TaxTMI 
TaxTMI 
2023 (6) TMI 351
X X X X Extracts X X X X
X X X X Extracts X X X X
....tification Number ("DIN") in the body of the order and therefore, said order and the consequent final assessment order dated 25.01.2023 are void ab initio. 3. That on the facts and circumstances of the case, the AO erred in holding that the Appellant has a permanent establishment ("PE") in India under the India-UK Double Taxation Avoidance Treaty 'DTAA"). 4. That on the facts and circumstances of the case, the AO erred in mechanically holding the Appellant has a PE without specifying the relevant provision of Article 5 under which PE is created and without specifying how conditions for existence of PE are satisfied. 5. That on the facts and circumstance of the case. after holding the issue of PE is an academic Issue. the DRP erred in not appreciating that in the absence of a PE, Section 44BB of the Act doesn't apply. 6. [Blank] 7. That on the facts and circumstances of the case, the AO and the DRP erred in bringing to tax income from supply of goods and equipment to ONGC in relation to contract no. EOA/MM/SURF-SPS/K07NL 17002 dated 05.1 1.2018, without appreciating that no part of manufacture or sales function had taken place in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2022 to verify the factual inaccuracies and without taking into consideration the submissions of the Appellant. 15. That on the facts and circumstances of the case, the order passed by the DRP is also perverse given the fact despite its clear directions to the AO to verify facts, the DRP has itself relied on the very same facts for upholding application of Section 44BB of the Act. 16. That on the facts and circumstances of the case, the AO has erred in adding amount of Rs.8,22,808/- to the tax payable alleging that the refund has already been granted to the Appellant. however, neither such refund has been issued to the Appellant till date nor there was any demand earlier for adjustment of refunds. 17. That on the facts and circumstances of the case, the AO erred in initiating penalty under Section 270A of the Act." 3. The assessee, Baker Hughes Energy Technology UK Limited, is a company incorporated in, and a tax resident of, United Kingdom (UK). It is a part of Baker Hughes Group of companies. In this case, the return of income for AY 2020-21 was e-filed on 31.03.2021 declaring a total income of Rs.83,91,03,650/- and later on filed revised return of i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ident engaged in the business of providing services or facilities or supplying plant and machinery on hire which is used in prospecting for or extraction of mineral oils shall be deemed to be the profits and gains of business. The section provides a presumptive taxation rate for computation of profits but does not override provision of Section 5, 9, or section 90 of the Income Tax Act. (See Sedco Forex International vs. CIT 399 ITR 1 (SC), at paras 16, 17 at pgs 15-16 of attached compilation and para 38 at pgs. 27-28 of attached compilation) [Attached] 8. Reliance in this regard is also placed on the decision of the coordinate bench of the Tribunal in R&B Falcon Offshore Ltd. vs. ACIT, ITA No.389(Del)/2005, Order dated 10.09.2010, Para 11 at page 66 of attached compilation, wherein it has been held that in the absence of PE, Section 44BB has no application. Reliance in this regard is also placed on the decision DDIT vs. Mitsui & Co. 118 Taxmann.com 379 (See para 12 to 14 and 27 to 29 at pages 7-1-76 and 93-9-1 of attached compilation, respectively) 9. As a corollary, it follows that unless the Revenue is able to prove that the Appellant has a PE in India, its busi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in carrying out actual business activities. No such evidence has been led by the AO or the Ld. DR during the course of hearing. Accordingly, no case for PE is made out. 16. The Appellant also submits that the response provided by ONGC under Section 133(6) does not state that the Appellant was involved in survey, installation. and commissioning of the equipment in India and it also does not state that the payments are not bifurcable. This finding of the AO is, therefore, perverse and not borne out of the records. Section 44BB is not applicable to Offshore sale of equipment 17. Section 44BB( I) of the Act reads as under: "44BB. (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 business chargeable to tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ely. 23. It is also noteworthy to point out that clause 5 of the MOU on which both the AO and Ld. DR placed heavy reliance on clearly provides that notwithstanding joint and several liability, the parties shall each be responsible and liable inter se for the performance and completion of their respective scope of work including any obligations and liabilities thereof. This understanding between the consortium members was within the knowledge of ONGC and approved by ONGC since the MOU was specifically made part of the agreement dated 5 November 2018. It, therefore, follows that the division of work had the approval of ONGC, which acknowledged that the Appellant was only required to manufacture and supply the equipment and parts from outside India. 24. Therefore, it is submitted that the findings of the AO and submissions of the Ld. DR to the effect that the Appellant was responsible for the overall contract and hence, Section 44BB applies is incorrect in law and on the facts of the present case. 6. On the other hand, ld. DR for the Revenue strongly relied upon the orders of the authorities below. 7. We have carefully considered the submissions and perused the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inserted after sub-section (3) of section 44BB by the Finance Act, 2023, w.e.f. 1-4-2024 : (4) Notwithstanding anything contained in sub-section (2) of section 32 and sub-section (1) of section 72, where an assessee declares profits and gains of business for any previous year in accordance with the provisions of sub-section (1), no set off of unabsorbed depreciation and brought forward loss shall be allowed to the assessee for such previous year. Explanation.-For the purposes of this section,- (i) "plant" includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business; (ii) "mineral oil" includes petroleum and natural gas." 8. Thus, a reading of the above section shows that the section provides that notwithstanding anything contained in sections 28 to 41 and section 43 & 43A, 10% of the gross receipt of a non-resident engaged in the business of providing services or facilities or supplying plant & machinery on hire which is used in prospecting for or extraction of mineral oils shall be deemed to be the profits & gains of business. Thus, this section has rightly been contended b....