Income Tax Appellate Tribunal - Delhi
Joint Commissioner Of Income Tax vs Hyundai Heavy Industries Co. Ltd. on 3 March, 2004
Equivalent citations: (2004)84TTJ(DELHI)256
ORDER
P.N. Parashar, J.M.
1. These are two appeals of the Revenue against the order of the CIT(A) dt. 8th Jan., 1999 for asst. yr. 1993-94.
Smt. Parwinder Kaur, learned Departmental Representative represented the Department in this appeal, whereas Shri O.P. Sapra, advocate, learned counsel appeared on behalf of the assessee.
2. At the outset, learned counsel for the assessee pointed out that these two appeals by the Revenue are against the same order of the CIT(A) and for the same assessment year i.e. 1993-94 and identical grounds have been taken in these two appeals. The submission of the learned counsel is found to be correct. Since, the Department has filed two appeals against the same order of CIT(A) and has taken identical grounds in these two appeals, consequently, the Appeal No. 1754/Del/1999 filed by the Revenue is treated to be infructuous and is dismissed accordingly.
3. In Appeal No. 1753/Del/1999, the Revenue has taken the following grounds of appeal:
"1. The CIT(A) has erred in law and on facts in deleting the addition made by the AO in bringing to tax income arising to the assessee in respect of payments shown as outside India receipts. The CIT(A) erred in accepting the assessee's contention that outside India activities were not attributable to permanent establishment in India.
2. The CIT(A) has erred in law and on facts in following the order of CIT(A) in . this case for asst. yr. 1992-93 while ignoring that the facts of the case in the year under consideration were at variance from the facts in asst. yr. 1992-93. Due to substantial progress of contractual activities, P.E. certainly ''existed during the year under consideration.
3. The CIT(A) erred in law and on facts in not following the spirit of CBDT's Instruction No. 1767, which lays down that the payments in respect of outside India activities for turnkey contract are also taxable at the deemed profit rate of 1 per cent."
4. The facts concerning this matter are that the assessee-company was incorporated under the corporate laws of South Korea. Certain contracts were executed between the assessee and the ONGC for carrying out works on certain projects. The work was to be done inside India and also in respect of outside India operation. As observed in para 2.3 of the order of the CIT(A), the assessee had entered into an agreement with ONGC for carrying out the works in respect of:
1. Hira Process Complex
2. LA, LB, LC, LD, and LE Well Platform
3. Neelam Process Complex
4. N.P. Platform Complex, It was stated on behalf of the assessee that the contracts stipulated some arrangements which related pre-designing, engineering, procurement, fabrication, transportation, installation, hook up, testing and pre-commissioning and a part of these activities were to be performed outside India and mainly in Korea. Regarding taxability of income relating to these arrangements, it was explained that since the Government of India and South Korea were signatories to the Double Taxation Avoidance Agreement (DTAA), the agreement entered into between the assessee and the ONGC were governed by the provisions of that treaty. Article 7 of this treaty, which regulates the taxability of income is as under;
"Article 7 'Business profits'
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment."
The term of permanent establishment has also been defined under Article 5 which is as under:
"Article 5 'Permanent establishment'
1. For the purposes of this convention, the term 'permanent establishment' means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term 'permanent establishment' shall include especially :
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3. The term 'permanent establishment' likewise encompasses a building site, a construction assembly or installation project or supervisory activities in connection therewith, but only where such site project or activities continue for a period of more than nine months.
4. Notwithstanding the preceding provisions of this article, the term permanent establishment shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of advertising, the supply of information, scientific research, or any other activity, if it has a preparatory or auxiliary character in the trade or business of the enterprise;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paras (a) to (e) of this paragraph, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character."
