Appeal on Tax Assessment Order Involving Demobilization Revenue Upheld Under Section 44BB

The appeal challenged the assessment order for the assessment year 2010-11, focusing on the inclusion of demobilization revenue in gross receipts for tax computation under section 44BB of the Act. The Tribunal upheld the AO and DRP's decision to consider the entire demobilization revenue as part of the gross contract amount. Additionally, the claim for deduction of a credit note issued was rejected, as the Tribunal held that under section 44BB, deductions were not permissible. The Tribunal directed the assessing officer to compute interest in line with a previous court ruling, partially allowing the appeal.

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Issues:
1. Inclusion of demobilization revenue in gross receipts.
2. Rejection of claim for deduction of credit note issued.
3. Charging of interest u/s 234B and 234C of the Act.

Inclusion of Demobilization Revenue:
The appeal challenged the assessment order under sections 143(3) and 144C of the Act for the assessment year 2010-11. The dispute centered on the inclusion of demobilization revenue in gross receipts for tax computation under section 44BB of the Act. The AO and DRP held that the entire demobilization revenue for all transit days should be considered as gross contract amount. The Tribunal affirmed this decision based on precedents, including the case of Sedco Forex International Drilling Inc.

Rejection of Claim for Deduction of Credit Note:
The rejection of the claim for deduction of a credit note issued by the assessee to M/s Allseas was another key issue. The assessing officer considered the credit note as a reimbursement of freight charges, thus includible in gross revenue. The assessee argued that the credit note was issued for fuel supplied by M/s Allseas and should be deductible. However, the Tribunal held that under section 44BB of the Act, which deems profits at 10% of the gross contract amount without allowing deductions, the claim for deduction of the credit note was not permissible.

Charging of Interest u/s 234B and 234C:
Regarding the issue of charging interest under sections 234B and 234C of the Act, the Tribunal referred to the decision in the case of DIT Vs. NGC Network Asia LLC and directed the assessing officer to compute the interest in line with the Bombay High Court's ruling in that case. Consequently, the appeal was partly allowed, with the Tribunal's decision pronounced on 8th January 2016.

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