TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 104
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....enerated Information (AIR), the Assessing Officer noticed that though, in the year under consideration, the assessee had received certain payment from Larson & Toubro Ltd. and Polarcus DMCC, on which tax under section 195 of the Act has been withheld, however, the assessee has not filed any return of income. Being of the view that income chargeable to tax has escaped assessment, the Assessing Officer reopened the assessment under section 147 of the Act by issuing a notice under section 148 of the Act. As observed by the Assessing Officer, even in response to the notice issued under section 148 of the Act, the assessee did not file any return of income. It is observed by the Assessing Officer, the assessee did not respond to the notices issued under sections 142(1) and 133(6) of the Act. Ultimately, the Assessing Officer issued a show- cause notice to the assessee in terms of section 144(1)(b) of the Act calling upon the assessee to explain why the assessment should not be completed to the best of judgment under section 144 of the Act. In absence of any reply to the said show-cause notice, the Assessing Officer proceeded to complete the assessment by treating the receipts of Rs.23,8....
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....ned parties for seismic support duties and transportation of coated pipes respectively in connection with prospective for, or exploration or production of mineral oils. Thus, he submitted, the receipts are squarely covered under section 44BB of the Act. In support of such contention, learned counsel relied upon the following decisions: 1. Western Geco International Ltd. [TS-943-ITAT-2022 (Del)] 2. Larsen & Toubro Ltd. [TS-124-HC-2022(Bom)] 3. M/s. SBS Marine Ltd. Vs. ADIT [2015-TII-26-ITAT-DELINTL] 4. Valentine Maritime (Gulf) LLC Vs. ADIT, [2017] 78 taxmann.com 109 (Mumbai - Trib.) 5. CIT Vs. M/s. SBS Marine Ltd. & Anr. [ITA No.36 of 2015 & Anr., dated 6th August, 2015] 7. Learned Departmental Representative strongly relied upon the observations of learned DRP. 8. We have considered rival submissions in the light of the decisions relied upon and perused the materials on record. The short issue arising for consideration is, whether the disputed receipts are taxable as business profits of the assessee under section 44BB of the Act or are in the nature of royalty as defined in Explanation 2 (iva) to section 9(1)(vi) of the Act. It is evident, while framing the draft asses....
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..... '44BB (1) Notwithstanding .anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in the case of an assessee 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 business chargeable to tax under the head Profits and gains of business or profession": Provided that this sub-section shall not apply in a case where the provisions of secti6h 42 or section 44D or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. (2) The amounts referred to in sub-section (1) shall be the following, namely:- (a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services, and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or ....
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....tion 9(1)(vi) of the Act. As stated earlier, Explanation 2 to section 9(1)(vi) defines the term royalty. In the facts of the present case, undisputedly, learned DRP has treated the receipts as royalty in terms of Explanation 2(iva), which reads as under: "Explanation 2.-For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains") for- (i) ................... (ii) .................. (iii) .................... (iv) .................. (iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB;" 12. As could be seen from the aforesaid definition of royalty, it is in two limbs. Though, in the first limb, the use or right to use any industrial, commercial or scientific equipment is treated as royalty, however, the second limb carves out an exception by providing that the amounts referred to in section 44BB of the Act cannot be treated as royalty. In our considered opinion, while treated the receipts as royalty, learned DRP has overlooked the....
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....er to tax the receipts under section 44BB of the Act. This ground is allowed. 14. In ground no. 3, the assessee has raised the issue of double counting of the revenue. 15. We have considered rival submissions and perused the materials on record. It is the case of the assessee that as per Form 26AS for financial year 2011-12 relevant to the assessment year under dispute, the actual receipts of the assessee are to the tune of Rs.11,92,95,017/-. Whereas, the Assessing Officer has taken double the amount for the purpose of taxation. It is observed, after considering the submission of the assessee, learned DRP has observed that on perusal of Form 26AS, prima facie, it appears to be a case of double counting of revenue. However, the assessee was directed to provide complete copy of bank statements and summary reconciliation sheets submitted before them to the Assessing Officer for enabling the Assessing Officer to undertake the reconciliation exercise. However, in the final assessment order, the Assessing Officer has repeated the addition of Rs.23,85,90,034/- with the following observations: "However, the assessee has failed to provide any documents in this regard to reconcile the re....