Arbitration settlement amount received in relation to project office in India is taxable

TGE Gas Engineering GmbH Vs DCIT (ITAT Delhi)

ITAT Delhi held that the amount of received in the arbitration settlement is related to project office of the assessee company in India. Accordingly, the same is taxable in India.

Facts- The assessee was incorporated in Germany and is a tax resident therein. The assessee had a Project office in India during the year under consideration. The office was set up in 2012 when the assessee had entered into an EPC contract with Petronet LNG. The losses have been carried forward year after year.

During the year under consideration, the assessee had received an arbitration settlement payment of Euro 2.0 Million from Indian Oil Tanking Pvt.Ltd. on account of breach of contract by its client. The assessee has not offered such amount to tax in India.

Further, the assessee has claimed carry forward of losses amounting to Rs.9,80,71,711/-. AO therefore, treating the settlement amount of Rs.16,13,20,000/- as taxable income in India. Further, the AO made disallowance of Rs.9,80,71,711/- and proposed to assess total income at Rs.16,13,20,000/- after disallowing the expenses.

Please become a Premium member. If you are already a Premium member, login here to access the full content.