TaxTMI 
TaxTMI 
TaxTMI 
2021 (2) TMI 265
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....turn on 29.01.2018 on a total income of Rs. 4,42,10,598/-. During the course of assessment proceedings the AO noted that the assessee received the payments from BGEPIL, a company registered in the Cayman Islands. In the notes given with the statement of income it has been stated that BGIL has received the following payments totalling to Rs. 1,86,32,25,025/- said to be on account of services provided on cost-to-cost basis in terms of Article 3.1.4.b of the Production Sharing Contracts (Panna-Mukta & Mid and South Tapti) entered into between BGEPIL. Reliance Industries Ltd. (RIL), ONGC Ltd. and the Government of India. Sl. No. Nature of receipts (as claimed by the assessee) Total Amount Received i. Payroll Expenses 14,95,72,807 ii. General & Administrative and Geological & Geophysical and other expenses 9,31,09,974 iii. Management Service Unit Charges 34,09,08,884 iv. IT Project Cost Recharges 128,07,33,360 Total 1,86,43,25,025 3. It was claimed by the assessee that these receipts are in the nature of reimbursement and reduced the entire amount as expenditure on cost to cost basis to arrive at net business income at NIL. It was stated by the assessee that th....
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.... the AO held that the amount received by the assessee form BGEPIL is taxable and cannot be accepted to be reimbursement of expenses by BGEPIL to the assessee. The AO held that the sum of Rs. 1,80,16,32,708 from India are not reimbursement of expenses towards activities performed by the assessee for group entities in India and hence, be regarded as "income" taxable under the Act as well as under the Double Taxation Avoidance Agreement between India and the United kingdom ('DTAA'). According to the AO the clause in Production Sharing contract ('PSC') for non-charging of profit element is not applicable in the case of services provided to BG Exploration and Production India Limited ( BGEPIL expenses of which is not shared by the Joint Venture). The AO disallowed expenses on the reason that the assessee has not been able to produce the evidence regarding the incurrence of expenses and rendering of services to BGEPIL by relying on decision of 'the Dispute Resolution Panel/ Tribunal for earlier years The AO also rejected the contention of the assessee that all the services provided to BGEPIL are being provided on cost-to-cost basis as per the PSC and global coast allocation policy of....
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.... section 44BB of the Act, the learned DRP erred in following the directions of the DRP in AY 2012-13 to AY 2016-17 wherein it was observed that the appellant was shifting its stand on the matter from year to year and further, that the appellant had not offered the income to tax under section 44BB of the Act in its return of income. Ground No. 4: Non-application of provisions of DTAA for interest income 4.1 in law and in fact, in holding not apply to the appellant's interest income. The learned AO / DRP erred that the provisions of the DTAA does Ground No. 5: Erroneous computation of tax on interest income 5.1 The learned AO erred in computing the tax liability on interest income at rates as per the Act as well as the DTAA, thus erroneously taxing the interestincome twice. Ground No. 6: Short credit of tax deducted at source 6.1 The learned AO erred in not granting credit of taxes deducted at source to the extent of Rs. 76,89,725. Ground No. 7: Levy of interest under section 234B of the Act 7.1 The learned AO has erred in law and in fact, in levying interest under section 234B of the Act Ground No. 8: Levy of interest under section 234C of the Act 8.1 T....
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....t years 2003-04 to 2016-17 and held that income of the assessee to be assessed by invoking provisions of section 44BB of the Act. He accordingly submitted that the receipts of the assessee from BGEPIL are pure reimbursements of cost incurred by the assessee for the purpose of rendering services to BGEPIL and cannot be treated as income of the recipient, liable to tax in India. 9. Without prejudice to the above Ld. Counsel for the assessee submitted that provision of section 44DA of the Act are not applicable and income, if any, should be taxable u/s 44BB of the Act. Ld. Counsel for the assessee submitted that receipts by the Assessee are in the nature of reimbursement, not exigible to tax under the Act. He submitted that if the receipts of the assessee from BGEPIL are held not to be reimbursements, (not liable to tax in India), then provisions of section 44BB of the Act are to be applied to such receipts. For the above proposition, he drew the attention of the Bench to the following written submissions :- * Section 44DA of the Act, provides that where income by way of 'royalty' or 'fees for technical services' (FTS) is received by a foreign company carrying on business in India ....