5. The assessee filed return of income for asst. yr. 1993-94 declaring nil income by adjusting profits from contract with the Northern Coal India Ltd. with brought forward losses of earlier years. During the course of assessment, the AO noticed that during the financial year 1990-91, the assessee completed the Heera Project Complex against which some payments were received during the year for outside India. Besides it, the assessee also executed three projects all at Bombay High for ONGC. In the assessment proceedings, the assessee claimed that there was no permanent establishment (PE) in India during the previous year, in terms of Article 5(3) of DTAA. It was also claimed that the Bombay office provided only maintenance of services for various projects executed for ONGC. The AO made enquiry into these claims of the assessee and issued show-cause notice. In compliance, to the notice, the assessee filed reply. However, AO did not accept the claim of the assessee and was of the considered view that payments made for the contracts on mile-stone formula for the outside India operations were to be taken at 10 per cent for want of books and record to determine the actual income therefrom. The receipts attributable to PE were taken at Rs. 87,91,90,131 and after deducting loss of Rs. 42,80,24,671 on account of inside India operations, the AO worked out net income attributable to PE by applying net profit of 10 per cent on the balance amount as per the computation made in the assessment order. Regarding outside India operations and income therefrom, the AO has made following observations :
"As regards the outside India operations carried out in execution of the above lumpsum contract, it was stated that as all the activities pertaining thereto were carried out beyond the territory of India, no income therefore, could be attributed to the PE under Article 7 of the Convention. From the perusal of the contracts, it is seen that all of them are signed in India. The site para-meters and various projects connected pre-designing activities were implicitly performed in India so as to make an accurate design of each platform and structures connected therewith at the yards of the NRA in Korea. Further, the NRA has also not furnished any evidence of visit of their technicians from time to time in the preliminary stage of contract. Besides, other reasons for adding the ostensible outside India generated income attributable to the PE apply mutatis mutandis from past years into this year because of the similarity of facts relating thereto. Hence, the payments ostensibly shown in the contract on mile-stone formula for the outside India operations are taken at 10 per cent for want of books and records to determine the actual income therefrom as are attributable to the PE. In this respect, it need be mentioned that any work performed outside India even for execution of such works as fabrication, designing, transportation, etc. relating to even Indian contracts shown to be carried outside India are not included in the project accounts of the various contracts to be executed in India. For want of the same, the above procedure is employed in keeping with the practice of earlier years, as also the basis which are employed in the case of other similarly placed non-resident companies."
6. The assessee filed appeal against the taxable income worked out by the AO. Before the CIT(A), written submissions dt. 30th July, 1996 and 13th Sept., 1996 were filed. The specific plea of the assessee before the CIT(A) was that the agreements were for designing, engineering, procurement, fabrication, transportation, installation, hook-up, testing and pre-commissioning and part of these activities were to be performed outside India, i.e., mainly in Korea. It was stated that as per Article 7.1 of the DTAA signed between India and Korea, the profit of the assessee was taxable only in that State to which it belongs unless the enterprise carried on the business in the other Contracting State through a PE and only in respect of so much of the profit as was attributable to that PE. The contention of the assessee was that the works done before the arrival of the structure in India were done or performed outside India and the Revenue earned in respect of works done outside India or activities carried out outside India, was not taxable in India.
7. In this regard, the assessee also filed certificate of ONGC dt. 12th Feb., 1996 and 26th Feb., 1996 in support of its contention that payments made to the assessee were not in the nature of the advance payment, but payments made in accordance with the contractual provisions based on the satisfactory completion of the work. On the basis of these certificates, it was stated that the assessee had no presence at the off-shore site in any form prior to the arrival of the structure, etc. for carrying out of India operations in pursuance of the contract. It was further submitted that the Revenue pertaining to outside India operations was not taxable in India but in Korea and in support of this contention, the assessee filed a certificate from the Korean Taxation Office.
8. Before the CIT(A), it was pointed out that similar issue was considered by the CIT(A) in asst. yr. 1992-93 and the it was decided in favour of the assessee. The CIT(A) called for the comments of the AO with regard to the certificate of ONGC and the written submissions of the assessee. AO reported that activities like pre-designing, etc. must have been performed by the assessee in India and the assessee did not file any document/evidence to show that it had no presence in India at the off-shore site.
