Income Tax Appellate Tribunal - Delhi
Acit (International Taxation), New ... vs M/S. Ls Cable And System Ltd., Gurgaon on 12 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'D' NEW DELHI
BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER
AND
SMT. BEENA A. PILLAI, JUDICIAL MEMBER
ITA No. 5900/Del/2016
(ASSESSMENT YEAR: 2014-15)
ACIT (International taxation), vs LS Cable & System Ltd.,
Circle-2(2)(1), Room No.411, 328, 3rd Floor, DLF Star
4th Floor, E-2 Block, Dr. Tower, Sector-30,
S.P.Mukherjee, Civic Centre, Gurgaon-122002.
Minto Road, New Delhi-
110002. PAN-AAACL6446Q
(Appellant) (Respondent)
Appellant by Sh. Sparsh Bhargava,
Ms. Ishita Farsaiya, Adv.
Respondent by Sh. G.K.Dhall, CIT DR
Date of Hearing 08.01.2018
Date of Pronouncement 12.01.2018
ORDER
PER R.K.PANDA, ACCOUNTANT MEMBER
This appeal filed by the Revenue is directed against the order dated 22.09.2016 of the Ld. CIT(A)-43, New Delhi relating to assessment year 2014-15.
2. The only effective ground raised by the Revenue reads as under:-
1. "On the facts and in the circumstances of the case, whether the Ld.CIT(A) erred holding that the income of M/s L S Cable and Systems Ltd. from offshore supply of cables is not taxable in India."ITA No. 5900/Del/2016
3. Facts of the case, in brief, are that the assessee is a company incorporated in Korea and is engaged in the execution of various projects in India. During the FY 2013-14, the company has executed 29 projects in India, the details of which is given at page 2 of the assessment order. The assessee filed its return of income on 28.11.2014 declaring taxable income of Rs.49,88,35,664/-. It was claimed by the assessee during the assessment proceedings that Indian concerns had imported certain materials from LSCL, Korea and had deducted tax at source while making payments to LSCL. Since the material was supplied from outside India, no income accrues or arises in India and no income is taxable in India. However, since tax has been deducted, credit for tax deducted at source against such supplies was claimed as refund.
4. The AO asked the assessee to submit the copy of agreements entered into with various project owners and also asked the assessee to show-cause as to why additions made in previous year on offshore supply should not be made in this year. The AO noticed that all activities and the nature of receipts in respect of offshore supply are identical to those in preceding years i.e. 2004-05 to 2009-10. He observed that his predecessors has dealt with this issue in great detail and has attributed 50% of the income relatable to operations carried out in India and profit rate of 20% was deemed on estimated basis.
Page | 2 ITA No. 5900/Del/2016 The AO observed that the assessee had filed applications u/s 197 of the Act for seeking NIL withholding tax certificates for payment received under the offshore supply contracts from 2015-16 FY. The certificates dated 22.06.2015 and 21.07.2015 were issued at effective rate of 4% on payment made to the assessee under offshore supply contracts, following the precedence of assessments in previous year wherein 50% of the deemed profit of 20% was attributed to India. He noted that the assessee filed an application u/s 264 of the Act before the Ld. CIT who vide order dated 07.03.2016 has held that it would be reasonable to attribute 25% of the income relatable to the operations carried out in India both as per provisions of section 9 of the I.T. Act, 1961 and Article 7 of the Tax Treaty between India and Korea. He has further held that on the offshore supply, profit rate of 10% is deemed to be assumed. In view of the above, the AO taxed the Revenues from offshore supply by considering the profit rate of 10% and attributing 25% of profits to operations carried out in India. He further held that final tax liability shall be restricted to 01% (inclusive of surcharge and cess) of the receipts as per direction of Ld.CIT(A). He accordingly determined the total income of the assessee at Rs. 52,91,43,096/-.
