TaxTMI 
TaxTMI 
1995 (6) TMI 43
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....ion of, mineral oils. During the relevant assessment year, assessee executed contract for OIL AND NATURAL GAS COMMISSION (ONGC), and CHEVRON OIL COMPANY OF INDIA LTD. The income was offered for taxation on the basis of the following statement of contract revenues : Contract No. US $ 1. BOP/SP-PDN/SCON-OPS/30/82 154,890 2. BOP/STR/IMP/GEOL/3/83/B-130  ....
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....at US $ 19,93,282. Assessee was asked to explain the reason for difference. It was stated that difference arose as because income offered for taxation was computed on the basis of cash system of accounting. In the audit report amount was reflected on the accrual basis. That is how the difference arose. The Assessing Officer did not accept the system followed by the assessee. Reference was made to the prescription of section 44BB of the Income-tax Act, 1961. It was stated that as per the scheme of section, the income has to be taxed on accrual basis only. He, therefore, brought to tax the amount of gross receipt as reflected in the audit report US $ 19,93,282. The CIT(A) reversed the order of the Assessing Officer. 4. Shri A.P. Pawar, lea....
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....fore, no rule is required to make interpretation of the provision. As there is no mandate in the section to declare the income on accrual basis it is open to the assessee to follow the system of his choice. Since, in past, the assessee offered income on cash basis, it is incumbent on the Assessing Officer to accept the same system. He cannot propose any modification in the system. According to Sri Khare, the word "or" used in section 44BB is to be understood in the ordinary sense. Sri Khare stated that non obstante clause in section 44BB, is qua sections 28 to 41 and sections 43 and 43A. This section does not prevail over section 145 which speaks about the method of accounting. 6. Learned counsel invited our attention on section 5(2) of ....
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....ax under the head 'Profits and gains of business or profession'. (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 production of, mineral oils in India; and (b) the amount received or deemed to be received in India by or on behalf of the assessee 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 production of, mineral oils outside India." 8. Sri Pawar made a....
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.... the relevant portions from the Memorandum explaining the provisions in the Finance Bill, 1987 : "New provisions for computation of taxable income from activities connected with exploration of mineral oils. 28. The computation of the taxable income of a taxpayer engaged in the business of providing services and facilities in connection with, or supplying plant and machinery on hire, used or to be used in the exploration for, and exploitation of, mineral oils involved a number of complications. As a measure of simplification, the Bill seeks to insert a new section 44BB in the Income-tax Act providing for determination of income of such taxpayers at ten per cent, of the aggregate of certain amounts. The amounts in respect of which th....
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....nt and machinery on hire used or to be used in the exploration for and exploitation of mineral oils in India. The amount will also include the amounts received or deemed to have been received in India by or on behalf of the assessee on account of such services or facilities or the supply of plant and machinery on hire in respect of the exploration for and exploitation of mineral oils outside India. This amendment will take retrospective effect from 1st April, 1983, and will, accordingly, apply in relation to the assessment year 1983-84 and subsequent years." 11. As per Maxwell, in ordinary usage "And" is conjunctive and "or" disjunctive. But to carry out the intention of the Legislature, it may be necessary to read "and" in place of t....