AI OCR 
TaxTMI 
TaxTMI 
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2025 (4) TMI 1731
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.... 3. 5647/Del/2018 A.Y. 2015-16 Weatherford Oil Tools ME Ltd. ACIT CIT(A)-2, Noida, Appeal No. 93/CIT(A)-(3)(b) 2/2017-18/ Noida Dated 22.06.2018 143(3)/144C 4. 7477/Del/2017 A.Y. 2013-14 ACIT Weatherford Oil Tools ME Ltd. CIT(A)-2, Noida, Appeal No. 45/CIT(A)-(3)(b) 2 /2016-17 Dated 27.09.2017 143(3)/144C 5. 417/Del/2018 A.Y. 2014-15 ACIT Weatherford Oil Tools ME Ltd. CIT(A)-2, Noida, Appeal No.(3) 120/CIT(A)-2 /2016-17 Dated 25.10.2017 (b) 143(3)/144C 6. 5647/Del/2018 A.Y. 2015-16 DCIT Weatherford Oil Tools ME Ltd. CIT(A)-2, Noida, Appeal No. 93/CIT(A)-(3)(b) 2 /2017-18/Noida Dated 22.06.2018 143(3)/144C 2. Heard both the parties at length. Case file perused. We proceed assessment year wise for the sake of convenience and brevity. A.Y. 2013-14 ITA No. 7334/Del/2017 (Assessee's appeal) ITA No. 7477/ Del/ 2017 (Revenue's cross appeal) 3. This assessee's appeal ITA No. 7344/Del/2017 raises the following substantive grounds: "Ground No. 1 That on the facts and circumstances of the case and in law the Ld Commissioner of Income-tax, Appeals-ll, Noida [CIT(A)] has erred in co....
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....fit of the 5 percent range as provided by the proviso to section 92C(2) of the Act. Ground No. 8 That the order passed violates the principle of natural justice, equity and fair play. The above grounds of objection are independent of and without prejudice to one another. Your appellant prays that the erroneous order be cancelled, and appropriate relief may be granted to the appellant." 4. Now come the basic relevant facts. This assessee is admittedly a company engaged in providing slick line services, mud logging services, casing services, completion services, LWD/MWD services, directional drilling services, core/fluid services, AMC for well test interpretation software etc. It had offered it's revenue on account of sale of material/equipment amounting to Rs. 17,27,92,605/- at profit margin of 2% going by the corresponding profit attribution report maintained which was assessed u/s 44BB of the Act to the tune of Rs. 7,25,92,605/- representing sale of material from composite contracts and the other head of sale of material from pure supply/standalone contract amounting to Rs. 10,01,44,938/- was taxed @8%, as it is evident from the Assessing....
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....is and it was arbitrary and the assessee did not give any details to justify the estimated profit rate 2%. The ld CIT(A) on taking certain comparables had arrived at the weighted average arithmetic mean of 3.13% as under :- Sl No. Company name NPM FY 2009-10 (%) NPM FY 2010-11 NPM FY 2011-12 Weighted average 1. Hazel Mercantile Limited 3.61% 3.71% 2.97% 3.38% 2. Super Domestic Machines Limited 0.75% 3.98% 1.70% 2.21% 3. Jainex Ltd. 2.73% 4.30% 3.99% 3.81% Arithmetic mean 3.13% 13. The assessee on the other hand furnished the comparables and arrived at the weighted average arithmetic mean of 1.69% worked out in the following manner :- Sr. No. Company Name NPM FY 2009-10 (%) NPM FY 2010-11 (%) NPM FY 2011-12 (%) Weighted Average 1 Aseem Global Limited 1.06% 0.80% 0.40% 0.80% 2 Hazel Mercantile Limited 3.61% 3.71% 2.97% 3.38% 3 PO CL Enterprises Limited -0.77% -1.80% 0.14% -0.87% 4 Veritas (India) Limited 1.37% 1.77% 0.01% 0.84% 5 Super Domestic Machines Lim....
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....nsidered as comparable as per the law. 16. The assessee relied on the ruling of the Special Bench of Chandigarh ITAT in the case of DCIT vs. M/s Quark Systems Private Limited [2010- TIOL-31-ITAT-CHD-SB], wherein it was held as under: "25 .. While we agree that merely because a comparable is making loss, it cannot be excluded from the list of comparables, Imercius is a case in which not only functional area is different ... 17. The above principle has also been upheld by other benches of ITAT in the case of UCB India (P) Limited vs. ACIT (2009) (121 ITD 131) (Mumbai ITAT), ACIT vs. Wockhardt Limited (6 Taxmann.com 98) (Mumbai ITAT), Brigade Global Services Private Limited vs. ITO (ITA No 988/Hyd/2011) (Hyderabad ITAT). 18. In view of the orders of the Co-ordinate bench of ITAT, we hold that Koa Tools India Limited which clears the FAR test should not be rejected as a comparable for the AY 2009-10." 15. It is not in dispute that the comparables chosen by the assessee duly fulfilled the comparability test i.e. FAR (Functions performed, Assets employed and Risks assumed). The ld CIT(A) had also not disputed the comparability test of the 6 co....
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....bility u/s 44BB vs. 44D of the Act. (iii) Whether the CIT (A) has erred in failing to note that the Memorandum to Finance Bill 2010 makes it clear that any service which falls within the ambit of 44DA, even if it is in connection with prospecting for, or extraction or production of mineral oils as stipulated in section 44BB, has to be assessed u/s 44DA of the Act. (iv) Whether the CIT (A) has erred in ignoring the nature of activities and scope of work as per the contracts of the assessee thus arriving at conclusion that the receipts of the assessee were not in the nature of Royalty u/s 9(1)(vi) and FTS u/s 9(1)(vii) of the Act. (v) Whether the CIT (A) has erred in overlooking that the software provided by the assessee was not actually used for mining or like project and thus did not fall in the exclusion clause of section 9(1) (vi) and 9(1) (vii) of the Act, in distinction to the lead case of Foramer inter alia covered by the Hon'ble Apex Court in ONGC case supra where the dominant purpose of the contract was prospecting, extraction or production of mineral oil. (vi) Whether the CIT (A) has erred in overlooking that the dominant purpose of t....
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....eared before Ld. AO and filed necessary details as called for. 3. Ld. AO completed the assessment at Rs. 21,94,29,740/- by including the reimbursement of service tax expenses incurred by assessee in the gross receipts and treating the royalty received from another non-resident as income of assessee thereby estimating 25% of the Gross revenue towards the same. 4. Aggrieved by the order of Ld.AO assessee preferred appeal before Ld. CIT (A) who deleted additions made by Ld. AO. 5. Aggrieved by the order of Ld. CIT (A) the revenue is in appeal before us now. 6. In a nutshell the issues that requires to be considered is: Whether the income of assessee shall be taxed as per the provisions of section 44AB; Whether the service tax forms part of the receipts as per provisions of section 44B of the act; 6.1. Both parties admit that issues raised by assessee in the present appeal is covered in favour of assessee by decision of coordinate bench of this Tribunal in ITA No. 3910/del/2014 for assessment year 2010-11 vide order dated 29/01/18. This Tribunal has decided the issue as under: "4. Heard arguments of both sides and perused the materi....
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....vision of equipment and services earned by the assessee company shall be taxable as per the provisions of Section 44BB of the Act. 6. Now, coming to the second issue relating to the service tax, learned AR placed reliance on the decision of the Hon'ble Jurisdiction High Court in the case of CIT vs. Mitchell Drilling International P. Ltd. 380 ITR 130 in support of his contention that the service-tax being statutory levy, should not form part of gross receipts as per provision of Section 44BB of the Act. He further placed reliance on the decision of the coordinate bench in the case of DDIT vs. Sundowner Offshore International (Bermuda) Ltd. ITA 1067/De1/2016 for a similar principle. We find that the principle laid down in the above decision squarely applies to the facts of this case also, as such, while respectfully following the same, we answer the issue that the service-tax does not form part of the gross receipts for computation u/s 44BB of the Act." 7. Respectfully following the same, we do not find any infirmity in the observations of Ld. CIT (A) and the same is upheld. 8. Accordingly ground raised by revenue stands dismissed." 10. A perusal of ....
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....d to benefits of the Double Tax Avoidance Agreement DTAA") between India and UAE. The interest received on the income-tax refund was claimed to be chargeable in terms of Article 11 of the Indo-UAE DTAA. The appellant has relied upon the decision of the Tax Appellate Tribunal, New Delhi (Special Bench B) in the case of Assistant Commissioner of Income Tax, Range-1, Dehra Dun v. M/s Clough Engineering Ltd. (ITA No. 4771(Del)/2007) wherein the ITAT, New Delhi held that the interest on income-tax refund to be taxable on gross basis under the provisions of Article 11. Identical ground of appeal was there in the assessment year 2014-15 also. Submission and Adjudication 5.26 The contention of the Appellant has been examined. However, it is not found Sustainable in view of the Judgments of the Jurisdictional High Court of Uttarakhand in the case of Pride Foramer SAS (ITA No. 16 of 2009) and BJ Services Co. Middle East Limited vs. ACIT (ITA No. 1 of 2010). Since there was PE of the Appellant in India, the income earned out of interest on refunds from Income Tax Department cannot be brought to tax on gross basis under DTAA. Hence, the Appeal on this ground is, therefore, di....