BJ SERVICES COMPANY MIDDLE EAST LIMITED,MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, DEHRADUN

ITA 120/DDN/2025

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The case involves appeals by the Assistant Commissioner of Income Tax against B J Services ME Company Limited concerning the taxability of interest income on income tax refunds for the assessment years 2015-16, 2016-17, and 2017-18. The primary legal question was whether such interest income should be taxed at the maximum marginal rate of 40%. The Tribunal referenced a precedent set by the Co-ordinate Bench in the case of Schlumberger Asia Services Ltd, which followed the jurisdictional High Court's decision affirming the maximum marginal rate for such interest income. The Tribunal dismissed the appeals by the assessee for the assessment year 2017-18 and allowed the Revenue's appeals for the earlier years, confirming the tax treatment of the interest income on refunds under Section 244A.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787000 (ITAT-DEHRADUN)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 15-07-2025
• Other Referred Cases: Schlumberger Asia Services Ltd, Vs. DCIT, B J Services Co. Middle East, ACIT vs Clough Engineering Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MOHANLAL JOSHI
• Assessee Lawyers: AMIT ARORA; VI SHAL MISHRA
• Keywords: Maximum Marginal Rate
• Section: 244A

Judgement Text

" 1 ITA No. 52, 53& 120/DDN/2025 ACIT Vs. B J Services IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘DEHRADUN’/ NEW DELHI) BEFORE YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRIMANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 52/DDN/2024 (A.Y. 2015-16) ITA No. 53/DDN/2024 (A.Y. 2016-17) Assistant Commissioner of Income Tax, 13-A, Subhash Road, Dehradun, Uttarakhand V s. B J Services ME Company Limited, Unit No. 203, Navi Mumbai,Thane, Maharashtra PAN:AAACB8529N Appellant Respondent ITA No. 120/DDN/2025 (A.Y. 2017-18) B J Services ME Company Limited, Unit No. 203, Navi Mumbai, Thane, Maharashtra PAN:AAACB8529N Vs Deputy Commissioner of Income Tax, Circle-1, International Taxation Income-tax Office, Subhash Road, Dehradun, Uttarakhand Appellant Respondent Assessee by Sh. Amit Arora, CA & Sh. Vishal Mishra, CA Revenue by Sh. Mohan Lal Joshi, Sr. DR Date of Hearing 14/11/2025 Date of Pronouncement 19/11/2025 ORDER PER YOGESH KUMAR, U.S. JM: The captioned appeals are filed by the Revenue For Assessment Year 2015-16 and 2016-17 against the orders of Commissioner of Income Tax (Appeals)-, Noida-2 [‘Ld. CIT(A)’ for short] dated 31/10/2023 and the appeal filed by the Assessee for Assessment Year 2017-18 challenging the order dated 23/05/2025 passed by Ld. CIT(A). Printed from counselvise.com 2 ITA No. 52, 53& 120/DDN/2025 ACIT Vs. B J Services 2. The solitary issue involved in the captioned Appeals isas to whether interest income on income tax refund earned u/s 244A of the Income Tax Act, 1961 ('Act' for short) deserves to be chargeable to tax on maximum marginal rate of 40% or not. 3. The above issue involved in the present Appeal is no more res- integra. The Co-ordinate Bench of the Tribunal in the case of Schlumberger Asia Services Ltd, Vs. DCIT in ITA No. 5223/Del/2018 vide order dated 15/09/2023 relying on the Judgment of Jurisdictional High Court, held as under:- “10.9. The ld. AR had stated that the decision of Delhi Tribunal in the case of B J Services Co. Middle East reported in [200] 29 SOT 312 (Delhi) has decided the issue in favour of the revenue. But this decision has been considered by the Special Bench of Delhi Tribunal in the case of ACIT vs Clough Engineering Ltd reported in 138 TTJ 385 (Delhi)(SB). We have gone through the decision of Special Bench and we find in that case, the issue was concerned with taxability under treaty provisions and particularly interpreting the expression ‘in connection with PE’. Whereas in the instant case before us, the assessee had admittedly offered the income under the domestic provisions and had not even disputed the same. Hence the decision of Special Bench of Delhi Tribunal relied upon by the ld. AR does not come to the rescue of the assessee in the instant case. 10.10. Moreover, we find that the decision of Delhi Tribunal relied by ld. DR in the case of B J Services Co. Middle East has been approved by the Hon’ble Jurisdictional High Court reported in 380 ITR 138 (Uttarakhand) wherein it was held that interest on refund u/s 244A of the Act arising to a foreign company would be taxed at Maximum Marginal Rate. 10.11. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, the Ground No. 5 raised by the assessee for the Asst Year 2015-16 is dismissed.” 4. By respectfully following the order of the Tribunal in the case of Schlumberger Asia Services Ltd. (supra), we hold that interest refund Printed from counselvise.com 3 ITA No. 52, 53& 120/DDN/2025 ACIT Vs. B J Services under Section 244A of the Act arising to foreign company would be taxed at maximum marginal rate. Accordingly, we allow the Revenue’s Appeal in ITA Nos. 52/DDN/2024 and 53/DDN/2024 and dismiss the Assessee’s Appeal in ITA No. 120/DDN/2025. Order pronounced in the open court on 19th November, 2025 Sd/- Sd/- (MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 19.11.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "