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However, the assessment was completed in Circle 15(1), New Delhi u/s. 143(1) of the Income-tax Act, 1961.

The records of the assessee were transferred to Circle 2(1), International Taxation, New Delhi. The perusal of record shows that the assessee's nature of business as per assessee's own admission is " Erection, commissioning, Supervisions and operations of power projects and supply of engine auxiliaries and pumps for projects" The nature of business of the assessee is clearly rendering technical services and supplying spare parts for the various projects. Whereas, the earned for rendering technical 11 ITA-1410/Del/2007 & 6 others services is to be taxed on gross basis under the income projects. Whereas, the fee earned for rendering technical services is to be taxed on gross basis under the Income-tax Act, 1961 as well as Double Taxation Avoidance Agreement between India and UK, the supplies in connection with various projects are to be taxed as business profit in view of the Ruling of Authority for Advance Ruling in the case of IHI and Sutron Corporation.

.

30. Aggrieved by the above order of CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal:-

3 Godavari EPC 1998-99 1999-00 2000-01 2001-02 2002-03 2003- 2004-

 Project                                                                         04       05
a.    Taxing business        15 & 16    N.A.       N.A.       N.A.       N.A.         N.A.     N.A.
      receipts u/s 44BBB     not
      on gross basis         pressed
b.    Taxing interest        N.A.       14 & 15    15(a),     14(a) &    6            3(a),    3(a) &
      under Article 12 of                          15(b) &    14(b)                   3(b) &   3(b)
      DTAA @ 15% on                                16                                 3(c)
      gross basis
c.    Profit on sale of      N.A.       N.A.       15 & 16    N.A.       N.A.         N.A.     N.A.
      assets under Article
      14 of DTAA as per
      local laws in India.
d.    Taxing other income    N.A.       N.A.       N.A.       N.A.       6            3(a) &   3(a) &
      on gross basis as                                                               3(b)     3(b)
      foreign company
      income in India.
e.    Taxing insurance       N.A.       N.A.       N.A.       14(c)      N.A.         N.A.     N.A.
      claim as normal
      income under the
      I.T.Act
4.    Budge Budge
      Project

a.    Taxing supervision     17 to 20   16 to 19   17 to 20   N.A.       N.A.         N.A.     N.A.
      of management
      activity as FTS &
      taxing u/s 44D of
      the I.T.Act
b.    Taxing interest        N.A.       N.A.       N.A.       15(a) to   7(a) &       N.A.     N.A.
      income & interest                                       15(c)      7(d)
                                                     20                          ITA-1410/Del/2007 &
                                                                                            6 others

      on refund of I.Tax
      on gross basis @
      15%
c.    Taxing profit on sale   N.A.       N.A.       N.A.   15(c)       N.A.            N.A.   N.A.
      of assets as normal
      income in India.
d.    Taxing foreign          N.A.       N.A.       N.A.   N.A.        7(a)            N.A.   N.A.
      exchange fluctuation
e.    Taxing the same         N.A.       N.A.       N.A.   N.A.        N.A.            8      N.A.
      income in AY 2002-
      03 & again in AY
      2003-04
5     Margins on Liaison
      Offices
a.    15% mark up to          21         20         21     17 & 18    9            10         4(a)
      liaison offices using
      exception to Article
      5(3)(e) of DTAA
6     Set-off of b/f          22 to 23   21 to 22   22     19         10           11         Addl.
      business losses &                                                                       Ground
      depreciation
7     Applicability of        24         23         24     21         N.A.         N.A.       N.A.
      provisions of
      section 44AB
     Charging of
      interest
a.    Charging of interest    25, 28     24 & 26    N.A.   22 to 24   11(a) &      12(a) &    4(b)
      u/s 234B                                             & 26       11(b)        12(d)
b.    Charging of interest    N.A.       N.A.       N.A.   N.A.       12           N.A.       N.A.
      u/s 234D
9     Awarding of costs.
10.   HBPL -
      Augmentation
      Project
a.    Business receipts       N.A.       N.A.       N.A.   N.A.       8            Addl.      N.A.
      held to be FTS                                                               Ground
      taxable at gross
      basis u/s 115A *@
      20%
      -------do------         N.A.       N.A.       N.A.   15(c)      N.A.         9 (not     N.A.
      *@42%                                                                        pressed)
11    IOCL/Haldia &
      Bholpur Pipeline
      Project
Double taxable of       N.A.       N.A.       N.A.   N.A.       N.A.         4          N.A.
      same income
      pertaining to AY
      2002-03 again in
      AY 2003-04
12    IOCL/KBPL
      Project
      Treating receipts as    N.A.       N.A.       N.A.   N.A.       N.A.         5          N.A.
      FTS as against
      business income
      taxable u/s 44D on
      gross basis.
13    KBPL Expansion
      office
      Taking gross profit     N.A.       N.A.       N.A.   N.A.       N.A.         6          N.A.
                                             21                     ITA-1410/Del/2007 &
                                                                               6 others

      as against net profit
14          IOCL
      Project
      Income taxed twice      N.A.   N.A.   N.A.    N.A.    N.A.      7        N.A.
      in AY 2002-03 &
      again in AY 2003-

72. In so far as ground of charging interest u/s 234D is concerned for assessment year 2002-03, the Delhi SB in the case of ITO v. Ekta Promoters (P) Ltd. 113 ITD 719 has held that it can only be charged from assessment year 2004-

05. Respectfully following the Special Bench decision, we direct that the interest charged u/s 234D for assessment year 2002-03 be deleted.

73. Grounds No. 4, 7 & 8 for assessment year 2003-4 pleads against double taxation of profits from Haldia Bolpur Project, IOCL Project and Budge Budge Project, respectively. The assessee has submitted that all these projects had come to an end in assessment year 2002-03 and these projects were not in existence in assessment year 2003-04. It seems that while framing the assessment, the AO has picked up the figures for assessment year 2002-03 in the computation for 2003-04. The AO is directed to verify from the profit and loss account filed before him as to whether there was any income declared by the assessee for these three projects in 63 ITA-1410/Del/2007 & 6 others assessment year 2003-04 at all. If there is no income in the year under review, then the amounts taken by him are directed to be deleted.