M.B. Petroleum Services LLC, Mumbai V. ADIT, Dehradun

CO 121/DEL/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9393 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Permanent establishment
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .1509/DEL/2013 & 1510/DEL/2013 1509/DEL/2013 & 1510/DEL/2013 1509/DEL/2013 & 1510/DEL/2013 1509/DEL/2013 & 1510/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, INTERN INTERN INTERN INTERNATIONAL TAXATION, ATIONAL TAXATION, ATIONAL TAXATION, ATIONAL TAXATION, DEHRADUN. DEHRADUN. DEHRADUN. DEHRADUN. VS. VS. VS. VS. M/S M.B. PETROLEUM SERVICES LLC, M/S M.B. PETROLEUM SERVICES LLC, M/S M.B. PETROLEUM SERVICES LLC, M/S M.B. PETROLEUM SERVICES LLC, C/O KIRTANE & PANDIT, C/O KIRTANE & PANDIT, C/O KIRTANE & PANDIT, C/O KIRTANE & PANDIT, H HH H- -- -16, SARASWATI COLONY, 16, SARASWATI COLONY, 16, SARASWATI COLONY, 16, SARASWATI COLONY, SITALADEVI TEMPLE ROAD, SITALADEVI TEMPLE ROAD, SITALADEVI TEMPLE ROAD, SITALADEVI TEMPLE ROAD, MAHIM (WEST), MAHIM (WEST), MAHIM (WEST), MAHIM (WEST), MUMBAI MUMBAI MUMBAI MUMBAI 400 016. 400 016. 400 016. 400 016. PAN : AAECM2604H. PAN : AAECM2604H. PAN : AAECM2604H. PAN : AAECM2604H. (APPELLANT) (RESPONDENT) CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION NO NO NO NOS.120/DEL/2 S.120/DEL/2 S.120/DEL/2 S.120/DEL/2013 & 121/DEL/2013 013 & 121/DEL/2013 013 & 121/DEL/2013 013 & 121/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009- -- -10 1010 10 M/S M.B. PETROLEUM SERVICES M/S M.B. PETROLEUM SERVICES M/S M.B. PETROLEUM SERVICES M/S M.B. PETROLEUM SERVICES LLC, LLC, LLC, LLC, C/O KIRTANE & PANDIT, C/O KIRTANE & PANDIT, C/O KIRTANE & PANDIT, C/O KIRTANE & PANDIT, H HH H- -- -16, SARASWATI COLONY, 16, SARASWATI COLONY, 16, SARASWATI COLONY, 16, SARASWATI COLONY, SITALADEVI TEMPLE ROAD, SITALADEVI TEMPLE ROAD, SITALADEVI TEMPLE ROAD, SITALADEVI TEMPLE ROAD, MAHIM (WEST), MAHIM (WEST), MAHIM (WEST), MAHIM (WEST), MUMBAI MUMBAI MUMBAI MUMBAI 400 016. 400 016. 400 016. 400 016. PAN : AAECM2604H. PAN : AAECM2604H. PAN : AAECM2604H. PAN : AAECM2604H. VS. VS. VS. VS. ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF ASSISTANT DIRECTOR OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL TAXATION, TAXATION, TAXATION, TAXATION, 13A 13A 13A 13A- -- -SUBHASH ROAD, SUBHASH ROAD, SUBHASH ROAD, SUBHASH ROAD, DEHRADUN. DEHRADUN. DEHRADUN. DEHRADUN. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI VIVEK KUMAR, SR.DR. ASSESSEE BY : SHRI SALIL KAPOOR, ADVOCATE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : ITA NO.1510/DEL/2013 ITA NO.1510/DEL/2013 ITA NO.1510/DEL/2013 ITA NO.1510/DEL/2013 :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LEARNED CIT(A)-II, DEHRADUN DATED 27 TH DECEMBER, 2012 FOR THE AY 2009-10. ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE CIT(A) HAS ERRED IN HOLDING THAT THE NATURE OF SE RVICES PROVIDED BY THE ASSESSEE WHICH WERE PROVIDING MUD SERVICES, WERE NOT IN THE NATURE OF FEES FOR TECHNICAL SERVICES AS DEFINED IN SEC. 9(1)(VII) OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF T HE ASSESSEE WAS NOT TAXABLE UNDER THE PROVISIONS OF SEC. 44DA R.W.S. 9(1)(VII) EVEN THOUGH THE NATURE OF SERVI CES RENDERED BY THE ASSESSEE WERE TECHNICAL IN NATURE, AND NOT FOR A PROJECT UNDERTAKEN BY THE ASSESSEE. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF T HE ASSESSEE WAS TAXABLE UNDER THE PRESUMPTIVE PROVISIONS OF SEC. 44BB AND IGNORING THE FACT THAT TAXABILITY U/S 4 4BB SHALL NOT APPLY IN RESPECT OF INCOME REFERRED TO IN SE CTION 44DA IN VIEW OF THE CLARIFICATORY PROVISO TO SEC. 44B B AND SEC. 44DA. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT T HAT PROVISO TO SECTION 44DA BROUGHT ABOUT BY THE FINANCE ACT 2011 WAS ONLY CLARIFICATORY IN NATURE AND ITS APPLICA TION HAS TO BE READ IN TO THE MAIN PROVISIONS WITH EFFECT FROM THE TIME THE MAIN PROVISION CAME IN TO EFFECT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING VS. COMMISSIONER OF INCOM E- TAX. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN REFERRING TO THE DECISION OF THE ITAT IN THE CASE OF M/S CGG VERITAS IN HOLDING THAT THE IN COME OF THE ASSESSEE COMPANY WAS COVERED UNDER THE PROVISIONS OF SECTION 44BB IGNORING THE SAID DECISION OF THE ITAT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AGAINST WHICH A MISCELLANEOUS PETITION HAS BEEN FILED. 6. WHETHER THE CIT(A) HAS ERRED IN REFERRING TO THE DECISIONS OF DELHI HIGH COURT IN THE CASE OF DIT VS. OH M ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 3 LTD. IGNORING THE FACT THAT THE DECISION OF DELHI HI GH COURT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AGAINST WHICH AN SLP HAS BEEN FILED. 7. WHETHER THE CIT(A), HAS ERRED IN IGNORING DECISIO NS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ONGC AS AN AGENT OF M/S FORAMER FRANCE AND M/S ROLLS ROYCE PVT.LT D. 8. WHETHER THE CIT(A), WAS RIGHT IN ALLOWING LOSSES ON ACCOUNT OF EXPENDITURE CLAIMED FOR A CONTRACT WHICH HAD BEEN WOUND UP AND FOR WHICH VOUCHERS WERE NOT PRESENT ED TO AO, WITHOUT EXAMINING THE VOUCHERS AT APPELLATE ST AGE HAVING REJECTED THESE UNDER RULE 46A. 9. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE AO WAS NOT R IGHT IN ESTIMATING THE INCOME OF THE ASSESSEE @ 25% SINCE THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS, DESPITE ADEQUATE OPPORTUNITY. 10. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MO DIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OF BEFORE THE HEARING OF THE APPEAL. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON-R ESIDENT WHICH IS DERIVING INCOME FROM PROVIDING DRILLING AND WELL INTEGRATED SERVICES ETC. DURING THE YEAR UNDER CONSIDERATION, TH E ASSESSEE DERIVED INCOME FROM TWO CONTRACTS, THE SCOPE OF WHICH IS AS UNDER:- CONTRACT NO.MR/MM/WS/SER/PTS/S006/03-04/OT- 1011/9010003516 WITH ONGC FOR HIRING OF PRODUCTION TESTING SURFACE EQUIPMENTS & SERVICES FOR CBM-BPM BASIN , KOLKATA :- THE SCOPE OF WORK SHOWS THAT ASSESSEE HAS BEEN PROVIDED PRODUCTION TESTING SURFACE EQUIPMENT (ALONG WITH ACCESSORIES) IN OPERATION CONDITION AND SERVICES SUITABLE FOR CARRYING OUT PRODUCTION TESTING O F HIGH PRESSURE (15000 PSI) EXPLORATORY AND DEVELOPMENT WELLS. CONTRACT NO.BDA/MM/ONSG/DISALLOWANCE/SCON/MUD ENG/52/05 :- AS PER THE SCOPE OF WORK UNDER THIS CONTRACT THE ASSESSEE S JOB INCLUDES THE PROVIDING OF MUD SERVICES ON SERVICE ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 4 CONTRACT (WITH PAYMENT TERMS ON ACTUAL CONSUMPTION AN D DAY RATE BASIS) TO DRILL 17 NUMBERS OF HORIZONTAL/MULT ILATERAL WELLS. 4. THE ASSESSING OFFICER DETERMINED THE INCOME OF THE A SSESSEE BY APPLYING SECTION 44DA OF THE INCOME-TAX ACT AND THE ASSESSING OFFICER ESTIMATED NET PROFIT AT 25% OF THE GROSS RECEIPT. THE ASSESSEE, AGGRIEVED WITH THE ORDER OF THE ASSESSING OFFICER, WAS I N APPEAL BEFORE THE CIT(A) WHO HELD THAT ON THE FACTS OF THE CASE, SE CTION 44BB IS APPLICABLE, THEREFORE, HE DIRECTED THE ASSESSING OFFICE R TO DETERMINE THE INCOME AS PER SECTION 44BB. WHILE DOING SO, THE CIT(A), APART FROM RELYING UPON VARIOUS DECISIONS, HAS ALSO RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT VS. OHM LIMITED [2013] 352 ITR 406 (DELHI). THE REVENUE, AGGRIEVED WITH THE ORDER OF THE CIT(A), IS IN APPEAL BEFORE US AND BY RAISING ALL THE ABOVE GROUNDS, THE REVENUE HAS CLAIMED THAT THE ASSESSING OFFICER WAS JUSTIFIED IN ESTIMATING THE INCOME AT 25% OF THE RECEIPT UNDER SE CTION 44DA AND THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING O FFICER TO DETERMINE THE INCOME UNDER SECTION 44BB. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT HON'BLE JUR ISDICTIONAL HIGH COURT EXAMINED THE SCOPE OF SECTION 44BB AND SECTION 44DA AT LENGTH IN THE CASE OF OHM LIMITED (SUPRA) WHEREIN THEIR LORD SHIPS HELD AS UNDER:- SECTION 44BB OF THE INCOME-TAX ACT, 1961, IS A SPECI AL PROVISION FOR COMPUTING THE PROFITS AND GAINS OF A NON - RESIDENT IN CONNECTION WITH THE BUSINESS OF PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH, OR SUPPLYIN G PLANT AND MACHINERY ON HIRE, USED OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MIN ERAL OILS INCLUDING PETROLEUM AND NATURAL GAS. REVENUES EARNED BY THE NON-RESIDENT FROM RENDERING SUCH SPECIFIC SERVICE S ARE ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 5 COVERED BY SECTION 44BB. SECTION 44DA IS ALSO A PROVI SION WHICH APPLIES TO NON-RESIDENTS ONLY. IT IS, HOWEVER, B ROADER AND MORE GENERAL IN NATURE AND PROVIDES FOR ASSESSMENT O F THE INCOME OF THE NON-RESIDENT BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES, WHERE SUCH NON-RESIDENT CARRIES ON BUSINESS IN INDIA THROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN OR PERFORMS SERVICES FROM A FIXED PLAC E OF PROFESSION SITUATED IN INDIA AND THE RIGHT, PROPERTY O R CONTRACT IN RESPECT OF WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID IS EFFECTIVELY CONNECTED W ITH THE PERMANENT ESTABLISHMENT OR FIXED PLACE OF PROFESSIO N. SUCH INCOME WOULD BE COMPUTED AND ASSESSED UNDER THE HEAD BUSINESS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, SUBJECT TO THE CONDITION THAT NO DEDUCTION WOUL D BE ALLOWED IN RESPECT OF ANY EXPENDITURE OR ALLOWANCE W HICH IS NOT WHOLLY OR EXCLUSIVELY INCURRED FOR THE BUSINESS OF SUCH PERMANENT ESTABLISHMENT OR FIXED PLACE OF PROFESSION OR IN RESPECT OF AMOUNTS, IF ANY, PAID BY THE PERMANENT ESTABLISHMENT TO ITS HEAD OFFICE OR TO ANY OF ITS OTHER OFFICES. UNDER SECTION 44BB, THERE IS NO REFERENCE T O A PERMANENT ESTABLISHMENT IN INDIA. THE TYPE OF SERVICE S CONTEMPLATED BY THE PROVISION IS MORE SPECIFIC THAN WH AT IS CONTEMPLATED BY SECTION 44DA. THE PROVISO TO SUB-SECTION (1) OF SECTION 44BB CAN ONLY MEAN THAT THE FLAT RATE OF 10 PER CENT OF THE REVEN UES CANNOT BE DEEMED TO BE THE PROFITS OF THE NON-RESIDEN T WHERE THE SERVICES ARE OF THE TYPE WHICH DO NOT FALL UNDER THAT SECTION, BUT ARE MORE GENERAL IN NATURE SO AS TO FALL UNDER SECTION 44DA. SIMILARLY, THE SECOND PROVISO TO SUB- SECTION (1) OF SECTION 44DA CAN ONLY BE INTERPRETED T O MEAN THAT WHERE THE SERVICES ARE GENERAL IN NATURE AN D FALL UNDER THE SUB-SECTION READ WITH EXPLANATION 2 TO SECTI ON 9(1)(VII), AN ASSESSEE RENDERING SUCH SERVICES AS PROVIDED IN SECTION 44BB CANNOT CLAIM THE BENEFIT OF BEING ASSE SSED ON THE BASIS THAT 10 PER CENT OF THE REVENUES WILL BE DEEMED TO BE THE PROFITS AS PROVIDED IN SECTION 44BB. IN OTHER WORDS, THE AMENDMENT MADE BY THE FINANCE ACT, 2010, WITH EFFECT FROM APRIL 1, 2011, IN BOTH SECTIO NS, CANNOT HAVE THE EFFECT OF ALTERING OR EFFACING THE FUNDAMENTAL NATURE OF THE PROVISIONS OR THEIR RESPECT IVE SPHERES OF OPERATION OR TO TAKE AWAY THE SEPARATE IDEN TITY OF SECTION 44BB. IF A SPECIAL PROVISION IS MADE IN RESPECT OF A CERTAIN MATTER, THAT MATTER IS EXCLUDED FROM THE GENERAL PROVISION. WHEN, ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 6 IN AN ENACTMENT TWO PROVISIONS EXIST, WHICH CANNOT BE RECONCILED WITH EACH OTHER, THEY SHOULD BE SO INTERPR ETED THAT, IF POSSIBLE, EFFECT SHOULD BE GIVEN TO BOTH. 6. THUS, THEIR LORDSHIPS HELD THAT THE PROVISION OF SE CTION 44BB IS A SPECIAL PROVISION WHILE SECTION 44DA IS A GENERAL PROV ISION. THEREFORE, WHEN THE SERVICES RENDERED BY THE ASSESSEE FALL WITHIN T HE SCOPE OF SECTION 44BB, THE SAID SECTION WOULD BE APPLICABLE B UT, WHERE THE SERVICES ARE OF THE TYPE WHICH DO NOT FALL UNDER THAT SECTION BUT ARE MORE GENERAL IN NATURE, THEN, SECTION 44DA WOULD BE APPLICABLE. SECTION 44BB(1) READS AS UNDER:- 44BB. (1) NOTWITHSTANDING ANYTHING TO THE CONTRAR Y CONTAINED IN SECTION 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 EXTRAC TION OR PRODUCTION OF, MINERAL OILS, A SUM EQUAL TO TEN PER C ENT 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 UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION: 7. WHEN WE READ SECTION 44BB IN THE LIGHT OF THE SCO PE OF THE CONTRACTS ENTERED INTO BY THE ASSESSEE WITH ONGC, WE FI ND THAT THE SCOPE OF THE WORK OF THE ASSESSEE FALLS SQUARELY WITHIN TH E AMBIT OF SECTION 44BB BECAUSE THE FIRST CONTRACT IS FOR HIRING OF PRODUCTION TESTING SURFACE EQUIPMENT IN OPERATION CONDITION FOR CARRYING OUT PRODUCTION TESTING OF HIGH PRESSURE EXPLORATORY AND DE VELOPMENT WELLS. THE SECOND CONTRACT IS FOR PROVIDING OF MUD SERVICES ON SERVICE CONTRACT TO DRILL 17 NOS. OF HORIZONTAL AND MULTILAT ERAL WELLS. ADMITTEDLY, SUCH WELLS WERE DRILLED FOR THE PURPOSE O F EXPLORATION/PRODUCTION OF MINERAL OIL. IN VIEW OF THE ABOVE, IN OUR OPINION, THE SERVICES PROVIDED BY THE ASSESSEE SQUARELY FA LL WITHIN THE ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 7 AMBIT OF SECTION 44BB(1) AND, THEREFORE, APPLYING T HE RATIO OF HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF OHM LIMITED (SUPRA), WE HOLD THAT THE CIT(A) RIGHTLY DIRECTED THE ASSESSING OFFICER TO COMPUTE THE INCOME UNDER SECTION 44BB OF THE ACT. ACCORDINGLY, THE ORDER OF LEARNED CIT(A) IS SUSTAINED. CROSS OBJECTION NO.121/DEL/2013 CROSS OBJECTION NO.121/DEL/2013 CROSS OBJECTION NO.121/DEL/2013 CROSS OBJECTION NO.121/DEL/2013 :- 8. AT THE TIME OF HEARING BEFORE US, THE LEARNED COU NSEL FAIRLY ADMITTED THAT THE CROSS-OBJECTION IS ONLY IN SUPPORT OF THE ORDER OF LEARNED CIT(A) AND GROUND NO.3 OF THE CROSS-OBJECTIO N IS AN ALTERNATIVE GROUND WHICH MAY ARISE ONLY IF REVENUES APPEAL IS ALL OWED. HE FAIRLY SUBMITTED THAT IF THE REVENUES APPEAL IS DISMISSED, THE CROSS- OBJECTION WOULD BE RENDERED INFRUCTUOUS. 9. SINCE WE HAVE ALREADY DISMISSED THE REVENUES APPEAL , THE CROSS-OBJECTION FILED BY THE ASSESSEE IS TREATED AS INFRU CTUOUS AND REJECTED AS SUCH. ITA NO.1509/DEL/2013 ITA NO.1509/DEL/2013 ITA NO.1509/DEL/2013 ITA NO.1509/DEL/2013 :- 10. IN THIS APPEAL BY THE REVENUE, THE ONLY GROUND R AISED IS AGAINST THE CANCELLATION OF PENALTY LEVIED UNDER SECTION 27 1(1)(C) OF THE ACT AMOUNTING TO ` 32,26,037/-. 11. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING NIL INCOME AND HAS DECLARED THE LO SS OF ` 46,11,549/- IN THE PROFIT & LOSS ACCOUNT FILED ALONGWITH THE RETU RN OF INCOME. THE ASSESSING OFFICER DETERMINED THE INCOME OF THE ASSESSEE BY APPLYING SECTION 44DA OF THE ACT AND ESTIMATED THE NET PROFIT AT 25% OF THE GROSS RECEIPTS. THE ASSESSING OFFICER HAS ALSO LEVIED PENA LTY UNDER SECTION 271(1)(C) IN VIEW OF THE VARIATION BETWEEN THE INCOME RETURNED AND INCOME ASSESSED. ON APPEAL AGAINST THE QUANTUM, LE ARNED CIT(A) ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 8 DIRECTED THE ASSESSING OFFICER TO DETERMINE THE INCOME UNDER SECTION 44BB WHICH IS UPHELD BY US BY DISMISSING THE REVENUES AP PEAL IN ITA NO.1510/DEL/2013. THE CIT(A) ALSO CANCELLED THE PEN ALTY HOLDING THAT THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN DELE TED BY HIM. THE REVENUE, AGGRIEVED BY THE ORDER OF LEARNED CIT( A), IS IN APPEAL BEFORE US. 12. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES A ND THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). AS PER PROFIT & LO SS ACCOUNT, THERE WAS A LOSS. THE ASSESSEE FILED THE RETURN DECLARING NIL I NCOME. THE ASSESSING OFFICER ESTIMATED THE INCOME UNDER SECTION 44D A WHICH IS NOT APPROVED EITHER BY THE CIT(A) OR BY THE ITAT. THE CIT(A) DIRECTED TO DETERMINE THE INCOME BY APPLYING DEEMING PROVISIO N OF SECTION 44BB WHICH IS UPHELD BY US ALSO. THEREFORE, MERELY B ECAUSE THE INCOME OF THE ASSESSEE IS DIRECTED TO BE DETERMINED BY T HE DEEMING PROVISION OF SECTION 44BB, IT CANNOT BE SAID THAT ASSESSE E CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF IN COME. IT IS NOWHERE MENTIONED EITHER IN THE ASSESSMENT ORDER OR IN THE PEN ALTY ORDER THAT ASSESSEE CONCEALED ANY FACT OR ANY DETAILS FURNISHED BY T HE ASSESSEE WERE FOUND TO BE WRONG OR FALSE. IN VIEW OF THE ABO VE, ON THESE FACTS, IN OUR OPINION, THE DECISION OF HONBLE APEX COURT I N THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. (2010) 322 ITR 158 (SC) WOULD BE SQUARELY APPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT LEARNED CIT(A) RIGHTLY CANCELLED THE PENALTY LEVIED UNDER SECTION 271(1)(C). THE SAME IS SUSTAINED. CROSS OBJECTION NO.120/DEL/2013 CROSS OBJECTION NO.120/DEL/2013 CROSS OBJECTION NO.120/DEL/2013 CROSS OBJECTION NO.120/DEL/2013 :- 13. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL STATED THAT THE CROSS-OBJECTION IS ONLY IN SUPPORT OF THE ORDER O F LEARNED CIT(A). HE ITA-1509 & 1510/D/2013 & C.O. 120 & 121/D/2013 9 FAIRLY SUBMITTED THAT IF THE REVENUES APPEAL IS DISMISSE D, THE CROSS- OBJECTION WOULD BE RENDERED INFRUCTUOUS. 14. SINCE WE HAVE ALREADY UPHELD THE ORDER OF LEARN ED CIT(A) AND DISMISSED THE REVENUES APPEAL, THE CROSS-OBJECTION FILE D BY THE ASSESSEE IS TREATED AS INFRUCTUOUS AND REJECTED AS SUCH. 15. IN THE RESULT, THE APPEALS OF THE REVENUE AS WELL AS THE CROSS- OBJECTIONS OF THE ASSESSEE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 28.02.2014 VK. COPY FORWARDED TO: - 1. REVENUE : ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, 13A 13A 13A 13A- -- -SUBHAS SUBHAS SUBHAS SUBHASH ROAD, DEHRADUN. H ROAD, DEHRADUN. H ROAD, DEHRADUN. H ROAD, DEHRADUN. 2. ASSESSEE : M/S M.B. PETROLEUM SERVICES LLC, M/S M.B. PETROLEUM SERVICES LLC, M/S M.B. PETROLEUM SERVICES LLC, M/S M.B. PETROLEUM SERVICES LLC, C/O KIRTANE & PANDIT, H C/O KIRTANE & PANDIT, H C/O KIRTANE & PANDIT, H C/O KIRTANE & PANDIT, H- -- -16, SARASWATI COLONY, 16, SARASWATI COLONY, 16, SARASWATI COLONY, 16, SARASWATI COLONY, SITALADEVI TEMPLE ROAD, MAHIM (WEST), SITALADEVI TEMPLE ROAD, MAHIM (WEST), SITALADEVI TEMPLE ROAD, MAHIM (WEST), SITALADEVI TEMPLE ROAD, MAHIM (WEST), MUMBAI MUMBAI MUMBAI MUMBAI 400 016. 400 016. 400 016. 400 016. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR