HIGH COURT OF BOMBAY
Director of Income-tax (International Taxation), Mumbai
Versus
Ishikawjima Harima Heavy Inds. Co. Ltd.
IT APPEAL NO. 239 OF 2011
OCTOBER 30, 2012
ORDER
1. The question of law raised by the Revenue in this appeal reads thus :
“Whether, on the facts and circumstances of the case and in law, the Tribunal is correct in law in holding that the amount receivable by the assessee in respect of offshore supply of equipments and offshore services cannot be taxed within the purview of section 9(1) of the Income-tax Act, 1961 ?”
2. The assessment year involved herein is Assessment Year 2003-2004.
3. The dispute in the present case relates to the taxability of the offshore services and offshore supply made by the assessee during the assessment year in question. The Income Tax Appellate Tribunal following the decision of the Apex Court in the assessee’s own case reported in Ishikawajima Harima Heavy Industries Co. Ltd. v. DIT [2007] 288 ITR 408 has held that the amount receivable by the assessee in respect of offshore supply of equipments and offshore services cannot be taxed under section 9(1) of the Act. According to the Revenue in view of the explanation, added to section 9 by Finance Act, 2010 with retrospective effect from 1st June, 1976, the assessee is liable to pay tax in respect of the offshore supply of equipments and offshore services. It is relevant to note that the Apex Court in the aforesaid assessee’s own case has held that apart from non-applicability of section 9(1) of the Income-tax Act, 1961 in the present case Article 7 of the DTAA between India and Japan is also applicable and, hence, the income arising on account of offshore services and offshore supply of equipments would not be taxable. If the assessee is not liable to tax in view of the Article 8 (sic) of DTAA between India and Japan, then, irrespective of the amendment to section 9(1) of the Act, the assessee would not be liable to tax.
4. In this view of the matter, no fault can be found with the order of the Income Tax Appellate Tribunal. The appeal is accordingly dismissed with no order as to costs.