9. The AO further stated that the work performed in India at off-shore site was in the nature of combined contract which concluded well after installation, hook-up, testing and commissioning and as such outside operation of these contracts cannot be segregated from inside India activities and, therefore, payments outside India were rightly taken at 10 per cent as attributable to the PE.
10. Against the comments of the AO, the assessee filed written rejoinder dt. 3rd Sept., 1998. This written rejoinder has been quoted by the CIT(A) in para 2.7 of his order. For the sake of brevity, we do not consider it proper to reproduce the same here.
11. On the above written rejoinder, again the AO submitted comments dt. 10th Sept., 1998 and thereafter, the assessee also filed written rejoinder dt. 15th Oct., 1998, which have also been reproduced in para 2.9 of the order of the CIT(A).
12. The CIT(A) after considering the written submissions and arguments of the assessee, found force in the stand of the assessee and held that the claim of the assessee deserves to be allowed. The relevant observations of the CIT(A) are contained in para 2.11 of his order, which are being reproduced below :
"The written submissions and arguments of the appellant and comments of the AO have been considered. The facts this year are similar to the facts of immediately preceding asst. yr. 1992-93 and the AO has relied on assessment order of asst. yr. 1992-93 for bringing to tax the payments pertaining to outside India operations of the appellant, Both the AO as well as the appellant have accepted the fact that the payments made by the ONGC to the appellant were connected with the work at the yard of the NRA in Korea even though forming part of the agreement signed between ONGC and the appellant-company. As per the report of the AO dt. 15th Oct., 1998 discussed above, the ONGC have confirmed the certificates dt. 12th Feb., 1996 and 26th Feb., 1996, on which the appellant had placed reliance in support of its claim that the payments received were not in the nature of advance payments and that the payments were made on completion of work in accordance with Clause 8.6.3 of the contract and that all communications during the building stage of the projects and thereafter were always addressed to the head office in South Korea of the appellant-company and that the appellant-company had no presence at the 'off-shore' site in any form prior to the arrival of structures, etc. for carrying out Indian operations in terms of the contracts. Further a perusal of CBDT Instruction No. 1767, dt. 1st July, 1987 shows that the issue regarding taxability of income of non-resident contracts engaged by resident organisation like ONGC carrying the business of oil exploration and production in India, for the execution of turnkey projects involving work to be carried out in India as well as outside India for a lumpsum consideration has been considered by the CBDT. It is stated in this instruction that where ownership in the platform or other facilities passes outside India, the non-resident will be taxable only in respect of the activities performed in India by way of installation, hook up and commissioning, etc. of the facilities acquired by Indian enterprise engaged in oil exploration and production. I find that the issue has already been examined in detail by my predecessor in his appellate order in Appeal No. 15/DDN/95-96 dt. 10th Jan., 1996 in the case of the appellant for asst. yr. 1992-93 and has been decided in favour of the appellant. Since the facts of this year are similar to the facts of preceding year as admitted both by the AO and the appellant in the assessment order and written rejoinder respectively, the claim of the appellant for this year is being allowed."
13. Before us, learned senior Departmental Representative placed reliance on the order of the AO and submitted that pre-designing activities carried out by the assessee for execution of the works relating to contracts were conducted in India and since such activities were part of total contract, the total receipts in relation to such contract should have been considered and included in the income of the assessee.
14. Learned counsel, on the other hand, placed reliance on the order of the CIT(A). He submitted that the issue relating to work carried out by the assessee outside India arose in asst. yr, 1986-87 and the Tribunal has decided the issue in those assessment years in favour of the assessee. Learned counsel for the assessee further pointed that in subsequent years also the issue has been decided by the Tribunal in favour of the assessee. In this regard, he has invited our attention to the copy of the order dt. 17th Feb., 2000 for asst. yr. 1989-90, copy of the consolidated order of the Tribunal order dt. 30th Aug., 1999 for the asst. yrs. 1986-87 to 1988-89 in the case of the assessee and copy of order dt. 8th Nov., 1998 for asst. yr. 1995-96 in the case of BKI/HAM.
