IN THE ITAT DELHI
Assistant Director of Income-tax, Circle-1(1), International Taxation
v.
Alcatel Lucent USA Inc.
IT APPEAL NOS. 3821 TO 3829 (DELHI) OF 2011
[ASSESSMENT YEARS 2004-05 TO 2008-09]
OCTOBER 21, 2011
ORDER
A.N. Pahuja, Accountant Member – These nine appeals-first four filed on 11.8.2011 by the Revenue against a common order dated 31st May, 2011 for the Assessment Years 2004-05 to 2007-08 in the case of Alcatel Lucent USA Inc. and remaining five also filed on 11.8.2011 against a common order dated 01.06.2011 of the learned CIT(A)-XXIX, New Delhi in the case of Alcatel Lucent World Services Inc. for the Assessment Years 2004-05 to 2008-09, raise the following similar grounds:-
“1 On the facts and in the circumstances of the case, the learned CIT(A) has erred in relying upon the decision of the Hon’ble Delhi High Court order in the case of Jacab Civil Inc./Mitsubishi Corporation, directing the Assessing Officer to delete the interest u/s 234B of the Income-tax Act.
2 The appellant craves to add, amend, modify or alter any grounds of appeal at/the time or before the hearing of the appeal.”
Since similar issues are involved, these appeals were heard simultaneously for the sake of convenience and are being disposed of through this common order
2. Adverting now to ground no.1 in these appeals, facts, in brief, as per relevant orders in the case of Alcatel Lucent USA Inc are that the assessee, a tax resident of USA, is one of the Alcatel-Lucent group entity and supplied telecom equipment to customers in India in the years under consideration. The said group started its operations in India 1982 in terms of an agreement with ITI Ltd. Subsequently, a joint venture was established with CDOT at Chennai besides having a research centre at Bangalore. A survey u/s 133A of the Income-tax Act, 1961 [hereinafter referred to as the ‘Act’] was conducted on 27.2.2009 in the various office premises of M/s Alcatel Lucent India Ltd., as mentioned in para 2.5 of the assessment order. The said company provided marketing support to these assessees. In the course of assessment proceedings in the case of Alcatel -Lucent France, a flagship company of the group, for the AY 2006-07, the concerned Assessing Officer [AO in short] noticed that the said assessee did not offer any income attributable to the offshore supplies to Indian customers and reflected income from services rendered in India alone . After considering the material found during the course of survey, the AO concluded in that case that the said assessee had a permanent establishment [PE]in terms of the double taxation avoidance agreement with India. Based on his findings in that case, the AO issued a notice u/s 148 of the Act to the aforesaid two assessees in the AYs 2004-05 to 2007-08 besides a notice u/s 142(1) of the Act for the AY 2008-09 to Alcatel Lucent World Services Inc. In response, these two assessees, filed returns for the respective assessment years, declaring nil income. Based upon his findings and conclusions in the case of Alcatel -Lucent France in the AY 2006- 07 and since facts and circumstances in the case of these two assessees were similar to facts and circumstances obtaining in the case of Alcatel -Lucent France, the AO attributed trading margin of 3.87% on account of various offshore supplies and after considering the deduction on account of market support, risks and functions, net income chargeable to tax and attributable to PE, was worked out at 2.5% of the sale price of the hardware portion of the supplies. The total income assessed in the AYs 2004-05 to AY 2008-09 in the assessment of these two assessees was determined as under:-
(i)
