TaxTMI 
TaxTMI 
2016 (2) TMI 921
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....ntract Whether Interest U/s 234B is challenged? Mobilisation 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 ....
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....inst the case of Jacob Civil Incorporated on similar issue. The assessee has challenged the issue of reopening before us. 7. On the issue of reopening the 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....
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....n 115A irrespective of the business to which it relates. 53. In view of the decision of the Delhi High Court in Bhai Sunder Dass and Sons Co. P. Ltd. v. CIT [2003] 259 ITR 33 (Delhi) 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 ....
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.... it stood prior to April 1, 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended pro vision, the requirement of passing of an assessment order has been 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 sectio....
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....oviso's in the Finance Bill 2010. (v) Whether on the facts and circumstances of the case the CIT (A) has erred in relying on the decision of the ITAT in the case of M/s CGG VERITAS in holding that the income of the assessee company 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 facilit....
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.... Court need not read anything into a statutory provision which is plain and unambiguous (Casus omissus rule - Hon'ble Supreme Court in Prakash Nath Khanna & Anr. Vs. Commissioner of Income Tax & Anr. (2004) 266 ITR 1 (SC)). d) In the end he submitted that the following receipts of the assessee are not covered within the beneficial 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 L....
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....EL/2010 date of pronouncement 17-02-2015 b. ADIT vs. Baker Hughes Singapore Pte. Ltd ITA No.744/DEL/2013 date of pronouncement 20-04-2015 c. PRIDE OFFSHORE INTERNATIONAL LLC vs. ADIT in ITA no. 5406/DEL/2012 d) On retrospective applicability of Section 44BB and 44 DA by the finance Act 2010 he relied on Our submissions in respect of Argument no. 1 i.e. Amendment in section 44BB and 44DA should 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 s....
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....uction of mineral oils (iv) then 10 % of specified amount shall be chargeable to tax. (v) It would be charged to tax under the head profits and gains of the business. (vi) Specified amount is specified u/s 44BB (2) of the act. (vii) There are two explanations to the section which defines what plant is and what is mineral oil. 22. There is no dispute on applicability of this section to the business of the assessee. Only limited issue before us is whether supplying 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 Li....
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....on hire. The rationale of the aforesaid decision of the Supreme Court may be applied in the context of section 44BB in as much as section 44BB does not mandate that the assessee should directly enter into contract with the person engaged in the business of prospecting for or extraction or production of, mineral oils or the services or facilities or plant and machinery on hire should be directly provided to the said person alone. We have already given a finding of fact that the services and facilities provided 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) ....
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.... • DIT (Intl. Tax) vs. Maersk Co. Ltd. 334ITR 79 (Uttarakhand) Full Bench • DIT vs. Jacobs Civil Incorporated 330 ITR 578 (Delhi) • CIT vs. Sedco Forex International Drilling Co. Ltd. 264 ITR 320 (Uttarakhand) • CIT vs. Halliburton Offshore Services Inc. 271 ITR 395 (Uttarakhand) • DIT (International Taxation) Vs. NGC Network Asia LLC 313 ITR 187( BOm) • DIT (International Taxation) Vs. Clifford Chance LLP in ITA No. 2883 of 2008 (Boom) 31. We have carefully considered the rival contentions . We have carefully considered the above 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....
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.... come to appeal of the assessee for AY 2008-09[ ITA No 5775/Del/20011] where in Ground No 1 to 5 were against the income of second leg contract income chargeable u/s 44BB of the act or as equipment royalty u/s 9(1) (vi) of the Income tax Act. Both the parties agreed that facts of this case were identical to case heard for AY 2004-05 in revenue‟s appeal. 39. We have already decided that issue in ground No (i) to (v) & (vii) the case of the appeal of revenue for AY 2004-05. Therefore we also hold in the case of the assessee for AY 2008- 09 that assessee is entitled to the preferential tax treatment u/s 44BB of The Income Tax Act on second leg contracts. Hence Ground No 1 to 5 of the appeal of the assessee is allowed. 40. Another ground of appeal of the assessee was against the charging of interest u/s 234B of the act which is identical to ground no (vi) decided by us in the appeal of the revenue for AY 2004-05 to which both the parties agreed. Therefore we allow this ground of appeal of the assessee. 41. In the result appeal no 5775/Del/2011 For A Y 2008-09 filed by the assessee is allowed. 42. Now we come to appeal no 746/Del/2013 field by the revenue against the o....