4.1 In appeal, Ld.CIT(A) held that the income of M/s L.S.Cable and System Ltd. from offshore supply of cables is not taxable in India. The Page | 3 ITA No. 5900/Del/2016 relevant observation of the Ld.CIT(A) from para 4 onwards read as under:-
4. Findings/Determination "I have examined the facts at hand. I have heard the Counsel. The appellant has pointed out that the issue stands covered by the Hon'ble High Court in appellant's own case. The submissions and year-wise status has been provided by the appellant vide write up dated 22.09.2016 is as follows:-
"Our submission It is respectfully submitted that revenues earned by LS Cable from offshore supply of goods under subject offshore supply contract are not subject to tax in India because title and risk in the goods was passed outside India. It is submitted LS Cable has, in accordance with the offshore supply contract, supplied goods from outside India. In consideration for such supplies, LS Cable has been paid consideration outside India. Therefore, such consideration is not liable to tax in India as no part of such consideration could be said to receive or deemed to be received in India; accrue or arise; or deemed to accrue or arise to LS Cable in India.
Further, it is humbly submitted that the issue of taxability of offshore supplies is no longer res integra and the same stands covered by the following multiple judgments in appellant's own case for various AYs as tabulated below:-
Assessment DRP/CIT(A) ITAT High Court Reference to Paper
Year Book
AY 2002-03 Held offshore In favour of In favour of appellant Refer page no.175 to
supply appellant (Held that offshore 275 of paperbook
taxable (Held that supplies are not taxable
offshore supplies in India)
are not taxable
in India)
AY 2003-04 Held offshore In favour of In favour of appellant Refer page no. 276
supply appellant (Held that offshore to 320 of paperbook
taxable (Held that supplies are not taxable
offshore supplies in India)
are not taxable
in India)
AY 2004-05 Held offshore In favour of In favour of appellant Refer page no. 276
supply appellant (Held that offshore to 320 of paperbook
taxable (Held that supplies are not taxable
offshore supplies in India)
are not taxable
in India)
AY 2005-06 Held offshore In favour of In favour of appellant Refer page no. 276
supply appellant (Held that offshore to 320 of paperbook
Page | 4
ITA No. 5900/Del/2016
taxable (Held that supplies are not taxable
offshore supplies in India)
are not taxable
in India)
AY 2006-07 Held offshore In favour of Refer page no. 321
supply appellant to 347 of paperbook
taxable (Held that
offshore supplies
are not taxable
in India)
AY 2007-08 Held offshore In favour of Refer page no. 348
supply appellant to 354 of paperbook
taxable (Held that
offshore supplies
are not taxable
in India)
AY 2008-09 Held offshore In favour of Refer page no. 355
supply appellant to 362 of paperbook
taxable (Held that
offshore supplies
are not taxable
in India)
AY 2009-10 In favour of Refer page no. 363
appellant to 374 of paperbook
(Held that
offshore
supplies are
not taxable in
India)
AY 2010-11 No additions made in the Assessment Order (Held that Refer page no. 384
offshore supplies are not taxable in India on the basis of to 409 of paperbook
AAR order)
AY 2011-12 No additions were made in the Assessment Order (Held that Refer page no. 410
offshore supplies are not taxable in India on the basis of to 427 of paperbook
AAR order)
We have briefly discussed below observations of appellate authorities in appellant's case:
Observations of Hon'ble ITAT and High Court in the orders for AY 2002-03 Observations of Hon'ble ITAT:
• The facts of the case are covered by the decision of Hon'ble Supreme Court in the case of Ishikawajima Harima Heavy Industries vs DIT (288 ITR
408). The relevant extract from the order of ITAT is reproduced as under:
"12. On consideration of facts and circumstances of the case, we are of view that contentions of learned counsel for the assessee are well taken ....... In the light of above background, it is neither possible nor permissible for the Revenue to contend that above decision of Supreme Page | 5 ITA No. 5900/Del/2016 Court is not applicable to the facts of the case. The Supreme Court after considering almost identical facts and circumstances and even when there was one agreement both for supply and erection of equipment held that income from offshore supply of material equipment did not arise in India and was not taxable. "
• Based on appreciation of Clause 31, 1 of the General Conditions of Contract (which states that ownership in goods to be imported to India shall be transferred to the PGCIL upon loading onto the mode of transport to be used to convey the goods from the country of origin to India) and provisions of Sales of Goods Act, 1930 held that property in the goods was transferred outside India. The relevant extract from the order is reproduced as under:
"13.2 All the circumstances mentioned above are fully satisfied in the present case also as goods were ascertained and delivered to ship for transportation to India, bill of lading was also handed over to the bank nominated by the assessee and payment was also received outside India. The property in goods got transferred to the buyer and sale was completed. With the completion of the sale, income accrued and that accrual was outside India. Accrual of such income was not attributable to any operation carried out in India. Therefore, contention of the assessee that income from offshore contract for supply etc did not arise in India and provisions of Indian Income-tax Act had no application is well founded and is required to be accepted."
