JUDGMENT : K.S. Jhaveri, J. 1. Tax Appeal No. 2142 of 2010 challenges the order dated 05/03/2010 passed by the ITAT in ITA No. 48/Ahd/2007 for assessment year 2000-2001 and came to be admitted on the following questions of law: "A. Whether the Appellate Tribunal is right in law and on facts in deleting the entire addition of Rs. 4,83,71,408/- being reimbursement of expenses to Head Office? B. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 1,82,55,408/- being expenditure incurred by the Head Office? C. Whether the Appellate Tribunal is right in law and on facts in deleting of expenditure incurred by sub-contractor and claimed by the assessee of Rs. 68,63,154/-? D. Whether the Appellate Tribunal is right in law and of facts in deleting the expenditure debited in P & L Account belonging to sub-contractor of Rs. 1,09,70,601/-?" 2. Tax Appeal No. 2143 of 2010 challenges the order dated 05/03/2010 passed by the ITAT in ITA No. 54/Ahd/2007 for assessment year 2000-2001 and came to be admitted on the following questions of law: "A. Whether the Appellate Tribunal is right in law and on facts in deleting the entire addition of Rs. 4,83,71,408/- being reimbursement of expenses to Head Office? B. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 1,82,55,408/- being expenditure incurred by the Head Office? C. Whether the Appellate Tribunal is right in law and on facts in deleting the disallowance of Rs. 1,42,85,226/- u/s. 40(a)(i) of the Act? D. Whether the Appellate Tribunal is right in law and on facts in deleting of expenditure incurred by sub-contractor and claimed by the assessee of Rs. 68,63,154/-? E. Whether the Appellate Tribunal is right in law and of facts in deleting the expenditure debited in P & L Account belonging to sub-contractor of Rs. 1,09,70,601/-? F. Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 27,04,23,415/- [Rs. 30,26,21,297/- -Rs. 3,21,97,882/- being depreciation allowed by CIT(A)] treating capital expenses as revenue expenses?" 3. At the outset, it is required to be noted that so far as the issue No. 'A' and 'B' are concerned, which are common and today this Court has passed common order in Tax Appeal No. 2130 of 2010 and 2145 of 2010 and decided issue Nos. 3,21,97,882/- being depreciation allowed by CIT(A)] treating capital expenses as revenue expenses?" 3. At the outset, it is required to be noted that so far as the issue No. 'A' and 'B' are concerned, which are common and today this Court has passed common order in Tax Appeal No. 2130 of 2010 and 2145 of 2010 and decided issue Nos. 'A' and 'B' in respect of the same assesses in favour of the assessee and against the department. Thus, while adopting the said reasonings and without giving any further reasons, we answer the issue Nos. 'A' and 'B' in favour of the assessee and against the Department. 3.1 Now, so far as issue Nos. 'C' and 'D' of Tax Appeal No. 2142 of 2010 and issue Nos. 'D' and 'E' of Tax Appeal No. 2143 of 2010 are concerned, the learned Tribunal in its order has observed in paragraph Nos. 28 and 29 as under: "28. The learned representatives of both the parties submitted that all the grounds in departmental appeal and ground No. 1 to 4 in the appeal of the assessee as above in the cross appeals are similar as have been considered in assessment year 1998-99 and requested that the order in that assessment year may be followed in this year also. 29. On consideration of the submissions of the parties and findings of authorities below, we are of the view that all the grounds in departmental appeal and ground No. 1 to 4 in the appeal of the assessee as above in cross appeals are similar and identical as are considered and argued by both the parties in Assessment Year 1998-99 in ITA Nos. 46/Ahd/2007 and ITA No. 52/ahd/2007. Therefore, following the same order and relying upon the same reasons for decision in the Assessment Year 1998-99 above, we set aside the orders of authorities below and delete the entire additions above in these grounds. As a result, appeal of the assessee in ITA No. 54/Ahd/2007 on ground No. 1 to 4 is allowed and the departmental appeal in ITA No. 48/Ahd/2007 on all 5 grounds is dismissed." 3.2 Thus, in light of the above observations, when the learned Tribunal has decided the questions referred in paragraph No. 3.1 of this order while adopting the reasonings given in its order passed in ITA Nos. 46/Ahd/2007 and ITA No. 52/ahd/2007 and relevant discussions made therein are confirmed by this Court while deciding Tax Appeal No. 2130 of 2010, following the same order and relying upon the same reasons, we answer the issue Nos. 'C' and 'D' of Tax Appeal No. 2142 of 2010 and issue Nos. 'D' and 'E' of Tax Appeal No. 2143 of 2010 in favour of the assessee and against the Department. 4. Now, so far as the question No. (C) of Tax Appeal No. 2143 of 2010 is concerned, the learned Tribunal has observed in paragraph Nos. 30 and 34 to 38 as under: "30. Ground No. 7 in the appeal of the assessee reads as under: "7. The learned CIT(A) has erred in confirming action of the learned Assessing Officer of making disallowance of Rs. 1,42,85,226/- u/s. 40(a)(i) of the Act." 31.