15. Learned counsel further pointed out that the CIT(A) has placed reliance on the order of his predecessor for asst. yr. 1992-93 and since the Department has not preferred any appeal against that order, the said order has become final. He also submitted that facts of asst, yrs. 1992-93 and 1993-94 are identical as pointed out by the CIT(A) also in the impugned order. Copy of the above-mentioned order of CIT for asst. yr, 1992-93, dt. 10th Jan., 1996, has also been filed along with the paper book.
15A. The learned counsel for the assessee also pointed out that platform structures in relation to three projects did not even arrive in India, during the assessment year under consideration. In this regard, he invited our attention to the details submitted before CIT(A) and which are as under :
As per the written submissions dt. 10th July, 1996, filed before the CIT(A) copy at pp. 86-90 and also from the impugned assessment order it is evident that there were receipts from following four contracts in the year under appeal outside India.
Name of the contract Date of platform. Arrival date
structures transported of structure
from Korea in India
(a) LA, LB, LC, LD, LE, Well Platform Project 18-3-1993 19-4-1993
(b) Neelam Process Complex Project 18-1-1994 25-2-1994
(c) NP Process Platform Complex Project 11-11-1993 12-12-1993
(d) Heera Process Complex : Admittedly this contract was executed in the preceding year and only part of outstanding payments were received during this year. The CIT(A) vide his order dt. 10th Jan., 1996, for the asst. yr. 1992-93 copy at pp. 79 to 85 had held that no part of receipts outside India in respect of Heera Process Complex contract were liable to be taxed in India, It may be noted that these details have not been controverted by the Department.
15B. In support of the contention that the assessee had no presence at the off shore site prior to the arrival of structures, the learned counsel made reference to the certificate of ONGC dt. 12th Feb., 1996, in which the following was stated:
"........................
We further confirm that Hyundai Heavy Industries Co. Ltd., South Korea, had no presence at the off shore site in any form prior to the arrival of structures, etc. for carrying out Indian operations in terms of the contract."
16. We have carefully considered the entire material on record and the rival submissions. At the time of hearing of this appeal, the Bench raised a query from the learned Senior Departmental Representative and required her to inform as to whether any appeal was filed by the Department against the order of CIT(A) for asst. yr. 1992-93 or not. She informed that no appeal was filed against the order of the CIT(A) for asst. yr. 1992-93.
17. On going through the relevant material and the order of the Departmental authorities in relation to the grounds taken before us, it is found that one of the issues to be decided is as to whether the assessee had any permanent establishment in India for carrying out the works outside India. The specific contention of the learned counsel is that even though the assessee may be having office establishment at Bombay or elsewhere in India, for carrying out various works in relation to various projects, but since every project is a separate project, it has to be seen as to whether there was a permanent establishment in relation to such project/work/contract or not. It was further pleaded that work relating to designing, engineering, fabrication, transportation, loading, etc. carried out outside territory of India, are to be taxed as per rule given in Article 7 of the Convention, i.e., in the State in which the company is resident, i.e., in South Korea in the present case. This contention of the assessee has to be examined in relation to the relevant facts. The definition of permanent establishment has been given in Article 5, which has been reproduced above. However, the definition cannot be considered in abstract and functional test is to be applied. It has to be seen as to whether the assessee had permanent establishment, i.e., permanent infrastructure including office equipments, supervisory staff, and other features of such establishment. In the present case, the Department has not made investigation into this aspect of the matter and has placed reliance on the material supplied by the assessee.
