TaxTMI 
TaxTMI 
2021 (2) TMI 265
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.... Subsequently the assessee filed a revised return 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 b....
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.... may not be treated as income for assessment year 2017-18. Rejecting the various explanations given by the assessee and following the order for the preceding year 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....
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....RP erred in not following the order of the Hon'ble Tribunal in the appellant's own case for AYs 2007-08 to 2016-17, as pointed out by the appellant. 3.3 In rejecting the ground of objection with reference to 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 exte....
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....nsistent reasonable allocation. He submitted that the assessing officer computed the income on the ground that the appellant did not establish one to one nexus of the expenses with the services rendered. Referring to the order of the Tribunal he submitted that the Tribunal has dealt with this issue in favour of the assessee from assessment 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 o....
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....both the sides, perused the orders of the AO/DRP and the paper book filed on behalf of the assessee. We find identical issue had come up before the Tribunal in assessee's own case in the immediately preceding assessment year. We find the Tribunal has discussed the issue and decided the issue in favour of the assessee by observing as under :- "15. We have heard the rival contentions and perused 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....
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.... the hands of the assessee. The findings of the Tribunal are in paras 8 to 10 at pages 12 to 15 of the said order. We are referring the same but not reproducing the same for the sake of brevity. 18. Now coming to the stand of the Revenue that the provision of section 44DA of the Act, wherein 2nd proviso was inserted w.e.f. 01.04.2011, were to be applied, in order to compute the income of the assessee. The Tribunal 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 appli....
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.... East Ltd. v. ACIT: 380 ITR 138. 13.2 Ld. DR on the other hand submitted that the issue has been decided against the assessee by the Jurisdictional High Court. 13.3. Since the issue has been decided against the assessee by the Hon'ble Jurisdictional High Court in the case of B.J Services Co. Vs. ACIT (supra) therefore, the ground of appeal No. 4 by the assessee is dismissed. 14. Ground of appeal No. 5 relates to erroneous 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 ....
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....issue had come up before the Tribunal in assessee's own case in the preceding assessment year. We find the Tribunal vide ITA No. 62 & 60/DDN/2019 order dated 24th February, 2020 at page 73 and 74 of the order in para 32 has decided the issue and allowed the grounds raised by the assessee by observing as under :- "32. We have heard the rival contentions and perused the record. The AO while computing the income in the hands of the assessee has charged 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 taxe....