M/s Ensco Maritime Ltd V. Additional Director Of Income Tax

ITA/50/2015

AI Insights

M/s Ensco Maritime Ltd. filed three appeals against the Additional Director of Income Tax, challenging the inclusion of reimbursed expenses in taxable income. The appeals were initially filed with delays, which were later condoned by the court. The core legal issue was whether the reimbursed amounts qualified as income under the Income Tax Act, specifically under Section 44BB, which deals with the taxation of income from the business of providing services in connection with the exploration or production of mineral oils. The court referenced a previous judgment (Commissioner of Income Tax vs. Halliburton Offshore Services Inc.) to support its decision that Section 44BB is a comprehensive code and that the reimbursed amounts are taxable.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 672321 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 30-05-2016
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. Halliburton Offshore Services Inc. (2008) 300 ITR 265
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: H M BHATIA
• Assessee Lawyers: P R MULLICK
• Keywords: Delay condonation; Income Tax; Reimbursement of expenses; Section 44BB; Taxation
• Section: 5(2); 44BB; 2(45)

Judgement Text

"IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 50 of 2015 With Delay Condonation Application No. 13495 of 2015 M/s Ensco Maritime Ltd.. ..………. Appellant Versus Additional Director of Income Tax. ....………. Respondent Income Tax Appeal No. 51 of 2015 With Delay Condonation Application No. 13619 of 2015 M/s Ensco Maritime Ltd.. ..………. Appellant Versus Additional Director of Income Tax. ....………. Respondent & Income Tax Appeal No. 52 of 2015 With Delay Condonation Application No. 13498 of 2015 M/s Ensco Maritime Ltd.. ..………. Appellant Versus Additional Director of Income Tax. ....………. Respondent Mr. P.R. Mullick, Advocate for the appellant. Mr. H.M. Bhatia, Advocate for the respondent. JUDGMENT Coram: Hon’ble K.M. Joseph, C.J. Hon’ble Sudhanshu Dhulia, J. Dated: 30th May, 2016 K.M. JOSEPH, C.J. (Oral) There is delay of 715 days in filing Income Tax Appeal Nos. 50 of 2015 and 52 of 2015 and 323 days in filing Income Tax appeal No. 51 of 2015. According to the appellant, the date of the order impugned is 08.08.2013; the order was received on 16.08.2013; the appeals were originally filed with some delay; that appeals, along with the Delay Condonation Application, were allowed to be withdrawn with liberty to file fresh appeals; and hence, the present appeals are filed with the delay. It is pointed out that the earlier appeals, along with the delay, were pending for a long time. Having heard the learned counsel for the parties, 2 we are of the view that the delay should be condoned. Accordingly, the delay will stand condoned and the Applications for condonation of delay will stand allowed. 2. We also proceeded to hear the learned counsel for the parties in regard to the appeals themselves. 3. The appeals arise from the orders passed by the Tribunal not agreeing with the contention of the appellant that the amounts, which were received by way of reimbursement of actual expenses, were not to be included within the amount, which is to be reckoned for the purpose of taxation under Section 44BB of the Income Tax Act. Primarily, the contention appears to be that the amount, which is received by way of reimbursement, would not qualify as income within the meaning of sub- section (45) of Section 2 of the Income Tax Act and it would also not come within the provisions of the charging section, namely, sub-section (2) of Section 5. According to the assessee, Section 5, actually, constitutes the charging provision; whereas, Section 44BB would only be a computing provision and, therefore, what would not fall within the four walls of the charging section, cannot be brought to tax on the basis that it would come under the computing section. 4. The question has engaged the attention of this Court in an earlier judgment in the case of Commissioner of Income Tax vs. Halliburton Offshore Services Inc., reported in (2008) 300 ITR 265. We also think that Section 44BB is a complete code in itself and the amount received, be it by way of reimbursement, is not, in any way, excluded from the ambit of Section 44BB. Therefore, placing reliance on Section 2(45) or Section 5(2) cannot advance the case of the appellant. 5. In such circumstances, the appeals are meritless and the questions of law are answered against the appellant. Consequently, the appeals will stand dismissed. No order as to costs. (Sudhanshu Dhulia, J.) (K.M. Joseph, C. J.) 30.05.2016 30.05.2016 G "