Law:

Section:

Section 9, read with section 2(31), of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - Applicant is a Hong Kong company and is in business of engineering, procurement and construction of petroleum, petro-chemical and power plants - With a view to execute a project awarded by Petronet, it has formed a consortium with CINDA, an Indian company, to develop a terminal for receipt and storage of liquefied natural gas at Kochi - As per terms of contract, applicant is responsible for offshore supplies and services and CINDA is responsible for onshore supplies and services - Whether under section 2(31), consortium of CINDA and applicant forms an Association of Persons (AOP) to carry out the project awarded by Petronet and applicant can be said to have a business connection in India for purpose of application of section 9(1) - Held, yes - Whether however, since applicant has not carried out any part of business relating to offshore supplies in India inasmuch as right, title, payments, etc., in supplies have passed on to Petronet, which is importing these supplies, outside India, amount received by applicant from Petronet for offshore supplies in terms of aforesaid contract is not taxable in India - Held, yes [In favour of applicant] FACTS Applicant (CTCI) is a Hong Kong company and is in the business of engineering, procurement and construction of petroleum, petro-chemical and power plants. With a view to execute a project awarded by Petronet, it has formed a consortium with CINDA, an Indian company, to develop a terminal for the receipt and storage of liquefied natural gas at Kochi. Under the contract, the consortium members are to undertake the designing, engineering, procurement of equipment, material supplies to erect, construct, test and commission and turnover the facilities for the storage and degasification of liquefied natural gas to Petronet. As per the terms of the contract, the applicant is responsible for offshore supplies, offshore services and mandatory spares for offshore supplies and CINDA is responsible for onshore supplies, onshore services, construction and erection and machinery spares for onshore supplies. On these facts,…

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