Income earned from offshore supply not taxable in India as none of operation is carried out in India

Schindler China Elevator Company Ltd Vs ACIT (ITAT Mumbai)

ITAT Mumbai held that income earned from offshore supply of escalators and elevators is not taxable in India as assesse didn’t carried out any operations in India.

Facts- The assessee is a non-resident company incorporated in China and is engaged in the business of supply of elevators and escalators, which includes design and manufacturing.

During the year under consideration, the assessee considered receipts of Rs.17,42,55,454 from Delhi Metro Rail Corporation Ltd (DMRCL) and Rs. 2,80,74,219 from Maharashtra Metro Rail Corporation Ltd (MMRCL) in its return as appearing in Form 26AS statement. Assessee considered both receipts as not taxable in India and claimed a refund of taxes deducted at source.

Assessee submitted that the payment made by the DMRCL and MMRCL to the assessee for the supply of elevators and escalators will be regarded as ‘supply of goods’ and will accordingly be taxable as business income under Article 7 of the India China Double Taxation Avoidance Agreement (DTAA). Assessee claimed that it does not have any permanent establishment in India and therefore, no part of the income earned by the assessee can be taxed in India by virtue of the provisions of Article 7 of the DTAA.

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