Income Tax Appellate Tribunal Delhi Adit, New Delhi vs M/S Nortel Networks Singapore Pte. ... on 24 April, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'G' NEW DLEHI BEFORE SHRI G.D. AGRAWAL, PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. Nos. 2172 to 2176/Del/2011 Assessment Years: 200102 to 200506 Addl. Director of Incometax vs M/s Nortel Networks Singapore P. Ltd, Circle 2(1), New Delhi. C/o S.R. Batliboi & Co. Golf View, Corporate Park, Tower B, Sector 42, Gurgaon. (PAN: AACCN0752F) I.T.A. Nos. 2757 to 2760/Del/2009 Assessment Years: 200102 to 200506 M/s Nortel Networks Singapore P. Ltd, vs Dy. Director of Incometax C/o S.R. Batliboi & Co. Circle 2(1), New Delhi Golf View, Corporate Park, Tower B, Sector 42, Gurgaon. (PAN: AACCN0752F) (Appellant) (Respondent) Assessee by: S/Shi Nagwshwar Rao, Purushottam Ananad Ms Sherry Goyal Department by: Shri G.K. Dhall, CIT DR Date of hearing: 22.03.2018 Date of Pronouncement: 24 .04.2018 2 ORDER PER K. NARASIMHA CHARY, JM These appeals are preferred by the revenue and the assessee respectively challenging the order dated 27.02.2009 of the learned Commissioner of Income tax (Appeals)XXIX, New Delhi (for short "CIT(A))". 2. Brief facts of the case are that the Assessee M/s Nortel Networks Singapore P. Ltd, is a company incorporated under the laws of Singapore. It is engaged in the business of supplying advanced the networking technologies to customers in the AsiaPacific region. Its system knowledge encompasses key products required in telecommunication networks, such as digital exchanges, transmission systems and base stations which include both the hardware and software, which is an embedded software in some instances. Nortel Networks India private limited ("Nortel India"), is a group company of the assessee in India established in July, 1996 in India and provides market support and licensing services to the assessee under the service agreement. The Indian entity NNIPL carried out installation and onshore supplies portion of various contracts with Indian buyers. NNIPL also provides support services under a written agreement and has been remunerated on cost plus basis. It was also subjected to transfer pricing scrutiny by Indian tax authorities. Nortel Networks India International Inc (NNIII) is a USA Inc entity which makes offshore supplies to Indian buyers under contracts assigned by the Indian entity. In addition to NNIII and NNIPL, the Canadian parent company of Nortel group had a liaison office in India which carried out activities permitted by the Reserve Bank of India. 3 3. During the previous years relevant to the assessment years 200102 to 200405, the assessee supplied telecommunication equipment with or without related software to the following Indian telecom operators: Name of the AY 200102 AY 200203 AY 200304 AY 200405 AY 200506 customer (amount in (amount in (amount in (amount in (amount in USD) USD) SGD) USD) SGD) Bharti Telesonic 2,347,653 5,316,582 12,468,821 11,470,201 9,696,382 Ltd. (Bharti) Reliance 18,203,175 3.374,105 2,09,891 Infocomm Ltd. (Reliance BPL Cellular Ltd. 344,722 1,562,835 206,157 Gas Authority of 4,125,772 4,185,026 Inida Ltd. (GAIL) Videsh Sanchar 264,783 22,292 96,879 Nigam Ltd.(VSNL) Total 2,957,158 11,007,481 35,160,058 14,844,306 9,906,273 4. Return of income for the assessment year 200304 was picked up for scrutiny under section 143 (2) and as could be seen from the Assessment Order, Ld. AO observed that Nortel India and the liaison office of Nortel Networks Ltd, being a Nortel group companies, were actually involved in negotiation and conclusion of contracts on behalf of the assessee in India; Nortel India was involved in securing orders wholly on behalf of the assessee and other Nortel group companies in India; both Nortel India and the Indian liaison office were operating from the same premises; Nortel India was financially and technically dep