*** 32.*** 33.*** 34. We have considered rival submissions and material available on record. The relevant provisions in the Act on this issue are reproduced as under: 35. Section 40(a)(i) of the Act provides "Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",- (a) in the case of any assessee- [(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,- (A) outside India; or (B) in India to a non-resident, not being a company or to a foreign company, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200: Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.-For the purposes of this sub-clause,- (A) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; (B) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub- section (1) of section 9;" of 35.1 Section 195. [(1) the Act provides "Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest [***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries" [***]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: [Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode :] [Provided further that no such deduction shall be made in respect of any dividends referred to in section 115-O.] Explanation.-For the purposes of this section, where any interest or other sum as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]" 35. Section 9(1)(vii) of the Act provides that the following incomes shall be deemed to accrue or arise in India:- "income by way of fees for technical services payable by- (a) the Government; or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India: [Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government.] [Explanation 1.-For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date.] [Explanation 2.-For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like 51 project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".]" 36. Hon'ble Bombay High Court in the case of Clifford Chance v. DCIT, 221 CTR 1 (supra) held that Section 9(1)(vii)(c) of the Act envisages two conditions to be fulfilled, services, which are source of income sought to be taxed in India must be (i) utilized in India and (ii) rendered in India. Thus the income of the assessee for services rendered in India and utilized in India as disclosed by the assessee in its return is only chargeable to tax in India to the exclusion of income from services rendered out of India. 37. Thus the income of the assessee for services rendered in India and utilized in India as disclosed by the assessee in its return is only chargeable to tax in India to the exclusion of income from services rendered out of India. 37. Hon'ble Karnataka High Court in the case of Jindal Thermal Power Company Ltd. v. DCIT, 225 CTR 220 held " amount paid by the assessee to non-resident company for rendering technical services for commissioning of a power plant in India did not attract tax liability as the technical services were in the nature of theoretical formulation which could be rendered wholly offshore and outside India: however, 'start-up services' and 'overall responsibility' involve executory part of the contract which took place in India and therefore, assessee was required to effect TDS out of remuneration paid towards these services." 38. The assessee pleaded before the authorities below that all the payments were made to several parties outside India for reimbursement of expenses incurred by the then KCIL (UK) (sub- contractor) for the purpose of Dahej Project so there was no element of income. The assessee also claimed that due to the above fact, there was no obligation of the assessee to deduct tax at source u/s.195 while making payments to nonresidents. AO has not brought any evidence or material on record that the recipients who got 52 payments through sub contractor were liable to tax in India. AO has also not brought about their status for receiving the payments. No efforts have been made to prove as to how the payment in question was liable to tax under the provisions of Income Tax Act. Unless the income was chargeable to tax, there would be no tax liabilities to deduct tax as per provisions of Section 195(1) of the IT Act. The AO has also not properly examined the provisions of DTA agreement with UK for the purpose of appreciating the issue. According to the assessee the amount is paid by the UK payer to UK payees, therefore, there was no reason to deduct TDS. The reimbursement of the expenses to the sub contractor for further payment to others was not appreciated in the light of the relevant provisions and how these expenses were considered as fees for technical services is also not considered by the AO. The reimbursement of the expenses to the sub contractor for further payment to others was not appreciated in the light of the relevant provisions and how these expenses were considered as fees for technical services is also not considered by the AO. As regards the reimbursement of the expenses to t he sub contractor, AO disallowed certain expenses treating the same to be liability of the sub contractor on other issues which have already