• The permanent establishment (PE') of the appellant had no role to play in offshore supply of goods and mere signing of agreement in India does not give rise to any income tri India. The relevant extract from the order is reproduced as under:
"13.4 There is no material to show that PE of ate assessee in India had any role to play in supply of offshore equipment. We have already noted that even if agreement for supply of equipment was entered into India, the mere signing of agreement of supply did not give rise to any income........"
• The performance of duties under installation/erection contract cannot postpone the transfer of property. The ITAT also observed that non-payment of Page | 6 ITA No. 5900/Del/2016 entire consideration on shipment cannot prevent transfer of title in goods. The relevant extract from the order is reproduced as under:
"13.5 .... Therefore, performance of duties mentioned in the Erection Contract cannot postpone the transfer of property u/s 24 read with para 31.2 of the agreement. None of the activities stated in the Erection contract can be taken as vesting the seller with a right of disposal of equipment or right to take back the equipment, which he is deemed to have unconditionally appropriate at the time of delivery to the ship. In the present agreement the seller was to be paid price of the goods as stipulated in the agreements. Although entire consideration is not paid on shipment of equipment, but non payment of price cannot prevent transfer of equipment.
• The warranties given in the contract relating to satisfactory performance of equipment are normal warrantees to secure performance by the buyer and cannot be read as condition entitling the seller to repudiate contract. The relevant extract from the order of ITAT is reproduced as under:
"15.....Other assurances and warrantees given in the agreement relating to satisfactory performance of equipment are normal warrantees to secure performance by the buyer and cannot be read as condition entitling the seller to repudiate contract and have the goods back or restored to him. Observations of High Court ('HC') • There is no justification of mixing the offshore and the onshore contracts as both the agreements were altogether different in terms of their scope and independent of each other. Relevant extract of the Judgment of the HC is reproduced herein below:
"18. Furthermore, as noticed above, the scope of work under the onshore contract was under a separate agreement and for a separate consideration. There is no justification to mix the consideration for the offshore and onshore contracts. When the equipment was transferred outside India, necessarily the taxable income also accrued outside India, and hence, no portion of such income was taxable in India."
• The PE had no role to play in offshore supplies and the same was involved in onshore contract only. Relevant extract of the He judgment in this regard is reproduced herein below:
Page | 7 ITA No. 5900/Del/2016 "36. With regard to the setting up of Permanent Establishment also, the PE of the respondent in the instant case, as in Ishikawajima (supra), had no role to play in the execution of the offshore supply contract and as a matter of fact was set up for the sole purpose of enabling the performance of the onshore services contract."
• The question of sale concluding in India does not arise at all as the contract clause clearly stipulates that title in goods would transfer at the port of shipment at the time of loading the goods onto the ship. The sale thus concludes at that very moment as there is no clause in the agreement which stipulates that the assessee could revoke the title from the buyer. Relevant extract of the judgment is reproduced below:
"35. ..................................The title to the equipment supplied from outside India was transferred in favor of PGCIL outside India. In the case of Ishikauiajima (supra), it was transferred in the country of origin itself as soon as the goods were loaded upon the mode of transfer to be used to convey the plant and machinery, i.e. the shipping vessel, even prior to the goods reaching the high seas."
