Reimbursement claims and section 44BB apply where expense recovery is unsupported by primary evidence but linked to mineral oil services.

Receipts claimed as reimbursement were not accepted as proved reimbursements because the assessee did not produce primary contemporaneous evidence of actual expenditure, the allocation basis, or a reliable one-to-one nexus between the costs incurred and the amounts recovered from the associated enterprise. Debit notes and general policy documents were held insufficient to discharge the burden of proof, and prior-year treatment did not control the year in issue because each assessment year must be decided on its own facts. The claim of pure reimbursement was therefore rejected, but the receipts were nevertheless held assessable under section 44BB in view of their connection with mineral oil operations and the services involved.

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Issues: Whether the receipts claimed as reimbursement of expenses were proved to be mere reimbursements, and if not, whether the income was nevertheless liable to be computed under section 44BB of the Income-tax Act, 1961.

Analysis: The assessee failed to produce primary and contemporaneous evidence showing actual incurring of the claimed expenses, the manner of allocation, or a reliable one-to-one nexus between the expenditure and the amounts recovered from the associated enterprise. The debit notes and broad policy documents were found insufficient by themselves to discharge the burden of proof. Earlier year orders did not govern the present year because each assessment year must be decided on its own facts, and the record in the year under appeal did not establish the reimbursement claim. In the circumstances, the receipts could not be accepted as proved reimbursements, but, given the nature of the business and the services connected with mineral oil operations, the proper course was to apply section 44BB.

Conclusion: The assessee's claim of pure reimbursement was rejected, but the receipts were directed to be assessed under section 44BB.

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