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....sed the record. The first issue which is raised in the present appeal is against the taxability of the receipts in the hands of the assessee. The claim of the assessee is that against rendering its services to BGEPIL inline of the product production sharing agreement as an affiliate, it was to provide the services on cost to cost basis. Hence, the total receipts were not taxable in the hands of the assessee being reimbursement of expenses and hence, were not liable to tax in India. On the other hand, the case of the Revenue is that the said receipts were taxable in the hands of the assessee as the assessee was not in a position to establish the link between the expenses incurred and the reimbursement of the same. In the present year, the Assessing Officer also applied section 44DA of the Act as against the plea of the assessee that the income was to be computed u/s 44BB of the Act. 16. We find that the similar issue arose in the case of the assessee starting from Assessment Year 2003-04 onwards. The Hon'ble Supreme Court in the Oil 85 Natural Gas Corporation Ltd. vs CIT [2015] 376 ITR 306 (SC) has held that the services rendered in connection with extraction and production of....
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....nal in Assessment Years 2011-12 to 2014-15 (supra) also adjudicated on the same vide paras 15 & 16 at pages 16 to 18 of the order dated 31.04.2019 and held that the provisions of section 44DA of the Act were applicable where the income was by way of royalty or fees for technical services, which was received from Government or Indian concern in pursuance to an agreement made by a non-resident or a foreign company with Government or Indian concern after 31.03.2003. Since the payment in the case of the assessee was neither received from the Government nor from the Indian concern, it was hold that the provisions of section 44DA of the Act were not applicable. Applying the said parity of reasoning, we also hold that the provisions of section 44DA of the Act were not applicable to the facts of the case and the income of the assessee is to be computed u/s 44BB of the Act. Accordingly, we direct the Assessing Officer to compute the income in the hands of the assessee after affording reasonable opportunity of hearing to the assessee. Thus, Ground Nos. 1 to 3 raised by the assessee in this appeal are allowed." 12. Respectfully following the decision of the Tribunal in assessee's own case we....
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....computation of tax on interest income. 14.1 After hearing both the sides we find the assessee has filed an application dated 13th October, 2020 for rectification u/s 154 of the Act wherein it was stated that the interest income was taxed twice as per Act at 40% and as per DTAA at 15%. Further surcharge and cess has also been levied on the aggregate tax amount. Since the same is pending before the AO, therefore, as agreed by both sides we remit the matter back to the file of the AO with a direction to dispose of the application before him at the earliest by deciding the issue as per fact and law after giving due opportunity of being heard by the assessee. Ground No. 5 of the assessee is accordingly allowed for statistical purposes. 14.2 In Ground of appeal No. 6, the assessee has challenged the order of the AO in not granting credit of TDS. 14.3 After hearing both the sides we find the grievance of the assessee is that credit of TDS to the extent of Rs. 76,89,725/- was not granted by the AO. An application u/s 154 dated 13th October, 2020 is also pending before the AO. Considering the totality of the facts of the case we restore the issue to the file of the AO with the direction ....
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....harged interest u/s 234B of the Act at Rs. 39.46 crores (approx.). The assessee is aggrieved by the aforesaid charging of the interest. The case of the assessee is that the tax due on the income of the assessee was subjected to tax deduction at source. Our attention was drawn to the computation of the tax liability in the hands of the assessee by the Assessing Officer which was placed on record. It was pointed out that the assessee had not paid any taxes by way of advance tax and total tax payable was adjusted against the tax deducted at source at Rs. 17.54 crores (approx.). The question which arises is that where the liability to pay tax was on the payer which in turn had to deduct tax at source, then the shortfall if any in the taxes due cannot be attributed to the assessee and for such default, no interest was chargeable u/s 234B of the Act. 33. Under the provision of section 209(1)(d) of the Act, it is provided that against the income tax calculated under the provisions of Act then the amount of income tax which would be deductible or collectible at source during the said Financial Year from any income would be deducted. 33. The provisions of section 234B of the Act deals w....