TaxTMI 
TaxTMI 
2010 (1) TMI 725
X X X X Extracts X X X X
X X X X Extracts X X X X
....tract was entered into prior to the introduction of the section, but where the completion of the contract was only in the current year, and the assessee is declaring his income only on a completed contract basis?" 3. The assessee is a non-resident foreign company with its headquarters at Legnano, Italy and Project office at Chennai, India and also for the purpose of establishing a place of business in India with effect from 01.10.1981. The non-resident company got itself registered with the Registrar of Companies and the Reserve Bank's permission has been obtained to carry out the operation of the project as per the contract. The relevant assessment year is 1994-1995 and the corresponding accounting year ended on 31.03.1994. The assessee company entered into an agreement as per the contract No.006/2701K/H/IIT/81 dated 8.6.1981 for unloading, erection, testing and commissioning of three numbers of steam turbine generators with ancillaries. For the said assessment year 1994-1995, the assessee has filed a return of income on 21.07.1994 declaring the total income as 'Nil'. In respect of the earlier assessment years 1982-83 to 1993-1994, the assessee had submitted return of inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arlier were all treated as advance till then. He also submitted that the income from the project accrued to the assessee only during the accounting year and therefore, as per Section 44BBB, 10% of the payment shall be deemed to be the profit which was rightly assessed by the assessing officer and the order passed by the Tribunal is not in accordance with law and the same has to be set aside. 5. In spite of notice being served on the respondent, there is no representation on behalf of the assessee. 6. Heard the learned counsel appearing for the appellant and perused the materials available on record. The relevant provision of Section 44BBB reads as follows:- "Notwithstanding anything to the contrary contained in sections 28 to 44AA, in the case of an assessee, being a foreign company, engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project approved by the Central Government in this behalf, a sum equal to ten per cent of the amount paid or payable (whether in or out of India) to the said assessee or to any person on his behalf on account of such civ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....28 to 44AA of the Income-tax Act, the income of foreign companies as are engaged in the business of civil construction or erection or testing or commissioning of plant or machinery in connection with a turnkey power project shall be deemed at 10 per cent of the amount paid or payable to such assessee or to any person on his behalf, whether in or out of India. For this purpose, the turnkey power project should be approved by the Central Government and should be financed under any international aid programme. It is also clarified that erection of plant or machinery or testing or commissioning thereof will include laying of transmission lines and systems. This amendment will come into force with effect from 1st April, 1990, and will, accordingly apply in relation to the assessment year 1990-91.(Section 10 of the Finance Act, 1989)." 7. An agreement was entered into between the assessee with the Neyveli Lignite Corporation on 08.06.1981. But we do not have the benefit of looking into the copy of the agreement as the same is not enclosed by the Revenue in the typed set. Further the authorities below have considered the agreement and given a categorical finding that the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id under the contract was Rs.4,90,45,132 and all the bills of the assessee were settled prior to 30.04.1990. It is pertinent to note that the assessee has been regularly filing its return of income and the same has also been processed by the assessing officer. For the assessment years 1988-1989 and 1989-1990, the assessments have been completed accepting the loss returned by the assessee in these two years. The said returns were processed under Section 143 (1)(a) of the Act and also they reached finality. The Tribunal in para 12 has stated as follows:- "We had perused the assessment orders for the assessment years 1988-89 and 1989-90 found at pages 70 and 75 of the paper book and note that these two assessments have not been completed on a "No Income No Loss"basis and computation of loss returned by the assessee is accepted." During the above two assessment years, the assessee/respondent has received a sum of Rs.3,02,10,878.21. But the assssee has filed a return of loss and the same was accepted by the Department. The total amount received by the assessee/respondent was Rs.4,90,45,132.72. Out of the said sum, Rs.3,02,10,878.21/- was received during the assessment ye....