DEEPAK CABLES (INDIA) LIMITED Vs. MEERA SRIVASTAVA, JDIT

JUDGEMENT

(1.) THE applicant is a company incorporated in India, engaged in manufacturing of cables, electrical & automotive wire and bronze type cables. The applicant formed a consortium with M/s LS Cables Limited, Korea on 22.6.2007 with a view to bid for four tenders invited by the Karnataka Power Transmission Corporation Ltd., (KPTCL) for setting up four specified transmission lines on turnkey basis. According to the consortium agreement, the applicant was to act as the leading company on winning the contract and the parties were jointly and severally bound for the successful performance of the contract and to be fully responsible for the design, manufacture, supply and successful performance of the equipments in accordance with the contract. According to the consortium agreement, all local supplies, installation services, testing and commissioning of 220 KV XLPE cable circuits fell within the scope of the work to be done by the applicant and the work of design, engineering, manufacturing and supply of 220 KV XLPE cable joints, terminations link boxes and bonding cable, jointing services for joints and terminations and supervision of cable laying, jointing, testing and commissioning fell under the scope of the work of M/s LS Cables Ltd., New Delhi. The consortium having won the contract, four separate contracts were awarded to the applicant under different Letters of Award. It is the case of the applicant that the Letter of Award inter alia recognizes the fact that offshore supplies shall be the responsibility of LS Cables Ltd. It is the further case of the applicant that the property in the goods supplied by M/s LS Cables from Korea under the four contracts pass to the applicant outside India, i.e. before the goods entered the customs frontiers of India. Clause 5 of the Memorandum of understanding between the applicant and LS Cables is relied on in support.

(2.) IF the answer to above question is in the negative, whether any tax is required to be deducted at source by the Applicant on payments to LSCL i.e. recipient non -resident Korean company.

(3.) IT is not for us to consider the arguments on the correctness or otherwise of the view expressed or test the correctness of the postulates in the decision of the Supreme Court. It is for the Revenue to raise those questions before the Supreme Court if it wants to seek a reconsideration of the question. Suffice it to say, that we are bound by the law laid by the Supreme Court in that decision, unless, of course, it is a question of our looking into the question whether there is an attempt for avoidance of tax, within the meaning of the proviso to Section 245R(2) of the Income -tax Act.