Tribunal decision: Partial win for assessee, dismissal of Revenue's appeal on interest.

The Tribunal allowed the assessee's appeal partly by directing the deletion of disallowance under section 43B. The Revenue's appeal on the deletion of interest under sections 234B, 234C, and 234D was dismissed. The issues concerning the levy of interest under section 220(2) and the exclusion of an amount from gross receipts were deemed academic and infructuous.

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Issues Involved:
1. Disallowance under section 43B.
2. Levy of interest under section 220(2).
3. Exclusion of an amount wrongly considered as part of the gross receipt.
4. Deletion of levy of interest under sections 234B, 234C, and 234D.

Issue-Wise Detailed Analysis:

1. Disallowance under section 43B:

The assessee contended that the income is determined under section 44BB, which assesses deemed profit at 10% of the gross receipts, and thus, section 43B disallowance is not applicable. The assessee relied on the judgment of the Hon'ble Calcutta High Court in CIT v. Schlumberger Sea Co. Inc., which held that once section 44BB is invoked, provisions of section 43B are not applicable. The Revenue argued that section 44BB excludes sections 28 to 43A but not section 43B, thus justifying the disallowance under section 43B.

The Tribunal concluded that since the assessee's books were rejected and income was determined under section 44BB, which does not allow separate claims for deductions, the disallowance under section 43B was not warranted. The Tribunal noted that disallowance under section 43B is only applicable when there is a deduction otherwise allowable under the Act, which was not the case here. The Tribunal allowed the assessee's ground, directing the A.O. to delete the disallowance under section 43B.

2. Levy of interest under section 220(2):

This issue was deemed consequential and academic in nature as it related to the merits of additions under section 143(3), which did not arise from the order under section 154. Thus, this ground was considered infructuous.

3. Exclusion of an amount wrongly considered as part of the gross receipt:

The assessee argued that an amount of Rs. 154,264,243/- was wrongly included in the gross receipts, ignoring the accounting standard 7 issued by the ICAI. However, this issue was not adjudicated by the CIT(A). Since it was related to the merits of additions under section 143(3) and did not arise from the order under section 154, it was considered academic and infructuous.

4. Deletion of levy of interest under sections 234B, 234C, and 234D:

The A.O. levied interest under sections 234B, 234C, and 234D on the disallowance made, charging Rs. 3,31,82,773/- and Rs. 43,12,099/- under sections 234B and 220(2) respectively. The CIT(A) deleted the interest, citing that the assessee, being a non-resident, was not liable to pay advance tax as its income was subject to TDS. The CIT(A) relied on the judgment of the Hon'ble Bombay High Court in DIT (IT), Mumbai v. M/s. NGC Network Asia LLC and other similar decisions.

The Tribunal upheld the CIT(A)'s decision, noting that the issue was covered by the Hon'ble Bombay High Court's judgment, which held that no interest could be imposed on the payee-assessee when the duty to deduct tax at source was on the payer. Thus, the Revenue's appeal on this ground was dismissed.

Conclusion:

The assessee's appeal was partly allowed, with the Tribunal directing the deletion of disallowance under section 43B. The Revenue's appeal regarding the deletion of interest under sections 234B, 234C, and 234D was dismissed. The issues related to the levy of interest under section 220(2) and the exclusion of an amount from gross receipts were considered infructuous and academic.

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