been decided in favour of the assessee. The AO has not specifically considered this issue from the point of view that if the amounts are reimbursed to the sub contractor for and on behalf of the assessee and are taken into consideration by the assessee in the profit & loss account, the same would show that these expenditures were spent by the assessee for itself for the purposes of its business. The AO has also not brought any evidence on record that the payees have any permanent establishments or business connection in India. In the case of Mahabir Commercial Company Ltd. v. CIT, 86 ITR 417 (SC), the Appellate Tribunal held that the sales took place in Pakistan and the income therefrom accrued to the appellant there. ON a reference the High Court held that, having regard to clauses (7) and (9) of the contract which provided respectively for non-acceptance of the documents and claim by the buyer in respect of quality or excess moisture and gave an option to the buyer to accept the goods with allowances or cancel the contract 53 in respect of the whole or part of the shipment, unconditional appropriation of the goods took place in India, notwithstanding the C.I.F terms, and the profits from the sales accrued in India. On appeal to the Supreme Court: Held, reversing the decision of the High Court, that the sales took place in Pakistan and therefore the profits derived therefrom arose outside India. There was nothing in the agreement which envisaged the property in goods being in the appellant even after the value of the invoice had been paid by the bank under the letter of credit in Pakistan. The condition in clause (7) was a condition where the buyers failed or refused to perform the contract altogether by not accepting the documents or in not paying against the documents. The condition in clause (7) was a condition where the buyers failed or refused to perform the contract altogether by not accepting the documents or in not paying against the documents. Even under clause (9) the condition was not a condition of the transfer of property. Under the c.i.f. contract prima facie the property in the goods passes once the documents are tendered by the seller to the buyer or his agent as required under the contract. But, where the seller retains control over the goods by obtaining a bill of lading in his name or to his order, the property in the goods does not pass to the buyer until he endorses the bill to the buyer and delivers the documents to him. If however the seller's dealing with the bill of lading is only to secure the contract price not with the intention of withdrawing the goods from the contract, and he does nothing inconsistent with an intention to pass the property, the property may pass either forthwith subject to the seller's lien or conditional on performance by the buyer of his part of the contract. Even though the property in the goods may pass to the buyer when the documents are handed over, the buyer may yet retain the right to examine and repudiate the goods but this right generally which a buyer has in a c.i.f. contract does not by itself indicate that the property in the goods has not passed to him." In the case of CIT v. Gulf Oil (Great Britain) Ltd., 108 ITR 874 (Bom) the Hon'ble Bombay High Court held, "on the facts that 54 the contracts were made in U.K. as the indents placed by the Indian company were accepted in U.K. The contracts were also executed outside India because once the goods were put on ship there was no reservation of right of disposal in the goods by the non-resident. Pursuant to the indents the products were not merely supplied by the nonresident company but actually sold to the Indian subsidiary at c.i.f. prices. The Indian company effected sales of the products on its own account in India and was taxed on the profits so made by it on its turnover in India. Pursuant to the indents the products were not merely supplied by the nonresident company but actually sold to the Indian subsidiary at c.i.f. prices. The Indian company effected sales of the products on its own account in India and was taxed on the profits so made by it on its turnover in India. It was, therefore, clear that the transactions between the nonresident company and the Indian subsidiary were on a principal to principal basis and the Indian subsidiary could not be regarded as the agent of the non-resident company so as to attract the provisions of section 42(3). The assessee-company did not derive any income from business connection in India chargeable to tax under section 42." The Hon'ble Madras High Court in the case of CIT v. Fried Krupp Industries, 128 ITR 27 (Mad.) held that - "there were no operation in India which wee attributable to the foreign company which could give rise to any profits being earned in India. The terms of agreement made it clear that none of the three types of activities of the foreign company resulted in business connection in India: (i) The supply of machinery was to be on f.o.b. terms. The part played by the foreign company ended with putting the machinery on board and there was no