Income Earned From Offshore Supply Of Escalators And Elevators Is Not Taxable In India: ITAT
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has observed that income earned by the assessee from the offshore supply of escalators and elevators is not taxable in India.
The two-member bench of G.S. Pannu (President) and Sandeep Singh Karhail (Judicial Member) have observed that the property in goods passes on to the buyer at the port of shipment. Though the cost, insurance, freight, etc., are met by the seller, the property in the goods gets transferred to the buyer at the port of shipment. The buyer incurs all risks of loss or damage to the goods from the port of shipment. Therefore, the title to the property in the goods shipped by the assessee to the foreign port was transferred at the port of shipment itself.
The appellant/assessee is a non-resident company incorporated in China and is engaged in the business of supplying elevators and escalators, which includes design and manufacturing. The assessee is a part of the Schindler Group of Companies.
As per the assessee, the title to the goods, i.e., escalators and elevators, was transferred to DRMCL and MMRPL outside India, and payment was also received outside India. Therefore, the transaction cannot be taxed in India. It is the plea of the assessee that the goods were transferred on a CIF basis.
In the draft assessment order, it has been held that since the offshore supplies have been made by the assessee on an Indian port of disembarkation basis, the delivery of the goods is to be taken as having been made in India. Thus, it has been held that the profit made by the assessee on a CIF basis is liable to be taxed in India on the basis that the sale is completed in India.
The ITAT relied on the decision of the Supreme Court in the case of Ishikawajima-Harima Heavy Industries Ltd. vs. DIT, which held that only such part of the income, as is attributable to the operations carried out in India, can be taxed in India.
Case Title: Schindler China Elevator Company Ltd. Versus ACIT
Citation: ITA no.2483/Mum./2022
Counsel For Appellant: Yogesh Thar, Sakshi Dande
Counsel For Respondent: Amit Kumar Soni