TaxTMI 
TaxTMI 
2024 (9) TMI 722
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....ince, identical issues are involved in all the three appeals, these appeals are taken up together for adjudication and are decided by this common order. For the sake of convenience of adjudication of these appeals, the appeal for AY 2013-14 is taken as a lead case. Hence, the facts are narrated from the said appeal. ITA No. 2346/Del/2024 (AY 2013-14) 3. The facts as emanating from the documents on record are as under:- The assessee was incorporated under the laws of Malaysia and is a tax resident of Malaysia. The assessee is engaged in the business of leasing of machines and equipment used for exploration and extraction of mineral oil. The assessee has filed its return of income for AY 2013-14 declaring income of Rs. 1,94,84,400/- in acc....
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....see from JEPL of INR 19,48,44,021/- is royalty income which is taxable in India on gross basis as per Section 115A of the Act and under the Article 12 of the India- Malaysia DTAA." 4. The assessee filed objection before the Dispute Resolution Panel (DRP) against the draft assessment order. The DRP vide directions dated 23.02.2024 rejected objections and confirmed the addition made by AO. The AO vide impugned assessment order completed the assessment in accordance with the directions of DRP. Hence, the present appeal. 5. Shri Ved Jain appearing on behalf of the assessee submitted that the issue in appeal is identical to the issue raised by the assessee in appeals for AY 2012-13 and 2017-18 in ITA No. 569 & 570/Del/2021, respectively. The T....
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....The stand of the Revenue is that the receipts of the assessee from equipment rental is royalty and is taxable under the provisions of section 9(1)(vi) of the Act as well as under Article 12 of India-Malaysia DTAA. The DRP while disposing of objections of the assessee in para 6.2 of directions observed that identical issue in assessee's own case for AY 2012-13 and 2017-18 have been decided by the DRP vide directions dated 16.02.2021. The DRP following its own directions for AY 2017-18 upheld the assessment order and rejected objections of the assessee. It is relevant to mention here that the DRP in its directions (para 6.3) has reiterated, "that factual and legal issue involved in the instant case is identical to that in the AYs 2012-13 and ....
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....his 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;" 10. A careful reading of clause (iva) to explanation 2 would make it clear that the term 'royalty' will also mean any amount received towards the use or right to use of any industrial/commercial or scientific equ....
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....P, and it is a fact also, section 44BB is a special provision applicable to certain categories of income earned by a non-resident from activities related to the business of extraction/exploration of mineral oils. One of the activities coming under the said provision relates to giving on hire/leasing of equipments to be used in exploration or extraction of mineral oil. In the facts of the present appeal, undisputedly, the assessee has given on hire/lease equipments used or to be used in extraction/exploration of mineral oils. Therefore, in our view, the amounts received by the assessee are fully covered under the provisions of section 44BB and taxable on gross basis at the rate of 10%. 12. In our view, learned DRP has made a fundamental er....
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....ophysical Pty. Ltd. Vs. CIT (International Taxation)-3, 2020 (3) TMI 969 (Delhi High Court) 5. DIT vs. OHM Ltd., 2012 (12) TMI 1091 (Delhi High Court) 15. In view of our reasonings in the foregoing paragraphs, we do not intend to discuss in detail the ratio laid down in these decisions. Suffice it to say, the conclusion drawn by us is fully supported by the ratio laid down in these decisions. Accordingly, we direct the Assessing Officer to compute the income in both the assessment years under dispute under the provisions of section 44BB of the Act. 16. In the result, appeals are allowed, as indicated above." [Emphasized by us] The aforesaid decision of the Tribunal was upheld by the Hon'ble Delhi High Court in appeal by the departme....