Taxability of offshore supply of equipments 

Facts:

Assessee a tax resident of China was in the business of supplying insulators and optic fibre ground wire. They had supplied goods worth 14.28 crores to PSU's on CIF basis at offshore destination in Chinese ports. Besides this there was onshore business as well which was outsourced to one ZTT India Pvt. Limited. Revenue's plea was on the offshore delivered goods wherein, basing earlier year orders they went on to bifurcate 60% as business income and 40% as fee for technical services and taxed both in India citing that the assessee was fully responsible for the entire activity on turnkey basis. On higher appeal the DRP upheld the views of the AO. On further appeal -

Held in favour of the assessee that if goods were delivered offshore no part of that income can be taxed in India. The earlier year orders stood annulled by the ITAT factually and thus revenue was wrong in applying the same to the year under appeal as well.

Ed. Note: The entire commentary on earlier year order makes it a worthwhile reading.

Case: Jiangdong Fittings Equipments Co. Ltd. v. ACIT 2024 TaxPub(DT) 1196 (Del-Trib)