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Income Tax Appellate Tribunal, DELHI BENCH, ‘D’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI BRAJESH KUMAR SINGH
ORDER
PER VIKAS AWASTHY, JM
1. This appeal by the assessee is directed against the Assessment Order dated 27.01.2025 passed u/s 143(3)/144C(13) of the Income Tax Act, 1961 (hereinafter ‘the Act’), for Assessment Year 2022-23.
The gist of the issues raised by the assessee in appeal is as under:- GOA ISSUES No.
3. Taxability of Offshore supplies in India 4. Appellant had business connection in India
Single composite contract was artificially split into three separate contracts 6. There exists fixed place PE in India 7. There exists dependent agent PE in India 7. There exists Construction PE in India 8. No evidence brought on record by AO for existence of PE 9. Attribution of 100% profits from offshore supplies to the alleged PE 10. Application of section 44BBB of the Act 11 to 13 Offshore supply receipts from GETDIL and SFO Technologies, not related to PGCIL Contract 14 Global operation fee taxable as FTS
Shri Aditya Vohra, appearing on behalf of the assessee, at the outset, submitted that the assessee is not pressing ground no.2 of appeal challenging validity of assessment order on the ground of limitation.
3.1. Narrating facts of the case ld. Counsel for the assessee submits that, the assessee is a tax resident of the United Kingdom and holds valid TRC for the impugned assessment year. The assessee is engaged in the business of designing, engineering, manufacturing and supply of electric equipment. The assessee was awarded tenders by Power Grid Corporation of India Limited (in short ‘PGCIL’ )for offshore supply of goods for setting up a 3000 MW HVDC Terminal Package associated with Western/Northern Region Interconnector for IPP Projects in Chhattisgarh under ‘National Grid Improvement Project” and upgradation of 3000 MW HVDC Terminals at Champa Pooling Station and Kurukshetra to 6000 MW under strengthening in WR-NR transmission corridor for IPP Projects in Chhattisgarh. The scope of contract includes complete project management, design, engineering, manufacturing, testing, supply, port handling and custom clearance for plant and equipments including spare parts, inland transportation, staff training, testing, erection/installation related civil work, and commissioning including performance testing of plant and equipment. A single composite contract was awarded to the assessee on turnkey basis. After award of single contract, the said contract was divided into three contracts i.e. : i. Off-shore contract: For supply of plant and equipment including spares outside India (First Contract) ii. On-shore supply contract: For supply of plant and equipment including spares and testing within India (Second Contract) iii. On-shore service contract: To perform all services and civil work, testing and commissioning including training of personnel in India (Third Contract).
3.2. The ld. Counsel submits that even though the main single contract was artificially divided into three sub-contracts by the assessee, all the responsibilities and liabilities of the project were vested with the assessee. The assessee had claimed before the Assessing Officer that it has only been awarded the first contract for Off-shore supply of plant and equipment including spares outside India for execution. The second and third contract have been awarded to its Indian Associates i.e. GE T&D India Ltd. (in short GE T&D India). The assessee has no role to play in Onshore project activities. The Assessing Officer held that the assessee has installation Permanent Establishment (in short ‘PE’), fixed place PE and a dependent agent PE in India. Thus, the Assessing Officer attributed business profits to PE under India-UK DTAA. Further, the Assessing Officer held that Offshore receipts of Rs.23,16,96,384/- is taxable in India. Likewise, the Assessing Officer brought to tax Offshore supply other than PGCIL Contract amounting to Rs.15,74,95,264/- as taxable in India holding it to be receipts following the ‘Force of attraction’ principle. The ld. Counsel further pointed that the Assessing Officer has erred in taxing Global Operation Fees from assessee’s group company amounting to Rs.13,77,13,110/- as Fees for Technical Services (in short ‘FTS’) u/s 9(1)(vii) of the Act.
3.3. The ld. Counsel submitted that similar additions were made by the Assessing Officer in the preceding assessment years. The assessee carried the issue in appeal before the Tribunal in for Assessment year 2018-19. The Tribunal vide order dated 12th April, 2023, decided all issues in favour of the assessee. Likewise, the appeals of the assessee for Assessment Years 2015-16, 2017-18 and 2020-21 were decided by the Tribunal vide single order dated 13.03.2024 reported as [2024] 160 taxmann.com 694 (Delhi Trib.). The issue relating to offshore supplies, existence of fixed place PE, DAPE and construction PE were decided in the favour of the assessee. Even the issue relating to taxation of Global Operation Fees as FTS was decided by the Tribunal in assessee’s favour. Referring to para 6 of the Dispute Resolution Panel directions, the ld. Counsel pointed that the ld. Dispute Resolution Panel records that the factual and legal matrix in AY 2022-23 is similar to AY 2020-21. He further submits that the Tribunal has decided these issues in favour of the assessee, however, he ignores the order of the Tribunal by stating that the Department has not accepted the order of the Tribunal and the Department has filed appeal before Hon’ble Delhi High Court.
Per Contra, Shri M. S. Nethrapal, CIT-DR representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. CIT-DR reiterated findings of the Dispute Resolution Panel and the Assessing Officer and prayed for confirming the additions.
5. Both sides heard, orders of the authorities below examined. A perusal of DRP directions revel that the DRP has based its findings in upholding the additions on observations of the DRP for AY 2020-21. The DRP categorically recorded that the factual and legal matrix of the case is broadly similar to the Panel observations for AY 2020-21, hence, there is no reason to deviate.
We find that while adjudicating appeals of the assessee for AY 2015-16 to 2017-18 and 2020-21, the Co-ordinate Bench of the Tribunal placed reliance on the decision of Tribunal in assessee’s own case for AY 2018-19 in decided on 12.04.2023. After referring to the said decision, the Co-ordinate Bench summed up as under:-
“19. From the above Tribunal order, it could be seen that the following grounds are covered in favour of the assessee is as under:- Ground Issue Para No. in Page No. in No. in ITAT order for ITAT order for present AY 2018
19. AY 2018-19 appeal
4. Taxability of offshore supply 9.8.2 and 28 10 and 29 in India 5 Whether assessee had 9.8.1 and 29 10 and 30 business connection in India 7 Whether the assessee 9.8.4 and 25 10 and 27 constitutes dependent agent permanent establishment (PE) Whether the assessee had 26 28 constitutes fixed place permanent establishment in India Whether the onus is on the 9.8.5 and 25.1 11 and 28 AO to prove the existence of PE 8. Attributing 100% profits from 9.8.6 and 29 11 and 30 offshore supplies made to PGCIL to the alleged business connections/ PE 9 Applicability of provision of 9.8.3 and 28 10,28 and 29 section 44BB of the Act 10. Whether single composite 9.8 11 to 23 contract was artificially split 10, 12 to 27 into three separate contract 12 to 15 Offshore supply receipts 30 to 32 30 to 32 from SFO Technologies and GETDIL 16-17 Global operation fees from 33 to 35 32 to 35 GETDIL as fees for technical services (FTS)
Thus, for AY 2020-21 the Tribunal overturned findings of the Assessing Officer/DRP and decided the issues in favour of the assessee following its earlier order for AY 2018-19.
