Delhi High Court - Orders
The Commissioner Of Income Tax - ... vs Uk Grid Solutions Ltd on 12 September, 2024
Author: Yashwant Varma
Bench: Yashwant Varma
$~2 & 3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 656/2023
THE COMMISSIONER OF INCOME TAX -
INTERNATIONAL TAXATION -3 .....Appellant
Through: Mr. Anant Mann, JSC, Mr.
Abhishek Anand, Advocate for
Mr. Ruchir Bhatia, Advocate.
versus
UK GRID SOLUTIONS LTD. .....Respondent
Through: Mr. Ajay Vohra, Sr. Adv. with
Mr. Aditya Vohra, Adv.
3
+ ITA 657/2024
COMMISSIONER OF INCOME TAX (EXEMPTIONS)
DELHI .....Appellant
Through: Mr. Anant Mann, JSC, Mr.
Abhishek Anand, Advocate for
Mr. Ruchir Bhatia, Advocate.
versus
UK GRID SOLUTIONS LTD. .....Respondent
Through: Mr. Ajay Vohra, Sr. Adv. with
Mr. Aditya Vohra, Adv.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
ORDER
% 12.09.2024
1. The Commissioner of Income Tax (Exemptions) impugns the order of the Income Tax Appellate Tribunal ["Tribunal"] dated 12 April 2023 [ITA 656/2023] and 17 April 2023 [ITA 657/2023] and posits the following questions of law for our consideration-
"2.1 Whether the Ld. ITAT erred in law in holding that section 44BBB was not applicable to the case of the Assessee since the contract of the project effectively implied a composite turnkey This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/09/2024 at 03:50:08 power project especially when assessee is involved in end to end execution of the project via India resulting in revenues earned towards civil construction, erection, testing or commissioning activities in turnkey power project?
2.2 Whether the Ld. ITAT erred in law in holding that global operation fees are not taxable as fee for technical service under Article 13 of India- UK DTAA even when on analysis of relevant agreements, services provided duly make available the technical knowledge, experience and know how to user?"
2. Insofar as the aspect of splitting of the contract is concerned, we take note of the following Minutes dated 28 October 2011 and which have been extracted in paragraph 14.1 of the order of the Tribunal in ITA 656/2023:-
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 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/09/2024 at 03:50:08 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- WRl/HVDC- 1489/7/G10/NOA -ll/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- WRl/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 IFF 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 n This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 19/09/2024 at 03:50:08 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."
3. It is in the aforesaid backdrop that Mr. Vohra, learned senior counsel contends that it would be wholly incorrect for the appellant to allege or assert that it was the respondent-assessee which had split the contract into three parts.
4. However, and since Mr. Mann, learned counsel appearing for the appellant prays for an opportunity to reframe the questions as proposed for our consideration, let these appeals be called again on 12.11.2024.
YASHWANT VARMA, J.
RAVINDER DUDEJA, J.
SEPTEMBER 12, 2024/ib This is a digitally signed order.
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