Vibhu Bakhru, J.

1. The petitioners have filed the present petition under Articles 226/227 of the Constitution seeking quashing of the ruling dated 20.03.2012 passed by the Authority for Advance Rulings (hereinafter referred to as the ‘Authority’). By the said ruling dated 20.03.2012, the Authority has disposed of the application (AAR No.962 of 2010) filed by the petitioner under section 245-Q of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) and held that the Consortium of the petitioner no.1 and Samsung Engineering Company Ltd. constitutes an Association of Persons and the income or profits received/ receivable by petitioner no.1 for the offshore supply of goods and for rendering of offshore services were taxable in India. The said ruling is hereinafter referred to as the ‘impugned ruling’.

2. The petitioner no.1, Linde AG, Linde Engineering Division, Pullach, Germany is hereinafter referred to as ‘Linde’. Samsung Engineering Company Ltd., Seoul, Korea is hereinafter referred to as ‘Samsung’. Linde and Samsung are hereinafter also referred to as members and collectively referred to as ‘Consortium’. ONGC Petro Additions Limited is hereinafter referred to as ‘OPAL’. Memorandum of Understanding dated 03.03.2008 is hereinafter referred to as ‘MOU’.

3. The principal controversy which is required to be considered in the present petition is: whether in the given facts, Linde and Samsung constitute an Association of Persons within the meaning of ‘person’ as defined under section 2 (31) of the Act? And, whether the income received/receivable by Linde for the supply of equipment, material and spares outside India and for rendering services outside India is taxable in India?

4. The relevant facts in brief are as follows:-

4.1. On 19.4.2007, OPAL floated a Tender Notice inviting bids executing the work (including undertaking all activities and rendering all services) for the design, engineering, procurement, construction, installation, commissioning and handing over of the plant for the Dual Feed Cracker and Associated Units of Dahej Petrochemical Complex in accordance with the Bid Documents. The project was to be executed on turnkey basis.

4.2. On 03.03.2008, Linde and Samsung entered into a Memorandum of Understanding (hereinafter referred to as the ‘MOU’) whereby both the parties agreed to form a Consortium, for jointly submitting a bid to secure the contract for execution of the aforesaid project. The MOU was followed by an ‘Internal Consortium Agreement’ dated 14.03.2008 executed between Linde and Samsung. Thereafter, on 20.03.2008, the Consortium submitted its proposal pursuant to the aforementioned tender notice published by OPAL. The price bid was submitted by the Consortium on 28.07.2008.

4.3. The said proposal submitted by Linde and Samsung was accepted and OPAL issued a Notification of Award on 23.12.2008 awarding the work of executing the project on a turnkey basis to the Consortium. 23.12.2008 was also fixed as the effective date.

4.4 Thereafter, OPAL (referred in the Contract as the ‘Company’) and the Consortium (referred in the Contract as the ‘Contractor’) entered into a definitive agreement on 10.02.2009. As per the said agreement, OPAL awarded the contract for carrying on work of all activities and services required for the design, engineering, procurement, construction, installation, commissioning and handing over of the plant on a lump sum turnkey basis in accordance with the Bidding Documents, to the Consortium. The Consortium agreed to perform the work in conformity with the terms of the agreement and OPAL agreed to pay the consideration in the manner as specified in the contract. The agreement included various annexures, viz.: the General conditions of contract as amended, Technical documents, Agreed clarifications, contract price schedule, construction schedule, Project instructions, Milestone payment formula, Notification of award, Letter of acknowledgement of notification of award from th