No Tax On Supply Profits Despite Permanent Establishment in India – AAR

LS Cable Limited Vs DIT – Nothing in law prevents the parties to enter into a contract which provides for sale of material for a specified consideration, although they were meant to be utilised in the fabrication and installation of a complete plant. Regarding the revenue’s plea that as the applicant has a PE in India, the income arising should be taxed in India, it stated that the existence of PE would be for the purpose of carrying out the contract for onshore supplies and services etc. but such a PE would have no role to play in offshore supplies. Even if a PE is involved in carrying on some incidental activities such as clearance from the port and transportation, it cannot be said that the PE is in connection with the offshore supplies. We accordingly hold that the applicant is not liable to tax in respect of offshore supplies as per the Act.

LS Cable Limited Vs DIT

A.A.R. Nos. 858- 861 of 2009

Date of Ruling – 26^th Day of July, 2011

Ruling

(By V.K.Shridhar)

Four applications are filed by the applicant, LS Cable Limited. The applicant is a company incorporated and located in Korea and is a tax resident of Korea. It is engaged in the business of manufacturing electric wire and cable for power distribution. The applicant was the successful bidder in the bids invited by the Delhi Transco Limited (DTL) for the supply, laying, jointing, testing and commissioning of the following projects: