The Supreme Court dismisses the appeals preferred by Ansaldo Energia SPA against Madras High Court’s ruling as the Assessee withdraws the appeals.
BACKGROUND
The Madras High Court upheld taxability of offshore supplies in India by treating the 4 contracts entered with an Indian co. (onshore and offshore supplies and services) as one ‘composite’ contract. Neyveli Lignite, an Indian company, had awarded a turnkey contract to the Assessee on a single bidder basis, whereafter, the contract was divided into four contracts – Contracts I and II dealt with offshore supply of equipments along with designing, engineering and offshore service involving supervision of the erection, testing and commissioning activity, while, Contracts III and IV (executed through Assessee’s Indian subsidiary ‘ASPL’) dealt with onshore supply of equipments and onshore services.
The High Court upheld the findings of the ITAT.
The ITAT held that the foreign company and the activities rendered by it under Contract and the other three contracts are inextricably linked and it was a composite contract. All responsibility from the beginning to the end rested on the Assessee. There was an intimate, real and continuous relationship with the subsidiary company and (iv) that the price of the other contracts was loaded on to Contract.
HIGH COURT’S OBSERVATION
The High Court strongly distinguished Assessee’s reliance on SC judgment in Ishikawajima Harima by observing that before SC “there was no factual finding on price imbalance in the four contracts and it was skewed in favour of the off-shore supply contract, nor was there any finding that the entity which executed the contracts for the onshore supply and the onshore services were mere facades.
SUPREME COURT’S OBSERVATION
The appeals were before the Division Bench of the Supreme Court comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan.
The court dismissed the appeal of Ansaldo Energia withdraws appeal against Madras HC judgment on offshore supply taxability.
Case Title: Ansaldo Energia SPA V/S CIT
Citation: Civil Appeal No. 4537 Of 2014