TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 921
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....obilisation advance 592/Del/2013) Revenue 2004-05 18,03,35,319 Yes N.A. 263/del/2013 Assessee 2004-05 Against reopening of assessment 5289/del/2010 Assessee 2007-08 30,04,25,130 Yes 5775/Del/2011 Assessee 2008-09 3,70,49,514 Yes N.A. 746/del/2013 Revenue 2009-10 99,24,572 13477470 1810/del/2013) Revenue 2009-10 NA Yes NA 3. We first take up the Cross objection filed by assessee in ITA no 592/Del/2013 for AY 2004-05 i.e. co. No 63/Del/2013 which is against reopening of the assessment for AY 2004-05 raising following grounds :- i. That the Ld. Commissioner of Income-tax, Appeals-11, Dehradun [CIT(A)] erred in not holding that the reassessment proceedings were bad in law because in the absence of any new material, the assessing officer could not have formed any reason to believe that income had escaped assessment. ii. That the Ld. CIT (A) erred in not holding that the reassessment proceedings were bad in law because in the absence of any tangible new material which can possibly justify the reopening of assessment under section 148. iii. That the Ld. CIT (A) erred in not holding that the notice under section 148 was bad in ....
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....e ld. AR submitted that original order has been framed in the case of the assessee u/s 143(1) and reassessment notice u/s 147 has been issued on 28th March 2011 and approval is also granted by the supervisory authority. He submitted that there is change of opinion on that aspect. 8. Against this the ld. DR submitted that there is failure on the part of the assessee in offering the entire revenue u/s 44BB of the Act which is not correct as the assessee is only providing supporting vessels which used for logistic purpose and these vessels are not used for drilling or exploration purposes and therefore it is merely rent for the vessels it is not covered u/s 44BB of the Act. He further submitted that there is an amendment in the Finance Bill 2010 w.e.f. 01.04.2011 coupled with the decision of Foramer France provides enough tangible material for formation of belief to the AO for reopening of the assessment. 9. We have carefully considered the rival contention and note that notice for reassessment has been issued to the assessee on 28th March 2011 and original return was processed u/s 143(1) on 24.01.2005. In response to that notice on 13th April 2011 the assessee submitted that return....
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....and that of the Gujarat High Court in Austin Engineering Co. Ltd. v. Joint CIT [2009] 312 ITR 70 (Guj), this court is of the view that subsequent pronouncement by a court or a superior court does not entitle the Assessing Officer to reopen the assessment proceedings on the ground that the Assessing Officer has reasons to believe that income has escaped assessment or that the assessee has not fully and truly disclosed all the material facts. The claim of the assessee could not be termed to be either lacking in material particulars nor could it be termed to be untrue. The assessee has disclosed all material facts and no false facts have been stated. The reasons recorded shows that the Assessing Officer has reasons to believe that income has escaped assessment on the basis of a subsequent decision rendered by this court. In the opinion of the court, this reasoning amounts to a change of opinion by the Assessing Officer. Further, there is no failure on the part of the assessee in disclosing fully and truly all material facts. 54. In so far as the second reason is concerned, the court finds that the primary facts had been disclosed by the petitioner, namely, the agreement/ contracts w....
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....n dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to minimise the Departmental work to scrutinise each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J.) in Apogee International Ltd. v. Union of India**. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is pay able by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any 'assessment' is done by them ? The reply is an emphatic 'no'. The intimation section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be pa....
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.... was covered under the provisions of section 44BB given AO's finding regarding PE ignoring that the said decision of the ITAT has not been accepted by the department, and a MA has been filed, while appeal was not filed purely on account of tax. (vi) Whether on the facts and circumstances of the case the CIT (A) has erred in holding that interest u/s 234-B was not chargeable in this case by relying upon the decision of Hon'ble Uttrakhand High court in the case of Maersk (334 ITR 79) whereas the department has contested the issue and has filed SIP before the APEX Court against in the case of Jacobs Civil Incorporated/ Mitsubishi involving similar issue. (vii) Whether on the facts and circumstance of the case CIT(A) has not appreciated that assessee has failed to distinguish the case of ONGC vs. IAC 29 ITD 422 which clearly states that section 44BB will not apply to the case of a mere transport vessel, and that the facility hired out has to be intimately connected with the prospecting for oils etc." 16. Following broad issues that emerges for the adjudication are:- a. Receipt of the assessee is rental of vessels received from non-production sharing companies (i.e.....