18. On the other hand, CIT(A) has considered the confirmations from ONGC, relevant clauses of contract stipulating the manner in which the contract was to be executed, Clause (4) of Article 5 of AADT and rejected the contention of the AO by reproducing the comments of the assessee given in rejoinder dt. 15th Oct., 1998. A relevant portion of the rejoinder is as under:
"(a) Pre-designing or pre-engineering, survey per se do not generate any profits particularly when nothing is paid by ONGC, etc. as is evident from various agreements. In other words, the cost of such surveys is to be borne by HHI. Therefore, it is incorrect on the part of the AO to say that such work constitutes an integral activity towards performing of the contract itself.
(b) Further, doing survey work does not bring in any PE nor any such survey work was attributable to a PE. It is also relevant to mention here that such survey work was done by the sub-contractors and not by HHI.
(c) It has to be appreciated that the income if at all results from the payments received by the appellant under the agreements for various contracts and as submitted above, when no payment is made for the survey work, no income can be assumed or attributed to such survey work and this is why such activity was excluded from the term 'permanent establishment' under Article 5 of AADT. Therefore, the survey, etc. would at best amount to temporary or auxiliary character in nature being purely temporary and therefore, the same could not give rise to any permanent establishment. It is so because not only the survey was to be done by the contractor either by itself or through sub-contractor at its own cost but such surveys on their own were not capable of generating any results whatsoever what to speak of any income.
(d) The appellant hereby specifically denies to have got done such surveys from a fixed place in India and the AO has been incorrect in assuming to the contrary. As submitted above, such surveys had been done through sub-contractors and not by the appellant.
(e) It is merely a presumption on the part of the AO to observe in his comments that M/s HHI is also maintaining a fixed base in India in respect of its other contracts form which the works under this contract must have also been looked after or performed and that having such PE in India has also never been denied by M/s HHI as it maintained the project office in India right from 1983 till date."
Thus, the certificate of ONGC, the written submission of the assessee and the certificate of the Korean tax authorities had been considered and referred to by the CIT(A) for coming to the conclusion that the assessee did not have PE in India and that the outside India works were mostly carried out from Korea itself. The Department has not been able to controvert this factual finding. In fact, no material has been placed before us by the Revenue in support of the grounds of appeal. The learned Departmental Representative has simply placed reliance on the order of the AO and did not make reference to any other material except it. Hence, we have to decide the matter only on the basis of the documentary evidence placed before us by the assessee and have to examine the impugned order in the light of the material made available to us.
19. In his appellate order for asst. yr. 1993-94, the CIT(A) has placed reliance on the order of his predecessor for asst; yr. 1992-93 and as observed above, the Department has not preferred any appeal against that order of CIT(A) which means that on similar facts, the order of the CIT(A) for asst. yr. 1992-93 has become final.
20. It may be pointed out at this stage that the CIT(A) in his order dt. 10th Jan., 1996 for asst. yr. 1992-93, has concluded his findings on this issue by observing us under :
"I have considered this issue very carefully. Since the aforementioned both the certificates dt. 12th Oct., 1995 and 22nd Dec., 1995, from the ONGC were neither called for nor did the AO examine appellant's case in regard to this issue in the light of the fact whether or not such a payment of 187,448 dollars made by the ONGC to the appellant was in respect of the works done by the latter outside India, i.e., in Korea and as under the circumstances, I find that appellant had not been given reasonable opportunity to explain its case in this regard, and further as the AO through his aforementioned letter dt. 10th Jan., 1996, has not offered any reasons why such certificates be not admitted in evidence, under such circumstances. I, therefore, admit these in evidence. Having held so, I find that in view of aforementioned certificate dt. 22nd Dec., 1995, the impugned payment of 187,448 dollars made to the appellant by the ONGC in respect of the contract relating to Heera Process Complex was on completion of the work outside India in accordance with Clause 8.6.3 of the said contract. Further, it has also been confirmed by the concerned authority of the ONGC in the aforementioned certificate that the appellant had no presence at the off shore site in India prior to the arrival of the structures, etc. for carrying out Indian operations in terms of the contract. There is another evidence in the form of certificate from the Korean Tax Department and it states that payment received or revenue earned in respect of work performed outside India by the Hyundai Heavy Industries Co. Ltd. in terms of its various contracts with ONGC' is taxable in Korea as per Korean domestic tax laws. In view of aforementioned documentary evidence and the fact that all communications during the bidding stage of the project and thereafter were always addressed to the appellant at its head office in South Korea--a fact duly mentioned in the aforementioned certificate dt. 22nd Dec., 1995 of the ONGC. I hold that this payment had no relation whatsoever to any operations done by the appellant in India in connection with the Heera Process Complex. It is hereby further held that this payment was not in the nature of advance but was based on satisfactory completion of the contractual work, as stated in the aforementioned certificate. This being so, therefore, I hold that the income of US $ 1874.48 which have been valued in the Indian currency in the assessment order at Rs. 32,128 was not taxable in the hands of the appellant and hence the same is hereby deleted. The AO is directed accordingly."
