CTCI OVERSEAS CORPORATION LTD. SUITE 1801-5, 18/F, TOWER 2, CHINA HONG KONG CITY, 33, CANTON ROAD, TSIMA SHA TSUI, KOWLOON, HONG KONG Vs. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)- I, NEW DELHI

JUDGEMENT

(1.) 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 LNG Ltd. (Petronet), it has formed a consortium with CINDA Engineering and Construction Pvt. Ltd. (CINDA), an Indian company, to develop a terminal for the receipt and storage of liquefied natural gas at Kochi, Kerala. The Consortium Agreement was made on 6.3.2009. Petronet awarded the contract for the project to the consortium which was amended and reinstated on 17.11.2009. Under the contract, the consortium members are to undertake the designing, engineering, procurement of equipment, material supplies to erect, construct, test and commission and turn over the facilities for the storage and regasification of liquefied natural gas to Petronet.

(2.) AS per the terms of the contract, CTCI is responsible for offshore supplies, offshore services and mandatory spares (for offshore supplies). CINDA is responsible for onshore supplies, onshore services, construction and erection and machinery spares (for onshore supplies).

(3.) IT is the case of CTCI that transfer of goods to Petronet i.e. the offshore supplies, being outside India, there is no territorial nexus for taxation regarding those offshore supplies. Learned counsel submitted that in the light of the decision in Ishikawajima Harima Heavy Industry, : 288 ITR 408 (IHHI), the facts being identical, the questions raised have to be ruled in its favour. The counsel pointed out that the only objection raised by the Revenue is that the consortium formed by CTCI and CINDA is an Association of Persons (AOP) as per the provision of section 2(31) of the Act and payments made by Petronet should be taxed in India.