For the sake of completeness, relevant extract of findings of the Tribunal in assessee’s appeal for AY 2018-19 are reproduced here in below:- On the issue of Offshore supply receipts from PGCIL: “11. Now, giving thoughtful consideration to the matter on record and the submissions, at the outset, the Bench feels relevant to observe that in the assessment order the Ld. AO has discussed more about the various provisions and principles of law governing the taxability in case of income which is deemed to accrue or arises in India for the purpose of Section 9 of the Act and how there has to be attribution to profit to the PE, without discussing the evidence in the case in hand, to give conclusive findings as to how the Indian associate of the assessee happens to be an agent or construction PE. His primary and ultimate reliance was on the fact that there was single composite contract which was divided into three contracts and that in two contracts, which were to be performed by the Indian entity, the ultimate liability for non- performance or compensation being on assesse, therefore, the Indian entity was a PE and the provisions of profit attribution were applicable. 12 At the same time the Ld. DRP bettered it little while discussing quite more of the recitals of the agreements and contracts but reached same finding that as there was no separate bid for each contract and that in case of any default in second or third contract, it was to be construed to be default of the assessee and result into right of termination and recovery of damages from the assessee by PGCIL, accordingly it too concluded that Associate as PE was involved throughout the contract period. DRP observed that the off-shore supply of equipments by the assessee would have been rendered meaningless in the absence of service of supervision, erection, commissioning etc. all of which was an integral and indivisible part of the contract.
So the key question is if this was independent contract as claimed by assessee or there was artificial spilt of one contract to the benefit of assessee, into three contracts leading to evasion of tax. The first and a very important concept that has to kept in mind is that the controversy regarding taxability event, in case of complex arrangement of contacts, may arise at several stages and with different tax incidences. The adjudication of an issue should be on basis of wholesome reading of the contract and context of terms. In regard to this principle of law the Hon’bleSupreme Court in Ishikawajma-Harima Heavy Industries Ltd. (supra) has observed in para no. 60 as follows :- “In construing a contract, the terms and conditions thereof are to be read as a whole. A contract must be construed keeping in view the intention of the parties. No doubt, the applicability of the tax laws would depend upon the nature of the contract, but the same should not be construed keeping in view the taxing provisions.”
Thus, it will be relevant to reproduce some major clauses of agreements and contracts entered between the PGCIL and the assesse, unlike selectively done by the Revenue Authorities below. The Off-shore contract agreement along with 11 Appendices dated 17.08.2012 is available at page no. 6 to 43 of the paper book and is the basic document and the relevant clauses of same starting from page 9, are reproduced as below :-
“WHEREAS the Employer is desirous of setting up ±800kV, 3000 MW HVDC Terminal ' Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under "National Grid improvement Project” and had invited bids for complete project- management, design, engineering, manufacture, testing, supply, port handling and customs clearance for the Plant and Equipment including mandatory Spares to be supplied from abroad, further handling, inland transportation and delivery at destination Site, unloading, storage, - handling at site, erection/installation including associated civil works, employer staff training, testing and commissioning including performance testing of Plant and Equipment including mandatory Spares and any other services as required for complete execution of the package. WHEREAS M/s. ALSTOM Grid 'UK Limited participated in the above referred bidding vide its First Stage bid proposal reference rro.T0193 dated 26.11.2011, updated Technical Bid, Compliance to Amendment No.-I and Clarification to the provisions of the Bidding Documents pursuant to First Stage Bid Evaluation. submitted vide communication reference CC-CS/156-WR1/HVDC- 1489/7/G10 dated 12.03.2012 and Second Stage Bid vide ref. No. T0193 dated 21st March 2012 read alongwith discount letter ref no. T- 0193/01 dated 22.03.2012. WHEREAS, as per the provisions of the Bidding Documents (Part I) and confirmations as per the documents referred in Notification of Award mentioned under Article 1.1 below, the construction of contracts shall be as follows: First Contract’ for CIF Indian Port of Entry supply of Plant and Equipment including mandatory Spares from outside India, Type Test and Training to be conducted outside India (also referred to as Off-Shore Contract), ‘Second Contract’ for Ex-works supply of Plant and Equipment including mandatory Spares from within India and Type Test to be conducted within India (also referred to as On-Shore Supply Contract), and Third Contract’ for all services to be performed in India covering, inter alia, port handling, port clearance, inland transportation, insurance, delivery at site, handling, storage, erection including associated civil works, testing and commissioning of all equipment and materials, including the equipment supplied under the First Contract end the Second Contract, Training in India etc. (also referred to as On-Shore Services Contract). WHEREAS M/s. ALSTOM Grid UK Limited in their Bid, had proposed M/s. ALSOM T&D India Limited having its Registered Office at A-18, First Floor, Okhla Noida- 201301, U.P. Area, Phase-ll, New Delhi-110020 and business address as A-7, Sector-65, : ca-201301, (hereinafter referred to as “ALSTOM-l” as their Associate for the purpose of executing the On-Shore Supply Contract and On-Shore Services Contract) and furnished “ALSTOM- l” written unequivocal consent vide their letter dated 26.11.2011 (enclosed in their First Stage bid) to work as Employer’s independent Contractor, on the terms and conditions as laid down in the Bidding Documents. WHEREAS the associate proposed by ALSTOM has been accepted by the Employer, as above, subject to the condition that ALSTOM shall be overall responsible and liable for the execution of all the three Contracts irrespective of the fact that the Employer will enter into the ‘First Contract’ with them and the ‘Second Contract’ and the Third Contract’ with ALSTOM-I. Further, in the Contract Documents, for ‘First Contract’ the word ‘Contractor’ shall mean ALSTOM, who had submitted the bid and shall, for the purpose of 'Second Contract' and ‘Third Contract’, include' ALSTOM-I - the Permitted Associate of ALSTOM. Accordingly, without prejudice to the overall responsibility and the liability of ALSTOM for the execution of all the three Contracts, the word ‘Contractor’ wherever appearing in the ‘Second Contract'and the Third Contract’shall also mean ALSTOM- I. WHEREAS the Employer desires to engage the Contractor for the CIF Indian Port of Entry supply of all Plant and Equipment including mandatory Spares inter-alia including Design, engineering, manufacture, testing at manufacturer’s works and CIF supply of all off-shore equipment and materials from country(ies) outside India including Type Testing and training to be conducted outside India for the complete execution of the ±800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region. Interconnector for IPP Projects in Chhattisgarh under “National Grid Improvement Project” as detailed in the Contract Documents (“the Facilities"), and the Contractor has agreed to such engagement upon and subject to the terms and conditions hereinafter appearing. Article 6. ALSTOM having proposed ALSTOM-I as its Associate for the purpose of executing the On-Shore Supply Contract and On-Shore Services Contract and furnished ALSTOM- I’s written unequivocal consent to work as the Employer’s independent Contractor, on the terms and conditions as laid down in the Bidding Documents and, in accordance with the confirmations as per the documents referred in Notification of Award mentioned under Article "1.1 above, Contract Agreement Nos. CC-CS/156-WR1/HVDC- 1489/7/G10/CA-II/4336 and CC-CS/156-WR1 /HVDC- 1489/7/G10/CA-l11/4337 between the Employer and the Contractor’s Associate - ALSTOM-I has also been made on 17.08.2012, respectively for the On-Shore Supply Contract (also referred to as the ‘Second Contract’) and On-Shore Services Contract (also referred to as the Third Contract’). The scope of ‘Second Contract’ includes Design, engineering, manufacture, testing at manufacturer’s works and Ex-works supply of all the equipment and materials including mandatory spares from within India and Type Testing, as detailed in the Contract Documents of said contract, required’ for the complete execution of ±800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under “National Grid Improvement Project”. The scope of ‘Third Contract’ includes all services to be performed covering, inter alia, port handling, port clearance, inland transportation, insurance, delivery at site, handling, storage, erection including associated civil works, testing and commissioning of all the Plant and Equipment including mandatory Spares supplied under the Off- Shore Contract and On-Shore Supply Contract, Training in India etc. and any other services specified in the Contract Documents of said contract, for complete execution of ±800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under “National Grid Improvement Project”. Notwithstanding the award of work under three separate Contracts in the aforesaid manner, ALSTOM shall be overall responsible to ensure the execution of all the three Contracts to achieve successful completion and operational acceptance / taking over of the facilities by the Employer as per the requirements stipulated in the respective Contract Documents. It is expressly understood and agreed by ALSTOM that any default or breach by its Associate, ALSTOM-l under the ‘Second Contract’ and/or Third Contract’ shall automatically be deemed as a default or breach of this ‘First Contract’ also and vice- versa, and any such default or breach or occurrence giving the Employer a right to terminate the ‘Second Contract’ and/or Third Contract’, either in full or in part, and/or recover damages under those contract(s), shall give the Employer an absolute right to terminate this Contract, at ALSTOM risk, cost and responsibility, either in full or in part and/or recover damages under this ‘First Contract’ as well. However, such default or breach or occurrence in the ‘Second Contract’ and/or ‘Third Contract’, shall not automatically relieve ALSTOM of any of its obligations under this ‘First Contract’. It is also expressly understood and agreed by ALSTOM that the Plant and Equipment including mandatory Spares supplied by ALSTOM under this ‘First Contract’ and by its associate, ALSTOM-I under the ‘Second Contract’, when erected and commissioned by its associate, ALSTOM-I under the ‘Third Contract’ shall give satisfactory performance in accordance with the provisions of the Contract”. 14.1 Further, from the notification of award of off-shore contract dated 21.06.2012 and the relevant minutes dated 28.10.2011, page 125-127 of PB,relevant clauses are reproduced as below :- “1.3 Your First Stage Bid submitted for the subject package under Proposal reference no. T0193 dated 26.11.2011; which was opened on 28th November, 2011. In your bid, you have confirmed that M/s. ALSTON T&D India (ALSTOM INDIA) (earlier known as M/s. AREVA T&D India Limited) shall be your Associate for the purpose of executing the On-Shore Supply Contract and On-Shore Services Contract (refer para 2.2 below) and furnished ALSTOM INDIA’S written unequivocal consent vide their letter dated 26.11.2011. ….. 12.1 We confirm having accepted your Bid referred to at para 1.3, 1.7 & 1.8 above) read in conjunction with all the specifications, terms & conditions of the Bidding Documents (referred to at para 1.2, 1.2.1, 1.2.2, 1.2.3 & 1.6 above) and your confirmations as per the documents referred above, and award on you the ‘Off- Shore Contract’ (also referred to as the ‘First Contract’) covering inter-alia supply on CIF Indian Port of Entry of all equipment and materials, mandatory spares including Type Testing to be conducted outside India, Training to be imparted abroad for the complete execution of the ±800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under “National Grid Improvement Project”, as detailed in the Bidding Documents referred hereinabove. The scope of work inter-alia includes the following: Design, engineering, manufacture, testing at manufacturer’s works and CIF supply of all off-shore equipment and materials from country(ies) outside India including Type Testing and training to be conducted outside India. The scope of work under this Notification of Award (NOA) shall also include all such items which are not specifically mentioned in the Bidding Documents and/or your bid but are necessary for the successful completion of your scope under the Contract for the construction of ±800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under “National Grid Improvement Project”, unless otherwise specifically excluded in the Bidding Documents or in this NOA. 2.2 As per the Record Notes of Clarification Meetings (referred to in para 1.5 above) and the acceptance of proposed Associate confirmed vide our communication dated 01.03.2012 (referred to in para 1.6 above), we have notified your Associate M/s. ALSTOM T&D India Limited vide our Notification of Award Ref. No. CC-CS/156- WR1/HVDC-1489/7/G10/NOA-II/4336 dated 21.06.2012 for award of 'On-Shore Supply Contract’ (also referred to as the ‘Second Contract’) for the subject package which includes the Ex-works supply of all equipment/materials including Type Testing to be conducted within India, required, for the complete execution of ±800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under "National Grid Improvement Project”, 'as set forth in the Bidding Documents., viz. Design, engineering, manufacture,, testing at manufacturer’s works and Ex-works supply of all the equipment and materials including mandatory spares and Type Testing from within India. We have also notified your Associate M/s. ALSTOM T&D India Limited vide. our Notification of Award Ref. No. CC-CS/156- WR1/HVDC-1489/7/G10/NOA-lIl/4337 dated 21.06.2012 for award of ‘On-Shore Services Contract’ (also referred to as the Third Contract’) for performance of all other activities, as set forth in the Bidding Documents, viz. port handling, port clearance, inland transportation, insurance, delivery at site, handling, storage, erection including associated civil works, testing and commissioning of all equipment and materials, including the equipment supplied under the First Contract and the Second Contract, Training in India etc. required for the complete execution of +800kV, 3000 MW HVDC Terminal Package associated with Western / Northern Region Interconnector for IPP Projects in Chhattisgarh under “National Grid Improvement Project” Notwithstanding the award of work under three separate Contracts in the aforesaid manner, you shall be overall responsible to ensure the execution of all the three Contracts to achieve successful completion and taking over of the works under the package by the Employer as per the requirements stipulated in the Bidding Documents. It is expressly understood and agreed by you that any default or breach by your Associate , M/s. ALSTOM T&D India Limited under the ‘Second Contract’ and/or the Third Contract’ shall automatically be deemed as a default or breach of this ‘First Contract’ also and vice- versa, and any such default or breach or occurrence „ giving us a right to terminate the 'Second Contract’ and/or 'Third Contract’, either in full or in part, and/or recover damages under those contract(s), shall give us an absolute right to terminate this Contract, at your risk, cost and responsibility, either in full or in part and/or recover damages under this ‘First Contract’ as well. However, such default or breach or occurrence in the ‘Second Contract’ and/or Third Contract’, shall not automatically relieve you of any of your obligations under this 'First Contract. It is also expressly understood and agreed by you that the equipment/materials supplied by you under this 'First Contract’ and by your Associate M/s. ALSTOM T&D India Limited under the ‘Second Contract’, when erected, installed & commissioned by your Associate M/s, ALSTOM T&D India Limited under the Third Contract' shall give satisfactory performance in accordance with the provisions of the Contract.”
15. When these minutes dated 28.10.2011 are considered,the clause 1.3 makes it apparent that in the bid itself ALSTOM-I was proposed and confirmed as an Associate for the purpose of executing the on-shore supply and service contracts.So having an Indian Associate was an integral part of the Bid and not introduced at the discretion of the assessee. Reference in this context can be made to the bid document of September, 2011 containing special conditions of contract available at page no. 231 of the paper book which required that success full bidder shall be under an obligation for entering into the three contracts. The first for off-shore contract and second & third for on-shore supply contract.
Next in the notification of the award, the ‘scope of contract’ of the off shore contract, given to the assessee was limited to, “Design, engineering, manufacture, testing at manufacturer’s works and CIF supply of all off-shore equipment and materials from country(ies) outside India including Type Testing and training to be conducted outside India. As distinguished with Scope of contract, meant for Second and Third Contracts. Thus there was not one scope of contract under which the assesse and Indian Associate were working together.
In aforesaid context only, this notification of award letter dated 26.06.2012 in clause 2.2 mentions that as ALSTOM-I was ‘awarded’ contract 2 and 3 for which ‘separate notification’ of award on-shore supply contract and on-shore service contract was made on 21.06.2012. Thereupon the off-shore contract was executed on 17.08.2012 where it was specifically mentioned that ALSTOM-I was made part of the contract as the part of proposal at the bid stage itself. This of-shore contract specifically mentions that ALSTOM-I shall be ‘independent contractor’ of PGCIL on the terms and conditions as laid down in the bidding document. Article 6 of this document dated 17.08.2012 specifically makes reference to ALSTOM-I’s ‘written unequivocal consent to work as the independent contractor of PGCIL’ and that separate contracts have been entered between PGCIL and Indian Associate of the assesse, ALSTOM- I, on the same date 17.08.2012 for the second and third contract.
The aforesaid discussion of the relevant clauses leave no doubt in the mind of this Bench that at the stage of bid itself ALSTOM-I had joined the assessee in terms of the requirement of the bid. These clauses and stipulations go on to establish that there was a collaborative effort of the assessee and the Indian associate and as such there was not actually a consortium to which one contract was awarded with bifurcation at level of the members of Consortium. The award of separate off shore contract by the PGCIL to assessee and on shore contracts to the permitted associate ALSTOM-I, which was classified as independent contractor of employer, coupled with the execution of separate contracts with defined scope of work of each contract, required each party to perform its obligation under the respective contracts awarded to them separately and to receive the consideration under the contracts independent to each other. The terms negotiated and document executed firmly establish that there was no mix up in the role and identity.
The Ld. Tax Authorities below have actually fallen in error in construing the aforesaid discussed clauses because what appears to be a narrow and not a pragmatic approach. As observed above, they were selective in considering the bid and contract documents clauses and failed to take note of it as a whole and to understand the business prudence of such Bidding involving International entities, while dealing with Indian entities, for such infrastructural contracts. The Ld. AO has merely focused on the fact of three contracts, alleging that a single composite contract awarded on turnkey basis was split artificially into three sub-contracts by the assessee. The matter of fact happens to be it was a condition in bid and there was nothing on the part of assessee to do the splitting of a composite contract.
