Director Of Income Tax (International Taxation v. Toyo Engineering Corporation

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.663 OF 2011 Director of Income Tax (International Taxation)..Appellant. Versus Toyo Engineering Corporation..Respondent. Mr.Tejveer Singh with Mr.Suresh Kumar for the appellant.Mr.Madhur Agarwal i/by Mint & Confreres for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 23[rd] January 2013 P.C. : 1.In this appeal by the Revenue for assessment year 1997-1998, the following questions of law have been formulated for our consideration. “a)Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the profit arising on the offshore supply contract to MRPL cannot be taxed in India under the provision of Section 9 of the Income Tax Act, 1961 ? b)Whether, on the facts and circumstances of the case, the Tribunal was correct in law in holding that Assessing Officer shoujld have computed profit of loss in respect of the project executed in India on the basis of Financial results shown by the assessee and not by resorting to estimation of applying Rule 10 of the Income Tax Rule ?” 2.So far as question (a) is concerned, the Tribunal in the impugned order while holding that income arising from contract of offshore supply of equipment cannot be brought to tax in India as the same has not accrued or arisen in India, reliance was placed upon its own decision in the matters of Siemens Aktiengesellschaft rendered on 30[th] June 2009 and M/s.Xelo Pty. Limited rendered on 22[nd] June 2009. Both the aforesaid orders of the Tribunal relied upon in the impugned order were challenged by the Revenue before this Court in Income Tax Appeal No.1033 of 2011 (Siemens Aktiengesellschaft) and in Income Tax Appeal No.825 of 2010 (M/s.Xelo Pty. Limited), were dismissed by this Court on 20[th] November 2012 and 15[th ]November 2011 respectively. Therefore, according to the respondent – assessee question (a) as raised does not arise for consideration. However, Mr.Tejveer Singh, counsel for the Revenue submits that the aforesaid decisions of this Court may not apply as in this case no documents were submitted before the assessing officer to determine whether the equipments and materials were supplied outside India or in India. This is not correct as the Tribunal in para-26 of the impugned order has recorded a finding of fact that on examination of the clauses of the contract the supply of equipments and materials was made outside India. In absence of any material to the contrary being brought to our notice by the Revenue, there is no reason not to accept the finding of the Tribunal in para-26 of the impugned order. In view of the above, particularly the decisions of this Court in the matters of M/s.Xelo Pty. Limited (supra) and Siemens Aktiengesellschaft (supra), question (a) as proposed cannot be entertained. 3.So far as question (b) is concerned, both the Commissioner of Income Tax (A) as well as the Tribunal have reached a finding of fact that the respondent – assessee was maintaining regular books of account and had even submitted the same to the assessing officer for verification, who also verified the same. Consequently, both the Commissioner of Income Tax (A) as well as the Tribunal held that the assessing officer was not justified in rejecting the books of account of the respondent – assessee without explaining as to why the accounts are suspect. Consequently, no occasion to apply Rule 10 of the Income Tax Rules, 1961 to estimate the income can arise. Thus, this being a finding of fact and the same is not shown to be perverse by the Revenue, question (b) as proposed cannot be entertained. 4.The appeal is accordingly dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)