/2022
ITA No. 3297/Del/2023

Read from the judgment's own cause title. This page is filed under one of them.

PER BENCH:

1.

The Assessee SMS Group Gmbh (hereinafter referred to as ‘assessee) by filing the present appeal sought to set aside the impugned order dated 23.05.2022 passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (for short ‘the Act’) in consonance with the order passed by the Dispute Resolution Panel (DRP) dated 17.03.2022 u/s 144C(5) of the Act.

2.

Identical issues are involved and hence they are taken up together and disposed of by this common order for the sake of convenience. ITA No. 1591-1

The order continues below.

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