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3. The Income-tax Appellate Tribunal, Hyderabad, has consolidated 21 reference applications as common question are involved and it has drawn up a single reference application.

4. The assessee is the Visakhapatnam Port Trust (hereinafter called the "Port Trust"). The Port Trust is under the Ministry of Shipping and Transport, Govt. of India. The Visakhapatnam Port exports a large amount of iron ore. In order to speed up the export operations, the Port Trust felt it necessary to install a plant known as "Bucket Weel Reclaimer". The purpose of this was to remove iron ore mechanically from the wharfs and put it on a conveyer belt which takes the ore directly into the ship. Global tenders were called for by the Port Trust in June, 1967. A German company known as M/s. Maschinenfabrik Buckau R. Wilf (hereinafter called at the "German company) tendered a contract for supply of the Bucket Wheel Reclaimer on June 26, 1967.

14. The assembling at the Visakhapatnam Port was to be done at the expense of the Port Trust. This is also clear from the fact that clause 10 of the contract provided that the Port Trust had to provide suitable skilled and unskilled labour, scaffolds, ect., water and electricity and pay for these items of expenditure. The Port Trust has filed a lot of documentary evidence to prove that the Port Trust itself, as a fact, paid for all the assembling and erection expense at Visakhapatnam as per the contract which came to Rs. 66,613.72 + Rs. 72,856 + Rs. 33, 137.40 and Rs. 2,22,448.26 = Total of Rs. 3,97,034.66.

15. In clause 11, the words "erection" were said to mean "wages and travelling expenses"."Erection" according to the contract meant the payment of wages, i.e., to Mr. Bremer, the German Supervising Engineer and his travel expenses. These were covered partly in DM 90,000 to be paid in Germany (including travel outside India) and Rs. 22,000 for erection (i.e., wages and travelling expenses) in India. The German company's engineer-erector, Mr. Bremer was, according to it, only in charge of supervision. Documentary evidence has been filed by the Port Trust which shows that the amount payable in DM including DM 90,000 is to be paid in Germany as per the terms of the contract. After the contract was signed on September 12, 1968, letters of credit were opened in Germany to enable the German company to receive from a German bank (the Deutsche Bank, Cologne) payments of the price in installments for each export consignment, by sea or air. Eight export consignments of the component parts of the Bucket Wheel Reclaimer including spare parts were dispatched on May 15,1969 (to Bombay), August 20, 1969 (to Bombay), September 13, 1969 (to Visakhapatnam), December 22, 1969 (to Bombay), November 6, 1969 (to Visakhapatnam), November 6, 1969 (to Visakhapatnam). These are covered by bills issued by the German company and these bills refer to the import license dated June 5, 1968, taken out by the Port Trust and irrevocable letters of credit dated May 17, 1969, and May 22, 1969, State Bank of India, Visakhapatnam. All the bills specify that the price is to be noted for delivery (C. I. F. Bombay or Visakhapatnam) "without assembly" or "without erection". The shipping documents on record show that the Port Trust paid the installments of the price as they fell due in 20 installments in German currency in Germany. The Port Trust itself paid the customs duuty and the landing charges and carriage expenses from Visakhapatnam Port to the erection site from Bombay Port to Pimpri, Pimpri to Poona, and Poona to Visakhapatnam.

60. Reliance is then placed on the eight bills issued by the German company which refer to the price being payable C. I. F. Bombay or Visakhapatnam "without assembly" or "without erection". It is argued that theses operations of assembly and installation must, therefore, be taken to have been conducted in India by the German company.

61. In our pinion, the above words in these bills do not raise a presumption that these operations have been conducted by the German company. The question must depend solely on the evidence as to who has actually got the operations of assembly or installation or erection made or paid for it. The material on record in this reference is only one way, namely, that it was the Port Trust that got the Reclaimer assembled, installed and erected at Visakhapatnam and that, in fact, the Port Trust paid Rs. 3,97,034.66 to the workers. There is absolutely no material in favour of the Department on this question. There is no evidence that the German company even reimbrused the expenditure of the Port Trust in this regard. This contention is, therefore, liable to be rejected.