VITKOVICE HEAVY MACHINERY A.S.,MUMBAI vs. ASST DIT (IT) 2(2), MUMBAI

This appeal filed by the assessee on 28.3.2014 is against the order of the AO / direction of DRP, Mumbai. In this appeal, assessee raised five main grounds and the same are as under:- “1. Objection against treating the contract entered into between the appellant and Steel Authority of India Limited as a composite contract.

Objection against treating the consortium of the appellant and Beekay Engineering Corporation as a Association of Persons. 3. Objection against conclusion that the contract entered into between the appellant, Beekay and SAIL has been artificially divided into parts so as to avoid tax liability. 4. Objection against treating income from offshore supply of design and engineering and offshore supply of plant and equipment as taxable in India. 5. Objection against application to Rule 10 for determination of income.” 2. At the outset, ld AR for the assessee submitted that the grounds in the appeal need to revisit the file of the AO / DRP qua the recent CBDT Circular No. 7 of 2016, dated 7.3.2016 relating to „clarification regarding the taxability of Consortium Members‟. 3. Briefly narrating the facts of the case, Ld AR submitted that the assessee is a member of the consortium with Beekay Engineering Enterprises for executing a contract from SAIL. In the assessment, AO held that income of the assessee is taxable in India and the contract in question constitutes a „composite contract‟. AO held that the income from offshore supply of design and engineering and offshore supply of plant and equipment are taxable in India. Further, it is submitted that the status of consortium was disturbed and the AO thrust on the assessee as member of the Association of Persons (AOP). In this connection, Ld AR submitted that the CBDT issued a Circular providing certain guidelines in connection with the taxation of AOP qua the claim of consortium. In this regard, Ld AR submitted that the issue raised in here may be remanded to the file of the AO. 4. On hearing the Ld Representatives of both the parties, we find that the said Circular is certainly relevant and the same was issued only on 7.3.2016. Whereas, the DRP-II, Mumbai finalised the objections only on 17.12.2013 ie in the absence of the said Circular. Considering the same, we find merit in the request of the Ld AR, for which Ld DR has no objection and remand the issue to the file of the AO. AO is directed to examine the applicability of the said Circular to the facts of the present case and decide the issue fresh after granting a reasonable opportunity of being heard to the assessee. Accordingly, all the issues raised in the grounds are allowed for statistical purposes. 5. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 11th January, 2017. (RAM LAL NEGI) ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक 11.01.2017 व.नन.स./ OKK , Sr. PS आदेश की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent. 2. 3. आमकय आमुक्त(अऩीर) / The CIT(A)- 4. आमकय आमुक्त / CIT ववबागीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, 5. ITAT, Mumbai