TaxTMI 
TaxTMI 
2014 (9) TMI 514
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....4.02.2006 declaring total income as Rs. 21,03,200/- by applying the provisions of section 44BB of the Income Tax Act, 1961. 4. Notice under Section 148 of the Act was issued on 31.03.2010 for reopening the assessment under Section 147 of the Act thereafter the assessment was completed by the Assessing Officer by holding as follows:- "Whereas the services or facilities which are provided in connection with prospecting for, or extraction or production of, mineral oils are eligible for the benefit of Sec. 44BB. The assessee is merely engaged in the transportation business which not at all connected with prospecting, extraction or production of mineral oils. The provisions of Sec 44BB does not apply in the case of the assessee who is not undertaking the activities specified in Sec 44BB itself. Also, the provisions of Sec 44BB were meant for the entities which incur' huge expenses and which are complex in nature which make it difficult to compute income under Article 7 of DTAA. Therefore, to simplify the computation of income, such provisions were introduced. In cases like that of the assessee there are no expenses of complex nature and it is not at all difficult to determine actu....
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....der mentioned grounds of appeal are without prejudice to one another. 1. That on the facts and the circumstances of the case and in law, the Commissioner of Income Tax (Appeal) [hereinafter referred to as 'CIT(A)'] has erred in holding that reassessment made by Assessing Officer is in accordance with the provisions of Section 148 of the Act. 2. The CIT (A) has erred in law and on facts in holding that Section 44BB is not applicable to your appellant. 3. The CIT (A) has erroneously held that the appellant has merely engaged in the transportation business which is not connected with prospecting, extraction or production of mineral oils. 4. That on the facts and the circumstances of the case and in law, the CIT(A) has erroneously held that Section 44BB covers only first leg contractor, who are having direct contract with ONGC. 5. That on the facts and the circumstances of the case and in law, CIT (A) has erred in taxing income by applying deemed profit rate @ 25% instead of taxing U/S 44BB of the Act. 6. That on the facts and the circumstances of the case and in law, the CIT (A) has erred in upholding the levy of penalty u/s 271B of the Income Tax Act." 7.....
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.... 11. Bidder to follow all rules, regulations and working duration of MDL while carrying out operations which include not only coordination with MDL but also obtaining work permits, Entry Passes, etc from respective MDL departments. BB. Scope of work EIL Supply of Sea-fastening material for fastening the coated pipes, risers, riser-bends available at MDL's Alock Yard." 10. The Price Schedule is at Page 47 of the Paper Book, which is follows:- "ONGC'S MHNRD 3 PIPELINES PROJECT PRICE SCHEDULE Lump sum price inclusive of all taxes and duties for transportation of coated pipes, riser5s, & risder clamps from Mdl's Alock yard, Mumbai to Mumbai High North Field till the completion of laying of linepipes and risers and riser bends including Load-out of coated pipes, risers, & riser bends and fabrication of Sea-fastening support and Sea-fastening of coated pipes, risers, & riser bends on Cargo Barge as per the details mentioned in the relevant sections of ONGC tender document No. MR/OW/MM/3WIPL/07/2003 dated June 2003. 11. Perusal of the above facts of the case demonstrate that the scope of the work is not limited to the transportation of coated pipes alone, but also for m....
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....court in the case of Sedco Forex International INC V s CIT in ITA No.99 of 1999 new No. 434 of 2001. The AO went on to compute the income by bifurcating the total payments received by the assessee under two heads (a) deemed income u/s. 44BB at the rate of 10% of Rs. 12,97,61,300/- computed the taxable income under this head as Rs. 12,97,61,30/- and (b) fees -for technical services Rs. l4,43,42,885/-. 9. We have considered the rival submissions and carefully perused the orders of the lower authorities and the material evidences brought on record. The entire dispute revolves around whether part of the payment received by the assessee can be considered as fee for technical services and whether the other part would be assessed under the presumptive tax of Sec. 44BB of the Act. It is not in dispute that by sub-contract agreement between Engineers India Ltd and the assessee, the assessee was given a turnkey project for laying and installation of pipe lines. It is a settled proposition of law that when a contract consists of a number of terms and conditions each condition does not form separate contract. The contract has to be read as a whole as laid down by the Hon'ble Supreme Cou....
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....urposes of this section,- (i) "plant" includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business; (ii) "mineral oil" includes petroleum and natural gas.] It clearly shows that the assessee is engaged in the business of providing services or facilities in connection with its business, therefore, provisions of Sec. 44BB clearly apply on the facts of the case. The AO has grossly erred in considering part of the income of the assessee as fee for technical services without pointing out which part relates to FTS. The Ld. CIT(A) has rightly considered the entire income to be taxed u/s. 44BB of the Act. 10. A careful perusal of the vanous decisions relied upon by the assessee shows that the work/services done by the assessee do not come within the purview of Sec. 9(l)(vii) of the Act. Respectfully following the decisions of the Tribunal, we do not find any reason to interfere with the findings of the Ld. CIT(A). Order of the Ld. CIT(A) is confirmed. Ground No. 1 & 2 are accordingly dismissed." 13. Consistent with the view taken therein we uphold the contention of the assessee that, the assessee being a n....
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.... of Section 44BB. 17. Ld. counsel for the assessee submits that it is nobodies case that the income in question is fee for technical services. He further submits that the proviso does not apply to the year in question. 18. After hearing rival contentions, we find that this argument of ld. CIT.D.R. is not the basis on which either the Assessing Officer or the ld. CIT(A) have come to a conclusion, that the provisions of Section 44BB do not apply with the facts of the case. Neither the AO nor the ld. CIT(A) have considered the receipt in questin as FTS. This is entirely a new argument and interpretation sought to be placed by the ld. CIT.D.R. This cannot be permitted. 19. When the Assessing Officer interpretation of the scope of work is that the assessee is merely engaged in transportation business and when ld. CIT(A) also holds that the assessee is merely providing specialized services in transporting equipment/material on behalf of the M/s EIL, the ld. D.R. cannot take totally new stand that the income received by the assessee FTS. Thus, this argument is dismissed. 20. In view of the above discussion, consistent with the view of the ITAT in the case of M/s Valentine Mari....