Then the Ld. DRP has fallen in error in making certain factual errors inobservations. As for instance in para no. 5 of its order Ld. DRP mentions that there are only two signatories to all the three contracts namely PGCIL (the Employer) and the assessee company (the Contractor). The above discussion has established there were three different award of contract and three different contracts were signed and executed. Only the ‘first contract’was executed and signed between the assessee and PGCIL. 20.1 Further in para 5, the Ld. DRP has taken into account ‘Part D’ of a document relating to “commercial issues”, and mentioned that it provided that “if ALSTOM-I fails to enter into the second contract and the third contract, the said contracts shall be entered into between ALSTOM and Power Grid in lines with the provisions of the bid document”. Now as a matter of fact this clause is part of Appendices 10, to the off-shore agreement which contains ‘specific agreements’ made during meetings held from 03.07.2012 to 05.07.2012 between the PGCIL and M/s. ALSTOM, along with its associate ALSTOM-I. This agreement was on the part of ALSTOM to execute second and third contract, merely as an assurance that at advance stage after the bid is accepted and before the contract is actually executed the bid is not frustrated. In any case when the three contract stand executed on 17.08.2012, the issues discussed in the meeting between 03.07.2012 and 05.07.2012 became superfluous but Ld. DRP has unnecessarily stressed upon the same to draw a conclusion that primary commitment in all the three contracts was of the assessee. 20.2 Further in para 5.2, the Ld. DRP has reproduced para 3.2 of the notification of award dated 21.06.2012 without understanding the context in which the same was made. As for the convenience para 5.2 of the order of DRP is reproduced as below :- “5.2 It has also been clarified at para 3.2 therein that- “3.2 Notwithstanding the break-up of the Contract Price, the Contract shall, at all times, be construed as a single source responsibility Contract and any breach in any part of the Contract shall be treated as a breach of the entire Contract.” As a matter of fact that this para 3.2 is part of clause 3.0 in notification of award, which makes reference to contract price and it will be beneficial to reproduce the whole of it, from the notification of award dated 21.06.2012, available at page no. 127 of paper book as under :- “3.0 Contract Price 3.1 The total Contract Price for the entire scope of work under this Contract shall be GBP 107,590,567 + EURO 68,835,118+USD 13,559,144 (Great Britain Pound One Hundred Seven Million Five Hundred Ninety Thousand Five Hundred Sixty Seven Plus Euro Sixty Eight Million Eight Hundred Thirty Five Thousand One Hundred Eighteen Plus USD Thirteen mijlion Five Hundred Fifty Nine Thousand One Hundred ' Forty Four Only) as per the following break- up : Sl. No. Price Component Amount
CIF Price Component GBP 107,590,567 EURO 68,835,118 USD 13,559,144 2. Type Test Charges Included 3. Training Charges Included Total for Off-Shore GBP 107,590,567 Contract EURO 68,835,118 USD 13,559,144 3.2 Notwithstanding the break-up of the Contract Price, the Contract shall, at all times, be construed as a single source responsibility Contract and any breach in any part of the Contract shall be treated as a breach of the entire Contract. 20.3 Ld. DRP has fallen in error in considering that the reference here to “single source of responsibility” is with regard to three contracts but the matter of fact is that it was only in context to the contract price for the off-shore contract. The off shore contract had three components; first being ‘CIF price component’ for which the contract price was disclosed and further the assessee was supposed to provide ‘type test’ and ‘training’but the charges for same were included in the contract price for ‘CIF price component’ and in reference to that it was agreed that any breach in any part of the contract shall be treated as a breach of the entire contract. Here the entire contract has reference to the off- shore contract and not all the three contracts. 20.4 Further, Ld. DRP has fallen in error in considering the ‘scope of work’ mentioned in the bid to be the contract which has been awarded by PGCIL to assessee while as discussed above, the notification of award of the off-shore contract dated 21.06.2012 gave the limited scope of work in off-shore contract and there is a separate delineation of scope of the word for second and third contract awarded to ASTOM-I. Thus Ld. DRP has fallen in error to conclude there is no separate delineation of work.
Lastly, the major focus of tax authorities below and Ld. DR has also been on the fact that under the bid and the three contracts the ultimate responsibility of execution and liability in case of breach remained with the assessee. In this context, the Bench is of considered opinion that the business prudence involving such major infrastructure projects cannot be examined and questioned by the revenue authorities attributing bare motives and to assume that the different contracts under one bid are with only intention to escape taxation. Such arrangements are more out of business prudence andusually for the safeguard of the rights ofIndian entity, like PGCIL, which negotiates and gets executed such infrastructural facility contracts. The intention being successful commissioning of the project and that it is not abandoned or frustrated due toinvolvement of many parties, each performing some part, by shouldering any delay or latches, on other unrelated party. 21.1 In this context, reliance can be placed on the judgment of Hon’ble Delhi High Court in Linde AG, Linde Engineering Division (supra) wherein dealing with the reasons for having such clauses to make parties to a consortium being joint and safely liable under a contract,Hon’ble High Court observed in para 53 and 55 as follows : “53. We are also unable to accept the contention that the fact that Samsung and Linde had agreed to be jointly and severally liable for performance of the contract, would be sufficient to hold that they constituted an Association of Persons for the purposes of the Act. Linde and Samsung agreeing to be jointly and severally liable to OPAL for due performance of the Contract only indicates that Linde and Samsung had accepted a contractual obligation towards a third party, the same does not by itself lead to a conclusion that the said members had formed an Association of Persons. Any entity/individual may agree, for its own business purposes, to accept a liability for due performance of an obligation of another. This by itself would not lead to a conclusion that the said persons had formed a common enterprise or an association which was moved by joint action for a common purpose. As a matter of illustration, let us take a case where a director of a company provides a personal guarantee for a loan taken by the company. Having stood as a surety for the company, the director and the company would be jointly and severally liable to the lender. However, they continue to be independent of each other and the fact that are jointly and severally liable cannot possibly lead to the conclusion that the company and its director constitute an Association of Persons for the purposes of the Act. In order for independent entities/individuals to be considered as an Association of Persons, they must exhibit some trappings of a partnership in relation to their common enterprise.” “55. In every project which is executed by multiple independent agencies, a certain level of cooperation and coordination is required to ensure that the agency involved performs its work in a timely manner as per a predetermined schedule in order to enable the other agency to commence and complete its portion of work. The level of cooperation as agreed between Linde and Samsung was also akin to the level of cooperation as expected from independent agencies executing a project. This can be understood by taking an illustration of a simple project for construction of a building. It is only after an Architect or a Designer provides the detailed drawings that a civil contractor can commence construction. Similarly, it is only after the civil construction is commenced and progressed to a certain level that space for electrical contractors is available for them to perform their work. The work of Interior finishing can take place only after the civil works are complete. The fact that each of the aforesaid agencies, namely, the architect, the civil and electrical contractors are required to complete their work in a pre-determined sequence and are required to cooperate with each other in providing the necessary information and adhering to a specified schedule would not necessarily imply that the architect, civil contractors and electrical contractors had formed an Association of Persons. In this illustration each one of the participants works towards a common project with a certain level of cooperation. However, since the said participants do not act as a single cohesive entity, but perform their independent allocated works, they cannot be considered as an Association of Persons. In order to consider independent agencies as an Association of Persons, it is necessary that they form a joint enterprise with a greater level of common management. An element of mutual agency and joint action for mutual purpose is also necessary. Mere obligation to exchange information, between independent agencies, for co-ordinating their independent tasks would not result in an inference that the agencies had constituted an Association of Persons.” Hon’ble Delhi High Court in the Linde AG Case (supra) has also 22. referred to case of Hyundai Rotem Co., in re [2010] 323 ITR 277/190 taxman 314 (AAR)which was also referredby the assesse before Ld. Tax Authorities below and where the facts werethat Hyosung Corporation submitted a bid for execution of the works relating to 800 KV/400KV Tehri Pooling Station which was floated by Power Grid Corporation of India Limited (Power Grid). The applicant was successful and its bid was accepted. As per the terms and conditions of the bid, the applicant could assign the whole or part of the work to an independent contractor subject to the approval of Power grid. In terms of this provision, the applicant requested that part of the contract relating to onshore supply and services be assigned to M/s L & T. Accordingly, Power Grid entered into a separate contract for onshore supplies and services with M/s L & T. Although, Hyosung continued to be responsible for the overall execution of the project, the scope of work of Hyosung was limited to the offshore portion of the contract. The facts of this case are quite identical; with PGCL being a common party and Ld. AAR in this matter vide application AAR no. 773 of 2008 order dated 17/6/2009, aftertaking into consideration the overall responsibility stipulations for the successful completion of the three contracts rested with the applicant Hyosung in line with the proposal in the bidding document, observed in para 7.4 that; “By incorporating various safeguards in the contract, Power Grid took the necessary precautions to see that notwithstanding the split up of contract into three, the applicant and L&T would act in harmony and maintain requisite coordination for the timely and successful completion of project. Such a role assigned to the applicant by Power Grid was in the overall interest of the project. It is an arrangement conceived of and agreed to by the parties keeping in view the overall objective of successful commissioning of the project.”
Thus, the bench is of considered opinion that the Ld. Tax Authorities below have fallen in error in concluding that there was an artificial split of a contract and that there was one inseparable, indivisible and composite contract.
On the basis of aforesaid discussion the question of assessee having a permanent establishment (PE) can be examined. Ld. AO has not given any substantial reason on the basis of evidence while what weighted heavily in the mind of Ld. DRP was that the supply of equipment on the basis of off-shore contract would have been rendered meaningless in the absence of services of supervision, erection commissioning etc. all of which was an indivisible part of the contract.
25. The Bench is of considered opinion that when the allegation of the Revenue about an artificial split of contract is not sustained and it is established that the assessee has entered into the ‘First Contract’, in its independent capacity, there is no force in the finding of Ld. AO that GE India ( Alostom-I) was actively involved in soliciting business for the assessee. In fact, there is substance in the contention of Ld. Sr. Counsel that in the bidding structure of present nature there is no question of someone ‘soliciting’ the business, as it was a case of open bid to which Indian and Foreign entities, both, were eligible to make the offer of bid.
25.1 There is no question of any agent and principle relationship between the assessee and the Indian associate for a very substantial reason that PGCIL has treated in its contract documents, ALSTOM-I to be its ‘Independent Contractor’. There is substance in the argument of Ld. Sr. Counsel on the basis of judgment of Hon’ble Supreme Court in CIT vs. E-funds IT solutions (supra) that the onus was on the department to prove the existence of PE. The Bench is of considered opinion that such an onus can be considered discharged by specific reference to the evidence. No evidence is brought on record to show that the Indian Associate was employed by any ‘act’ of the assessee to represent the assessee independently while dealing with PGCIL. On the contrary what is established is that it was the assessee at whose proposal, ALSTOM-I was accepted to be an Associate of the assessee and the employer PGCIL treated ALSTOM-I as its ‘independent contractor’ on the terms and conditions, as laid down in the bidding document. If there was any involvement of the employees of Indian Associate, at any stage in the meetings between assessee and the PGCIL that was bound to be there and outcome of the fact that assessee and its Indian associate were required to work in tandemand that does not give rise to existence of a dependent agent P E of the assessee.
As with regard to the question of Indian Associate being a Construction PE again there is force the contention of Ld. Sr. Counsel that the findings of Ld. Tax Authorities below are not on the basis of any facts and evidence. The case of assessee as submitted and established is that under ‘First contract’ it was merely liable to make offshore supplies. Thus, assessee was not engaged in any construction project in India. Its revenues were outcome of the offshores supplies and services rendered off shore. Thus, there was no question of constitution of the Construction PE as per Article 5(2) of the DTAA.
As for the applicability of Section 44BBB of the Act, is concerned, it can be observed that the foundation of it was existence of a PE. The assessee under the ‘First contract’ was merely under obligation to make off shore supplies and wherein property in the goods transferred outside Indian, therefore as Section 44BBB does not speak of engagement of a foreign company for ‘supply’ in connection with the turnkey Power Project, the provisions of Section 44BBB are not applicable. Thus Ld. DRP has fallen in error in sustaining application of Section 44BBB of the Act, on premises that the assessee is involved in the end to end execution of the project in India. The revenue derived by the assesseewere on the basis of offshore supplies and not out of any construction, erection, testing or commissioning activities of a turnkey power project in India. Thus, the application of section 44BBB to such revenue, which is not per se taxable India, is not sustainable.
It also appears that the Revenue is not disputing the fact that under the ‘First Contract’ assessee was only supposed to make off shore supplies. Otherwise too it is appearing from the recitals of ‘First Contract’ that the procurement by PGCIL, was on the basis of, “CIF Indian Port of Entry supply”. The title in property had passed out side India. The payments were also made outside India in terms of this contract. The settled proposition of law in this regard, rightly relied by Ld. Sr Counsel for assessee, is sustainable and the relevant conclusion in para 79, from the judgment of Hon’ble Supreme court in the case of Ishikawajma-Harima Heavy Industries Ltd. (supra)is reproduced below; “Re : Offshore Supply : (1) That only such part of the income, as is attributable to the operations carried out in India can be taxed in India. (2) Since all parts of the transaction in question, i.e. the transfer of property in goods as well as the payment, were carried on outside the Indian soil, the transaction could not have been taxed in India. (3) The principle of apportionment, wherein the territorial jurisdiction of a particular state determines its capacity to tax an event, has to be followed.”