Observations of Hon'ble ITAT and High Court in the orders for AY 2003-
04. 2004-05 and 2005-06 Observations of Hon'ble ITAT:
• In passing the judgment for AY 2002-03, the ITAT had gone through the relevant clauses of both the offshore and onshore contracts. Relevant extract of the ITAT's order for AYs 2002-03, 2003-04 and 2004-05 is reproduced herein below:
"We find that the issue is squarely covered by the decision of the ITAT in assessee's own case reported as LG Cables Vs. Dy. Director of Income-tax, Circle 1 (1), International Taxation, New Delhi (113 ITD 113). The contention of the Revenue is that the two agreements i.e. onshore services agreement and offshore supply agreement were part and parcel of one contract and this fact was not brought to the notice of the ITAT. We find that the ITAT while deciding the issue has thread-bare gone through the various terms and conditions of both the agreements. "
• In passing the judgment for A Y 2002-03 the ITA T has analysed the facts of the case in light of the applicable provisions of the Act and the Tax Page | 8 ITA No. 5900/Del/2016 Treaty between India and Korea. Only after such analysis did the ITAT reach at the conclusion that the Appellant is not taxable on income from execution of offshore supply contract. Relevant extract of the ITAT's order for AYs 2002-03, 2003-04 and 2004-05 is reproduced below:
"Revenue's objections were based on lack of proper appreciation of the terms of the agreement and provisions of sale of goods act. There was no material to show that the FE of the assessee in India had any role to play in supply of offshore equipment. It is correct that assessee did not receive 100% of price of offshore supply of goods outside India but it is undisputed that PGCIL issued irrevocable letter of credit in favour of the appellant and that under para 31.2 agreed that property in goods will pass to the buyer as and when the assessee loads the equipment on the mode of transport for transportation from the country of origin. The question to be asked was having appropriated in the goods by delivery to the ship was there any right with the seller of disposal of goods. Is there any condition under which the seller could keep control of the goods and retake the goods. There is no such condition in the agreement and, therefore, sale of goods as for as buyer was concerned, was complete and unequivocal. The property in the equipment passed to the buyer as stipulated in para 31.2 of the agreement."
• Relevant extract of the ITAT's judgment for AYs 2003-04, 2004-05 and 2005-06 in connection with Indian Agent is reproduced below:
"As regards the role of India Agent in overseas supply the contention of the assessee is that ld. CIT(A) has not been able to point out exactly what operations relating to off-shore supply were carried out by the Indian agent when it is a matter of record that the goods were manufactured abroad and dispatched from the foreign port. The services have been provided by the Indian agent with reference to onshore contract. We are in agreement with the arguments advanced by the ld. AR of the assessee. "
• The sale of goods was completed outside India. Relevant extract of the judgment is reproduced below:
"10.......... The Tribunal while deciding the case for AY 2002-03 has held that since delivery of goods, documents, and receipt of substantial part of sale consideration did take place outside India where the sale took place and income had accrued, such income could only be taxed outside India and not Page | 9 ITA No. 5900/Del/2016 under Indian laws. Hence, income from offshore contracts is not taxable in India. ) Observations of Hon'ble High Court • The Hon'ble Delhi High Court relying on its previous decision for AY 2002-03 and held that offshore supply is not taxable in India. Relevant extract from the judgement is reproduced as under:
"Thus, the aforesaid arguments of the learned counsel for the Revenue is not acceptable and there is no reason to change the decision arrived at in the case of LG Cable Ltd. (supra) in ITA no. 703 of 2009."
Observations of Hon'ble CIT(A) and ITAT in the orders for AY 2006-07 Observations of Hon 'ble CIT(A) • The Hon'ble CIT(A) observed that there is no change in facts for this year. Therefore, following the decisions of ITAT and High Court in appellant's own case for earlier years, the Hon'ble CIT(A) held that offshore supply is not taxable. Relevant extract from the order is reproduced as under:
"10. The facts of the case of the year under consideration are similar to the facts of the earlier years. The AO while making this addition for the current year has relied on the order of assessment order for AY 2005-06 (para 4.6 & 5 of the assessment order). Respectfully following the order the jurisdictional ITAT and the order of the Hon'ble Delhi HC in appellant's own case for the earlier years as discussed in the preceding paragraphs, it is held that the income of the appellant from offshore supplies is not taxable in India. "
Observations of Hon'ble ITAT • The Hon'ble ITAT following the decision of Hon'ble High Court of Delhi in appellant's own case for AY 2002-03 confirmed the above order of Hon'ble CIT(A). Relevant extract from the judgement is reproduced as under: "5.1. In view of the above, since the matter has been effectively decided in favour of the assessee for A.Y. 2002-03, holding that the receipts from offshore supply equipment are not taxable in India, we find no flaw in the impugned order, wherein the learned CIT(A) has followed the aforesaid High Court order in assessee's own case for A.Y. 2002-03. It is pertinent to stress here, as noted by the learned CIT(A), that the Tribunal vide its order dated 13-8-2010, in the assessee's case for A. Y. 2003-04 to 2005-06, again deleted the addition. on similar lines."
