The assessee argued that because it did not have a permanent establishment in India, the terms of article of the Agreement did not permit taxation of the assessee’s revenue in India. The AO determined in a draft assessment order that the assessee formed a consortium with its Indian linked firm to fulfill its contractual obligations. The AO viewed this consortium as an association of individuals under section 2(31) of the Act and determined that the contracts with the two parties were indivisible and composite agreements that could not be divided for supply and commissioning. The AO held that the association could not get the benefit of the Agreement. Additionally, he claimed that the sale was completed in India because the products were delivered there and the assessee had made the offshore supplies on a cost-insurance-freight basis at the Indian port of disembarkation. The Assessing Officer then taxed 5% as income from composite contracts. The dispute resolution panel upheld the addition but held the no assessment finding of the AO as pre mature. The same was appealed.

The Tribunal held that the consideration received in India by the enterprise was already put to tax. The Tribunal observed that even though he treated the consortium as an association, the income was tax only in the hands of the assessee. The property in the items passes to the buyer at the port of shipment when an assessee makes an offshore supply of equipment on a cost-insurance-freight basis. All risks of loss or damage to the goods after they leave the port of shipment are assumed by the buyer. India may only tax the portion of revenue that can be linked to business activities there. The assessee’s income was not taxable in India since it did not conduct any operations related to the scope of its work there. (AY.2018-19, 2019-20)