Thus, the Bench is inclined to conclude that there was not an artificial split of bid into three separate contracts to avoid taxes in India.In the present case, the Indian Associate’s non- involvement in off- shore transaction excludes it from being a part of the cause of the income itself, and thus there is no business connection.The Ld. Tax authorities below failed to appreciate the distinction between the existence of a business connection and the income accruing or arising out of such business connection,which is clear and explicit. It is established that assessee had no business connection or dependent agent PE or construction PE in India. The attribution of profit from off- shores supplies made to PGCIL to the alleged business connection or PE and application of Section 44BBB is not sustainable. The ld. Tax Authorities below have fallen in error to hold that off-shores supplies to PGCIL are taxable in India. The assessee was merely under liability for making off-shores supplies to PGCIL under the ‘First contract’ for which the revenue earned is not taxable in India. Consequently, ground no. 3 to 8 are decided in favour of the assessee. Ground no. 9 to 11; It was contended on behalf of the assessee 30. by the Ld. Sr. Counsel that at the time of passing final assessment order, the Ld. AO has not complied with binding directions of DRP. Raising the question that Offshore supply receipts from GETDIL & SFO Technologies- Ld. AO did not follow DRP directions Ld. Sr. Counsel relied ESPN Star Sports Mauritius SNCET Companies vs Union of India: 388 ITR 383 (Del), Global One India Pvt Ltd vs DCIT:
(Del Trib.)and he submitted such addition is not sustainable. Ld. DR however, supported the findings of Ld. Tax Authorities below.
It can be appreciated in regard to these grounds that Ld. DRP in para 5.15 of its order had specifically directed the Ld. AO that receipts on account of offshores supplies made by the assessee to GE T&D and SFO, if they are not related to the PGCIL contract, which is the basis of addition in the draft assessment order, be deleted. Ld. AO in para 20 of final assessment order observed as follows :- “20. In view of the directions of the Hon’ble DRP the receipts from GE T& D India Ltd. and SFO Technologies have been reexamined and it is held that Since the company constituted a dependent agent PE in India (GET&D) as far as the assessee’s entire operations in India were concerned and the same has been upheld by the Ld. DRP. It is pertinent to mention here that once PE has been established for a transaction, it needs not to be established for each and every transaction. Moreover, the supplies are of very high technical specifications, customised machinery and given that the assessee company is a leader in its field, these supplies were to be assembled and made operational/commissioning in India only by itself or its associated enterprises (which is GE T&D in this case), thus such receipts are taxable as discussed in preceding paras. Without prejudice to the above, the assessee company has not furnished copy of agreement of offshore supply with GE T&D and SFO Technologies. It has only furnished sample invoices in case of Offshore supply made to GE T&D. In absence of any underlying agreement, assessee’s claim that offshore supply made to GE T&D and SFO technologies is not related to PGIL contract can not be ascertained.In view of the above, the offshore supplies made to GE T&D and SFO Technologies are taxable as per DTAA and Income Tax Act. Further, the DRP has also upheld the taxability ofGlobal operation fee amounting to Rs. 15.27,62,000 as Fee for Technical services as per DTAA and Income Tax Act.
The Bench is of considered opinion that once the foundation of the findings of Ld. AO on the basis of dependent agent PE status of GE T&D India and SFO technologies in not sustained by this Bench, the foundation of his reasoning in para no above stands washed away. At the same time what comes up is that assessee had claimed that there was no agreement with GE T&D and SFO technologies and on the basis of orders and invoices generated, the supplies were made. Ld. AO has stressed on the agreement without appreciating that the invoices as made available in the paper book from 281 to 371, have terms and conditions described on the purchase order. Thus, on the basis of general terms and conditions, purchase orders were raised and on the basis of which the offshore supplies were made to these two Indian companies. Ld. AO was under obligation to give effect to the orders of DRP in a substantive manner but without there being anything on record to show on the part of the Ld. AO that the supplies were in regard to PGCIL contract with the assessee, the addition was made by ignoring invoices. Thus, these grounds are sustained and decided in favour of the assessee. Ground no. 12; In regard to this ground it can be appreciated 33. that Ld. AO made the general observations while Ld. DRP observed that the specialize / customize training provided by the assessee to the users for assessee and use of specific technical content available for their business ‘make available’ technical knowledge, skill and experience within the meaning of and scope of Article 13 of the DTAA. It has taken into consideration certain specific services on account of which the assessee had received global operation fees. The relevant para 6.3 of the order of ld. DRP is reproduced below :- “6.3 On perusal of the relevant Global Operation Fees Agreements for the years 2017 and 2018 entered into between GE T&D India Ltd and the assessee, which are available in the paper book filed in DRP proceedings, the following services, inter alia, are seen to be provided therein under the respective Heads- Technical support for manufacturing process. a) b) Test system- which includes Test System design, Test Software development and provision for upgrades and new products, design and provision of test jigs and fixtures, providing of technical support in respect of system failure, process performance, spares and maintenance and Training of local support engineers on system. c) Project managed introduction of new products into manufacturing units d) Coordinate and manage introduction of design changes- Technical support and liaison between units and teams, E.g. R & D. e) Master Data- Creation of product configurators on Global IT system, creation of products and materials on global system for use within local unit, training for local units in adaptation of Bom’s, routings and configuration in line with global rules, providing of technical assistance and support and product structure realted issues and Training of local team in configurator development. f) Indirect support- Technical support to suppliers on process support, test system design and support, text fixture design and support, technical/quality issue resolution. g) Component approval – Provide technical data and specifications and Training of local support engineers on system use. h) Localisation- Provision of technical details, technical support for supplier development, facilitation of qualifications to global standard and facilitation of product approval for manufacture. i) Creation of technical documentation for products.