In the case of the assessee in asst. yrs. 1986-87 to 1988-89, also similar issue came before the Tribunal and one of the ground taken by the appellant before the Tribunal was as under :
"The CIT(A) has erred in law and on facts in holding that the contracts executed outside India were also liable to tax in respect of profit attributable to PE in terms of AADT,. thereby completely ignoring the factual position that contracts executed outside India for which payments were also made in Korea had absolutely nothing to do with PE, even if such PE was assumed in India though not admitted. Consequently, the CIT(A) had erred in holding that 1 per cent of the contract, receipts made by the ONGC to the appellant in respect of the contract executed outside India were taxable as profit attributable to PE, if any, in India."
21. After considering the entire material including the certificate of the ONGC to the effect that all correspondence during the bidding stage of the contract and thereafter were addressed to the assessee at its head office in Korea and also on considering the plea of the assessee that it had no presence at the off shore site in any form prior to the arrival of the structure, etc. and the order CIT(A) for asst. yr. 1992-93 by Tribunal 'B' Bench vide its order dt. 17th Feb., 2000 rendered in ITA No. 8751/Del/1992 for asst. yr. 1989-90 (copy available at pp, 1 to 10 of the paper book, decided the issue in favour of the assessee by observing as under:
"After considering the rival submissions and perusing the material on record, we find that this issue has come before Tribunal in the appeals for the asst. yrs. 1986-87 to 1988-89 and the Tribunal has decided the issue in favour of assessee. The findings of the Tribunal are given at pp. 46 to 50 of its order. The relevant portion of the order is placed at pp. 137 to 141 of the paper book, Respectfully concurring with the finding of the Tribunal, here also we hold that no income accrued to the assessee in India in respect of activities admittedly carried on outside India. Accordingly the profit added by the authorities below is deleted. This ground of the assessee is allowed."
22. The issue relating to taxability of income accrued to the assessee in India in respect of the activities carried outside India, was considered by the 'E' Bench of Tribunal vide its order dt. 30th Aug., 1999, rendered in ITA Nos. 2494, 5186 & 5187/Del/1991 for asst. yrs. 1986-87, 1987-88 & 1988-89 and although in those appeals, on facts, it was found that there existed in relation to the projects carried out by the assessee but regarding taxability of income, the issue was decided in favour of the assessee by observing as under:
"On the aforesaid facts, we hold that no income accrued to the assessee in India in respect of the activities admittedly carried on in Korea vis-a-vis the project under consideration. It may not be out of place to mention that the payment for the entire contract was to be made in US $ and that also outside India. The CIT(A), as already noted above, had invoked Instruction No. 1767, (supra), to tax the assessee and we invoke the same instruction to hold otherwise."
