NUCLEAR POWER CORPORATION OF INDIA LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE applicant before us is the Nuclear Power Corporation of India Limited (NPCIL). It is a company incorporated in India. It is a Public Sector Company. It has approached this Authority under section 245Q(1) of the Income -tax Act, 1961 (hereinafter referred to as "the Act") on the basis that it has entered into an offshore Services Contract with M/s. Atomstroy Export Russia, (ASE) for setting up a power plant in the State of Tamil Nadu. According to the applicant, the income from such contracts is taxable under section 44BBB of the Act. It had also entered into four Offshore Supply Contracts with ASE. As per those contracts, the equipments and materials were to be sold outside India and the payments were also made outside India. No one connected with ASE who was present in India was involved in the activities associated with the offshore supply of such goods. The sales were on principal to principal basis. According to the applicant, the payments received by ASE under these supply contracts were not taxable in India. Under the Offshore Services and Offshore Supply Contracts, ASE is to make the payment of taxes in India and the applicant, the customer, was to reimburse the amounts to ASE.

(2.) THE applicant has pleaded that ASE was assessed to tax for the years 2006 -07 and 2007 -08 pursuant to the directions of the Dispute Resolution Panel and it was held that payments received by ASE under Offshore Services Contracts are covered by Section 44BBB of the Act and payments received by ASE in respect of Offshore Supplies Contracts are also covered by Section 44BBB of the Act.

(3.) IN the context of the admission that ASE, the supplier and the other party to the transaction, was already assessed to tax, we raised a doubt when the application came up whether the application would not be barred by clause (1) of the proviso to Section 245R (2) of the Income -tax Act and whether it would be proper to allow the application under section 245R(2) of the Act for giving a Ruling. The application, on the request of the applicant, was then posted for hearing on that question.