operation by that company in India so as to envisage a business connection; (ii) The supply of spare parts was also to be on f.o.b. terms, and, as in India to constitute business connection; and (iii) So far as the deputation of the foreign personnel for erection machinery is concerned, such personnel became employees of the Indian company and the foreign company was not responsible or the erection of the machinery as such. It was not like a turnkey project where the responsibility of the foreign company 55 would continue till the machinery is actually run and proves its performance. Thus, there was absolutely no operation in India which would give rise to a tax liability in India as far as the foreign company was connected and Tribunal was, therefore, right in its conclusion." Learned CIT(A) relied upon the decision in the case of Wallace Pharmaceutical Pvt. Ltd. (supra) in which applicant was a Indian Company and tax resident of India. Penser is tax resident of USA but operating internationally. Penser is tax resident of USA but operating internationally. It was found from facts that Penser has rendered consultancy services in India, therefore, consultancy fees was held to be deemed income of Penser in India. The facts of this case are therefore, clearly distinguishable from the facts of this case. Considering the facts on this issue and in the absence of specific finding and material brought on record by the AO, we do not find any justification to sustain the findings of authorities below. We accordingly set aside the orders of authorities below and delete the entire disallowance. As a result, ground No. 7 in the appeal of the assessee is allowed." 4.1 Thus, in light of the above observations and discussions, when the learned Tribunal has decided the above referred question by making detail discussions, without assigning any further reasons, while adopting the said reasonings, we answer the said question in favour of the assessee and against the Department. 5. Now, so far as question No. (F) of Tax Appeal No. 2143 of 2010 is concerned, the learned Tribunal has discussed the said in detail and relevant discussion made in paragraph No. 43 which reads thus: "43. We have considered the rival submission and material on record. The facts as noted above are not in dispute. The assessee raised these temporary structures at the project site for the purpose of business and welfare of the employees. As per the clause 15(3) of the agreement with the principal (supra), the assessee was required to clear the site on completion of the project. The above facts, therefore, show that all the structures were temporary in nature and were meant for the business of the assessee till the project continued. It was obligation of the assessee to remove the temporary structure from the site on completion of the project. There is no question of generating any asset in favour of the assessee or getting any enduring benefit. The temporary structure therefore, would not constitute any asset, the same are expenses wholly and exclusively incurred for the purpose of facilitating the business of the assessee. The decisions relied upon by learned Counsel for the assessee clearly support the case of the assessee for allowing deduction on the expenses being revenue in nature. The temporary structure therefore, would not constitute any asset, the same are expenses wholly and exclusively incurred for the purpose of facilitating the business of the assessee. The decisions relied upon by learned Counsel for the assessee clearly support the case of the assessee for allowing deduction on the expenses being revenue in nature. Hon'ble Supreme Court in the case of CIT v. Tamilnadu Police Housing Corporation, 313 ITR (ST) 28, dismissed the departmental appeal in which assessee did not in construction building on leasehold land, acquired a capital asset but had only put up a construction of the building for business advantage, with the result that the entire construction cost was admissible as revenue expenditure. Considering the facts and circumstances noted above, in the light of the above decisions, it is clear that the amounts spent by the assessee on erection of the temporary structure, equipments, furniture and fixtures etc. at the site unit are revenue expenditure and the same shall have to be allowed as deduction. We accordingly set aside the orders of authorities below and delete the entire addition. In view of the above finding, there is no need to consider the alternate submission of the learned Counsel for the assessee for grant of depreciation. As a result, ground No. 9 of the appeal of the assessee is allowed." 5.1 Thus, in light of the above observations and discussions, when the learned Tribunal has decided the above referred question by making detail discussions, without assigning any further reasons, while adopting the said reasonings, we answer the said question in favour of the assessee and against the Department. 6. Accordingly, all these appeals stand disposed of by answering the questions in favour of the assessee and against the department.