Assessee a non-resident of India entered into four contracts with Indian entities for design, manufacture, supply, installation, commissioning etc of paper machines. Amount received from Indian customers was taxed as FTS and Royalty but income on these contracts was not offered to tax in India. The AO added the attributable profits based on assumed 25%. It was held by ITAT that from overall reading of the agreements, reveals that the assessee was given one integrated end-to-end activity of setting up state-of the art plant on turnkey basis, which is otherwise known as the mill. The end-to-end activity covers design, supply, erection, commissioning, performance run of the entire paper mill. The contract between the assessee and the contractee is not for purchase of plant and equipments simpliciter, but a complete paper mill to be installed and commissioned at deliverable stage. Therefore, the assessee’s contention that the income received from supply of plants and equipment is not chargeable to tax in India, as the supplies were made from outside India, is not acceptable. The matter was set aside as without analysing the role of PE in India, an ad-hoc profit percentage was added. (AY.2013-14)