In regard to this ground it was submitted on behalf of the assessee by Ld. Sr. Counsel that there were various services which were rendered for multiple functions to ALSTOM-I and those with regard to Global Industrialization function amounting to Rs. 7,15,24,966/- were offered to tax in the return of income and the balance services valued for Rs. 8,12,37,034/- were not offered to tax as the corresponding services do not fulfil the “make available” clause of paragraph 4(c) of Article 13 of the DTAA. Relying various judgments it was stressed that ALSTOM-I is not enabled to employ these services on its own so the ‘make available’ clause is not applicable. The service provisions were primarily managerial in nature and do not involve any technical knowledge etc. to fulfil the make available test. In context to the principle that the Global operation fee received from GETDIL is not taxable in India in absence of ‘make available’ and as to how the phrase ‘ Make available’ is interpreted under law, the Ld. Sr. Counsel relied CIT vs De Beers India Minerals (P) Ltd: 346 ITR 467 (Kar), DIT vs Guy Carpenter & Co Ltd: 346 ITR 504 (Del), Autoliv ASP Incvs DCIT (International Taxation): [2022] 194 ITD 253 (Del Trib.), Anand NVH Products Incvs ACIT:
(Del Trib.), NTT Asia Pacific Holdings Pte Ltd vs. ACIT: 196 ITD 591 (Mum Trib.), Raymond Ltd vs DCIT: 86 ITD 791 (Mum Trib.), GE Energy Management Services Incvs ADIT: 193 ITD 485 (Del Trib.), Bombardier Transportation Sweden AB vs DCIT: 90 ITR(T) 405 (Del Trib.), Bio Rad Laboratories Incvs ACIT: & 996/Del/2022 dated 30.12.2022 (Del Trib). 34.1 Supporting his contention that Managerial services are not FTS in absence of ‘managerial’ word in India-UK DTAA the ld. Sr. Counsel relied Steria (India) Ltd vs CIT: 386 ITR 390 (Del) and Everest Global Incvs DDIT: 194 ITD 729 (Del Trib.). Ld. DR however, defended the findings.
In this context, it can be observed that the Global Operation Fees Agreement made available at page no. 372-396 of paper book along with copy of invoices available at page no. 397-403 of the paper book establish, that the assessee had agreed to provide services which included industrialization of products, sources and procurement of raw materials, setting quality standers, supply general and contracts. The industrialization support for SMP services details and descriptions have been given in appendix II available at page no. 377 of the paper book. Ld. DRP has merely taken into consideration the sub-heads of Global Industrialization support services, which have infact already accrued to tax. Ld. Tax Authorities below have approached the issue with the very general discussion without appreciation of any evidence and facts to show that how the other services fall into the category make available clause. The essence of ‘make available’ clause is that the technical knowledge or skills of the provider should be imparted to be absorbed by the receiver so that the receiver can deploy similar technology or technique in the future without dependent upon the provider. However, in the case in hand for the services rendered, there is renewal of contract on annual basis and the nature of services are all prima facie managerial in nature. They have also passed the arm’s length tests. Thus Ld. Tax authority below have fallen in error intaxing global operation fee of Rs.8,12,37,030 received from GETDIL as Fees from Technical Services (“FTS”) under the provisions of the Act and the India-UK DTAA, without appreciating that provision of said services by the Appellant did not satisfy the ‘make available’ clause contained in Article 13(4)(c) of the India-UK DTAA. Ground is adjudicated in favor of assessee.
Consequent to determination of raised and argued grounds no 3 to 12 in favour of assessee, the appeal is allowed. Impugned final assessment additions are deleted with consequential effects.”
The Revenue has neither placed on record any material to controvert the order of the Tribunal in assessee’s own case for preceding assessment years, nor the Revenue has furnished any order from the Hon’ble High Court reversing the Tribunal order or even granting stay on the said order. Therefore, we see no reason to take a different view in the impugned assessment year.
In so far as on the issue of holding GE T&D IL as assessee’s PE in India, the Co-ordinate Bench in assessee’s appeal for AY 2020-21 (supra) has held as under:-
“24. Ground No. 6 raised by the assessee is challenging the action of the ld AO in holding that GETDIL constitutes fixed place permanent establishment in India.
We have heard the rival submissions and perused the material available on record. The assessee has a group company i.e. GETDIL. The ld AO observed that this Indian company was taking active part of the Indian leg of the composite contract and accordingly treated the Indian company i.e. GETDIL as Dependent Agent of the assessee. In this regard, we find that Indian company is independently acting on its own, having its own work force, having independent receipts and had suffered taxes in India. Hence, it cannot be construed as Dependent Agent Permanent Establishment (DAPE). The Indian entity does not have any authority to conclude contract. The contract is awarded based on global bids. Hence, we hold that the entire observations made by the ld AO in this regard are totally without any basis. Our view is further fortified by the decision of Hon’ble Jurisdictional High Court in the case National Petroleum Construction Company Vs. DIT reported in 383 ITR 648(Del) wherein, it was held that given where assessee, a UAE based company, in course of carrying out contract with ONGC for installation of petroleum platforms, availed services of ASL for providing marketing information and other facilities in India, since 'ASL' was not authorized to conclude contract on assessee's behalf, paragraph 5 of article 5 of India-UAE DTAA applied to its case and, thus, it could not be regarded as Dependent Agent Permanent Establishment (DAPE) of assessee in India. Accordingly, ground No. 6 raised by the assessee is allowed.”
Though, it is a well-established legal principle that PE has to be determined in each year separately, as pointed earlier, the Dispute Resolution Panel has admitted that the legal and the factual matrix in the impugned assessment year is similar to that of AY 2020-21. Thus, in light of findings of the Co-ordinate Bench in assessee’s own case in preceding assessment year, we have no hesitation in holding that the assessee does not have any PE/DAPE in India.
Accordingly, the assessee succeeds on grounds of appeal
no.3 to 14.
12. The ld. Counsel for the assessee has made a statement at Bar that he is not pressing ground no.2 challenging validity of assessment order. In the light of statement made by ld. Counsel, ground no.2 of appeal is dismissed as not pressed.
13. In ground no.15 of appeal, the assessee has assailed levy of interest u/s 234B of the Act. Charging of interest on aforesaid section is mandatory and consequential. Hence, ground no.15 is dismissed.
14. In ground no.16 of appeal, the assessee has alleged that there is a computational error in determine the total interest and fee payable in the computation sheet annexed to the impugned assessment order. This issue is restored to the Assessing Officer for verification.
In the result, appeal of the assessee is allowed in terms aforesaid.
Order pronounced in the open court on Monday the 10th day of November, 2025.