23. In the case of DKI/HAM v.o.f. v. Addl. CIT for asst. yr. 1995-96 also, the issue was considered by 'D' Bench of Tribunal in ITA No. 849/Del/1999 and vide order dt. 8th Nov., 1999, the Tribunal has decided the issue in favour of the assessee. Regarding the permanent establishment, the Tribunal has made the following observations:
"11.1 A permanent establishment begins to exist when the enterprise commences to carry on its business through a fixed place of business. This is the case once the enterprise prepares the activity for which the facility is permanently to be used. The same principles apply when determining the points of time at which a permanent establishment ceases to exist. If the enterprise ends its business for good, its permanent establishment will also cease to exist.
11.2 Looking at the plethora of documents filed before us and the documents already referred to earlier, the duration of the activities under the sub-contract did not exceed a period of six months and accordingly, PE would not have been established."
24. We have also considered in the light of the guidelines of CBDT Order No. 1767, dt. 1st July, 1987 although the submissions of learned counsel for the assessee was that these guidelines did not apply to asst. yr. 1993-94, as these were to operate for 3 years and their application was not extended for subsequent years. However, even in view of these guidelines, the Department was required to make thorough probe and investigation to ascertain as to what was the nature of the establishment of the assessee in India for carrying out the projects in question and for that purpose an enquiry was needed 'to be made regarding the terms of relevant contracts and the activities carried out by the assessee in respect thereto. The inquiry should have also been made about the infrastructure, office maintenance, supervising staff and other facilities as well as the design, fabrication and installation and the transport of structure by the assessee in India and the exact details thereof. The Department has neither conducted such an enquiry itself nor required the assessee to give details in respect thereto. The assessee, on the other hand, has obtained and filed certificates from the tax authorities of Korean Government as well as from the ONGC about the activities carried out by the assessee. As observed earlier, the CIT(A) has placed reliance on this material for deciding the issue. The facts as narrated in the letters of the assessee which have also been reproduced by the first appellate authority regarding non-maintenance of PE have gone uncontroverted and in view of this position, we have to uphold the view taken by the CIT(A).
25. In ground No. 1, the Department has assailed the finding of the CIT(A), but it has not been able to show that there was PE of assessee in relation to the projects undertaken by it during this year or that any part of payment made to the assessee was co-related to the activities carried out in India or was attributable to any such PE if such PE existed. Thus, neither the existence of PE has been shown or proved nor it has been demonstrated that a part of income of the assessee was attributable to such PE. Hence, this ground taken by the Revenue cannot be allowed.
26. So far as ground No. 2 is concerned, although it is pleaded in this ground that the facts for asst. yr. 1992-93 are not similar, but the Department has not pointed out any difference or dissimilarities. It may be pointed out that some payments relating to Heera Process Projects were received in asst. yr. 1992-93 and have also been received during this assessment year. The nature of these receipts has been duly considered by the CIT(A) in asst. yr. 1992-93 and held to be non-taxable. Since, the payments received during this assessment year related the same contracts and further since orders of CIT(A) for asst. yr. 1992-93 has become final on the same basis we have to confirm the view of CIT(A) taken in this assessment year on these receipts. Thus, in absence of any material to prove otherwise, we have to accept the contention of the assessee that facts of this assessment year are similar to asst. yr. 1993-94. The CIT(A) has also observed that the facts relating to asst. yr. 1992-93 are similar to the facts of this assessment year. Thus, the Department has not adduced any material to controvert the findings of the CIT(A), this ground also fails.
27. As regards other three contracts, as pointed out earlier even the structures did not arrive in India during this assessment year and therefore, question of any income attributable to such payments made outside India did not arise. We have also made reference to the instruction of the CBDT No. 1767 and have observed that the Department has not carried out necessary investigation to bring out the relevant facts in its support in the light of the instruction of the CBDT, consequently, this ground taken in this appeal also stands rejected.
28. In the result, the appeals of the Revenue are dismissed.