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....l provisions of s 44BB: (A) Receipts from supplying on hire of a mere transportation vessels / ships; and / or (B) Receipts when the assessee is the second (or further) leg supplier of plant and machinery e) It is his further submission that once the hire receipts are excluded from s 44BB, they have been brought to tax by the AO as equipment royalty as receipts from industrial / commercial vessels / ships u/s 9(1) (vi) of the Act. He defended that AO treated all hiring receipts as "Royalty" income within the meaning of 9(1)(vi) and proceeded to tax it as business income since applicability of DTAA has not been claimed. However, since no books of account were maintained / produced by the assessee, the AO estimated business income @25% of gross receipts, and taxed it accordingly. f) Regarding reliance by assessee on SBS marine Limited ( ITAT ) he submitted that it is distinguish able on facts The main issue therein is restricted to SBS Marine being a second (or further) leg supplier. In the present case of the assessee, Tidewater, the main issue is that the vessels supplied mere transportation vessels, used for "transporting goods, supplies or equipment in support of exploration ....
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.... be read as retrospective e) Thereafter he submitted that how case laws relied up on by the LD DR does not apply to the facts of the case. 19. We have carefully considered the rival contentions. We take up the first ground of appeal of revenue which is against the issue of chargeability of tax on the receipt of rental income from Non PSC companies offered for taxation u/s 44BB of the act by assessee. We have perused and considered all the decision cited before us which we considered as relevant for deciding the issue. 20. Provisions of section 44BB are as under :- SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS IN CONNECTION WITH THE BUSINESS OF EXPLORATION, ETC., OF MINERAL OILS (1) Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in the case of an assessee being a non-resident engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten per cent. of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such....
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....upplying plant or machinery on hire to a company which in turns provides services or facility to the company which is engaged in the specified business is eligible for claim of concessional rate of taxation u/s 44BB of the act or not. This is in common parlance referred to as " Second Leg‟ Contracts. The „plant‟ supplied by the assessee are vessels and therefore they cover in the definition of plant which is also not in dispute. 23. Coordinate bench of ITAT in SBS Marine Limited v ADIT [ITA 107/Del/2012 dated 13.2.2015] after considering the decisions of honourable supreme court in case of UOI V Gosalia Shipping Pvt. Limited [113 ITR 307] & Poomphur Shipping corporation Limited V ITO [360 ITR 257] , both of which are heavily relied by the revenue has decided this issue. Further this decision of Coordinate bench has also been upheld by honourable Uttarakhand High court vide order dated 6.8.2015 in ITA No 36/2015 applying judgement of Honourable Supreme court in case of Oil And natural Gas Coorp. Limited V CIT [376 ITR 306 ( SC)]. There is no contradictory decision of any high court placed before us. Therefore we are duty bound to follow the decision approved by Ho....
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....rovided by the assessee along with plant and machinery are used in offshore drilling operations i.e., the activity of prospecting for or extraction or production of mineral oils. Consequently, the requirements of section 44BB are satisfied in the present case. 24. In view of the above, there is no merit in the contentions of the revenue that the assessee is not an eligible assessee under section 44BB since it has not directly entered into contract with the ONGC and it is not undertaking the activities specified in section 44BB itself and being second leg contractors they are not eligible under section 44BB. 24. Therefore in view of the decision of SBS Marine Limited V ADIT (Supra) we hold that even second leg contracts are also eligible for the benefit of tax treatment provided u/s 44BB of the Act. 25. Second Contention raised was that amendment in section 44BB and 44DA should be read as retrospective. Honourable uttarakhand High court in assessee‟s own case in 339 ITR 169 has held that "As stated earlier, the combined effect of the provisions of sections 44BB, 44DA and 115A of the Act will not have a bearing to the cases in hand inasmuch as the Explanatory Note to the Fi....
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....bove argument which is mainly that in a case of a non-resident whose entire income was subject to tax deduction at source under s. 195 interest u/s 234 B is not chargeable. There are conflicting decision of Honourable Delhi High court on the issue as its is evident from the decisions relied up on by assessee as well as LD DR. In the case cited by LD AR reasoning of the Hon'ble Court was that once the entire income of the assessee was subject to tax deduction at source under s. 195, the assessee was not liable to pay any 'advance tax' in terms of section 209(l)(d) and hence, could not be faulted for shortfall in payment of advance tax. However in the case cited by LD DR it is that when the income is chargeable to tax in India of Non resident u/s 195 they cannot escape the liability of interest u/s 234B of the act. It has come to our notice that SLP filed before the Honourable supreme court in case of DIT (International Taxation) Vs. Clifford Chance LLP in ITA No. 2883 of 2008 (Bom) has been dismissed as stated in ITA No.5823/Del /2011 Assessment Year : 2008-09 in Fugro Geoteam AS V Addl. Director of Income tax "Levy of Interest 8. Interest u/s 234B & 234C is not charge....