Page | 10 ITA No. 5900/Del/2016 Observations of Hon'ble ITAT in the order for AY 2007-08 • The Hon'ble ITAT following its own decision in appellant's case for AY 2002-03 to 2005-06 and order of Hon'ble High Court of Delhi in appellant's own case for AY 2002-03 held that offshore supply is not taxable in India. Relevant extract from the judgement is reproduced as under:
"3. It is the common submission of both the parties that the issue involved in current year is covered by the decision of this Tribunal in assessee's own case for assessment year 2002-03 reported in 314 ITR 301 (Del.) (ITAT). and ITAT's subsequent decision in assessee's own case for assessment year 2003-04 to 2005-06 in 1. T.A. No.3634, 3635 & 3636 of 2009. It has been further submitted by the Ld AR for the assessee that the decision of this Tribunal in assessment year 2002-03 has been confirmed by jurisdictional High Court in their judgment dated 24.12.2010 in I.T.A. No. 703/2009.
4. In view of the above, ground No. (i) taken by the assessee is decided in favour of the assessee i.e. ground No. (i) is allowed."
Observations of Hon'ble ITAT in the order for AY 2008-09 • The Hon'ble ITAT following the aforementioned decisions of ITAT as well as jurisdictions High Court held that offshore supply is not taxable in India. Though, the learned Department Representative argued that the department has challenged the order of High Court before the Supreme Court. However, the Hon'ble ITAT observed that decision of jurisdictional High Court is binding upon the authorities and Tribunals working under its territorial jurisdiction and accordingly, decided the issue in favour of the appellant. Relevant extract from the judgement is reproduced as under:
"4. We have heard both the sides, considered the material on record as well as precedents relied upon by Ld. Counsel for the assessee. We find that the issues involved in this appeal are squarely covered in favour of the assessee as is clear from various decisions of ITAT as well as of jurisdictional High Court in assessee's own case which fact has not been refuted by the Ld.DR too. The agreement involved in earlier decisions as well as in the case in hand is the same which has been taken into consideration to decide the issues in favour of the assessee and this fact too has not been refuted by Ld.DR except contending that SLP is pending before the Hon'ble Supreme Court. Since, jurisdictional High Court decision is binding upon the authorities and the Page | 11 ITA No. 5900/Del/2016 Tribunals working under its territorial jurisdiction. Therefore, following the precedents as laid down by the Hon'ble High Court as well us by different benches of the ITAT, we decide the issues in favour of the assessee while accepting the appeal."
(Emphasis supplied) Observations of Hon'ble AAR in appellant's case • Further, we wish to bring to your kind attention order dated 26 July 2011 of the Hon'ble AAR in Appellant's own case (AAR No. 858-861 of 2009) wherein the Hon'ble AAR relying on the decision of Hon'ble Supreme Court in case of Ishikawajima Harima Heavy Industries (288 ITR410) adopted consistent view that offshore supply is not taxable in India. Relevant extract from the order of Hon'ble AAR is reproduced as under:
"7 Income of similar nature earned by a non-resident was held to be not taxable in India by this authority in the case of Hyosung Corporation, 314 ITR 343, where all these issues were considered at length following the binding decision of the Hon'ble Supreme Court in Ishikawajima Haritna Heavy Industries, 288 ITR 410. At the outset it may be stated that this authority is not free to disregard the law laid down by the Supreme Court and to have a fresh look into the matter. The clauses in the offshore supply contract agreement regarding the transfer of ownership, the payment mechanism in the form of letter of credit which ensures the credit of the amount in foreign currency to the applicant's foreign bank account on receipt of shipment advice and insurance clause, would go to establish that the transaction of sale and the title took place outside Indian Territory. The ownership and property in goods passed outside India. The transit risk borne by the applicant till the goods reach the site in India is not necessarily inconsistent with the sale of goods taking place outside India. The parties may decide between them as to when the title of the goods should pass. As the consideration for the sale portion is separately specified, it can we II be separated from the whole as is held in the case of Ishikawajima. In the case of Ansaldo Energia SPA relied on by the revenue) the contract for offshore supply awarded to the assessee was held to be a composite contract together with onshore supply contract etc. awarded to another. The turnkey project as a whole was awarded to the applicant who was not a single bidder. Thereafter the contract was split up. In Page | 12 ITA No. 5900/Del/2016 that case the Tribunal found that there was a facade created for the purpose of avoiding tax and that there was price imbalance in the contracts and that it was skewed in favour of the offshore supply contract in order to minimize the tax liability. There is no such case before us. Therefore, the facts are different from the facts of the present case. Nothing in law prevents the parties to enter into a contract which provides for sale of material for a specified consideration, although they were meant to be utilized in the fabrication and installation of a complete plant. Regarding the revenue's plea that as the applicant has a PE in India, the income arising should be taxed in India, it stated that the existence of PE would be for the purpose of carrying out the contract for onshore supplies and services etc. but such a PE would have no role to play in offshore supplies. Even if a PE is involved in carrying on some incidental activities such as clearance from the port and transportation, it cannot be said that the PE is in connection with the offshore supplies. We accordingly hold that the applicant is not liable to tax in respect of offshore supplies as per the Act."
(Emphasis supplied) Observations of Hon'ble CIT(A) in the order for AY 2009-10 • The Hon'ble CIT(A) observed that there is no change in facts for this year. Therefore, following the decisions of ITAT and High Court in appellant's own case for earlier years, the Hon'ble CIT(A) held that offshore supply is not taxable. Relevant extract from the order is reproduced as under:
"8.2 The facts obtaining in the year under consideration are similar to the facts of the earlier years. The AO while making this addition for the current year has relied on the order of assessment order for earlier years (para 4. 6 & 5 of the assessment order). Respectfully following the order of the ITAT and the order of the Hon'ble Delhi HC in the appellant's own case for the earlier years as discussed in the preceding paragraphs, it is held that the income of the appellant from off-shore supplies is not taxable in India. Ground No.1 is therefore, allowed and the AO is directed accordingly."
In support of the non-taxability of offshore supply, the appellant also places reliance on, and invites the attention of your goodself to the following judicial precedents:
Page | 13 ITA No. 5900/Del/2016 Ishikawajma-Harima Heavy Industries Ltd. vs DIT [288 ITR 408 (SC)] The Apex Court in the said case categorically held that the title transfer and payment outside India shall be determining factor for the purpose of taxability of income from offshore supply. The Apex Court vide Para 99 held as under:
ETR"99. We, therefore hold as "under:
Re: Offshore Supply:
(2) Since all parts or the transaction in question, i.e. the transfer or property in goods as well as the payment, were carried on outside the Indian soil, the transaction could not have been taxed in India."
The said twin test has also been accepted by the Hon'ble AAR and a consistent view has been taken time and again by the Authority in the following decisions wherein the ratio laid down by Hon'ble Apex Court in case of IHI has been followed.
Further, the appellant has placed reliance on the following judgements:
Hyosung Corporation (AAR No. 773 of 2008) confirmed by High Court (W.P.(C) No. 2765/2010) Joint Stock Company Foreign Economic Association "Technopromexport" (AAR no. 827 of 2009) DIT vs. Ericsson A.B. (Delhi High Court) (343 ITR 370) DIT vs. Nokia Networks OY [ITA No. 512/ 2007; 1138/ 2006; 503/ 2007; 505/ 2007 - Delhi High Court National Petroleum Construction Company Limited vs. DIT [TS-29-HC-20 16(DEL)] Delhi High Court SEPCOIII Electric Power Construction Corporation [Application No. 1 of 2011 in AAR No.1 008 of 2010] Thus in view of the position laid by Courts/ Tribunal! CIT(A) in earlier years, the offshore supply is neither taxable under the Income Tax Act as title and risk has passed outside India nor the offshore supply is taxable under the provisions of DTAA between India and Korea as the offshore supply is not related to the permanent establishment for executing onshore activities. The Ld. AO has merely relied on his earlier year orders which have already been decided in the favour of assessee by Courts/ Tribunal/CIT(A).
Page | 14 ITA No. 5900/Del/2016 Conclusion In view of the above, offshore supply is neither taxable as per provisions of DTAA nor as per provisions of the Act. "
Further, it has been informed that the case for AYs 2012-13 and 2013-14 have not come up for assessment as the appellant has filed applications before the Hon'ble AAR which has duly admitted the same, and with whom the same are pending.
4.1 Further, the aforesaid issue was in appeal before me in appeal for AY 2009-10, wherein in appeal no. 148/2014-15, vide my order dated 22.09.2015 I had adjudicated as follows:-
"8.1 I have carefully considered the submissions of the appellant, the facts of the case and the points made by the AO in the assessment order. This issue has already been decided in favour of the appellant by the Jurisdictional High Court in AY 2002-03 (LG Cable Ltd (2010) ITA 703 of 2009), AY 2003-04, 2004-05 and 2005-06 (LG Cable Ltd (2011)ITA No. 704,706,707 of 2011), and by the order of ITAT in AY 2007-08 and 2008-09. Even the tax effect is minimal, being disallowance of loss of Rs. 33,919/- only. 8.2 The facts obtaining in the year under consideration are similar to the facts of the earlier years. The AO while making this addition for the current year has relied on the order of assessment order for earlier years (para 4.6 & 5 of the assessment order). Respectfully following the order of the ITAT and the order of the Hon'ble Delhi HC in the appellant's own case for the earlier years as discussed in the preceding paragraphs, it is held that the income of the appellant from off-shore supplies is not taxable in India. Ground No. 1 is therefore, allowed and the AO is directed accordingly. 8.3. The other grounds of appeal become infructuous and do not require any adjudication.
9. In the result, the appeal is allowed."
4.2. The facts obtaining in this year are similar. As such, the appeal is adjudicated in favour of the appellant."
5. Aggrieved with such order of the Ld.CIT(A), the Revenue is in appeal before the Tribunal.
Page | 15 ITA No. 5900/Del/2016
6. We have heard the rival submissions made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. We find the AO brought to tax the Revenues from offshore supply by considering profit rate of 10% and attributing 25% of profits to operations carried out in India. While doing so, the AO has followed the orders of his predecessors as well as the order of the Ld.CIT passed u/s 264 for the FY 2015-16 i.e. A/y 2016-17. We find the Ld.CIT(A) deleted the addition made by the AO by following order of the Tribunal in assessee's own case in the preceding years as well as the decision of the Jurisdictional High Court in assessee's own case, the details of which have already been reproduced in the preceding paragraphs. Nothing contrary was brought to our notice by the Ld.CIT DR against the finding of the Ld.CIT(A) except stating that the Ld.CIT(A) has not considered the order passed by the Ld.CIT u/s 264 of the I.T.Act, 1961. The same, in our opinion, cannot be a ground to take a different view than the view taken by the Ld.CIT(A) who has followed the decision of the Tribunal in assessee's own case in the preceding assessment year as well as the decision of the Hon'ble jurisdictional High Court in assessee's own case. In view of the detailed reasoning given by the Ld.CIT(A), we find no infirmity in his order. Accordingly the same is upheld and the ground raised by the Revenue is dismissed.
Page | 16 ITA No. 5900/Del/2016
7. In the result, the appeal filed by the Revenue is dismissed.
Pronounced in the open court on 12.01.2018.
Sd/- Sd/-
(BEENA A.PILLAI) (R.K.PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date:- 12th January, 2018
*Amit Kumar*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
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