BG International Limited, Mumbai V. The Deputy Commissioner of Income Tax, DDIT/ADIT(International Taxation), Circle-1, Dehradun

ITA 31/DDN/2020

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9518 (ITAT-DEHRADUN)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 22-10-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OPERATES ITS OWN OIL
• Keywords: Business income; Double taxation relief; Opportunity of being heard; Principle of natural justice; Application of stay; Permanent establishment; Revised return; TDS
• Section: 143(3); 244A; 234B; 44BB; 208; 271B; 44AB; 44DA; 73; 13; 22; 27

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 31/DDN/2020 ASSTT. YEAR 2017-18 BG INTERNATIONAL LIMITED C/O DELOITTE HASKINS AND SELLS LLP, INDIABULLS FINANCE CENTRE, TOWER-3, 28 TH FLOOR, ELPHINSTONE MILL COMPOUND, SENAPATI BAPAT MART, ELPHINSTONE (W), MUMBAI, MAHARASHTRA-200013 VS. DCIT,DDIT/ADIT (INTERNATIONAL TAXATION), CIRCLE-1 DEHRADUN (APPELLANT) (RESPONDENT) STAY NO. 14/DDN/2020 (ITA NO. 31/DDN/2020) ASSTT. YEAR 2017-18 DCIT, DDIT/ADIT (INTERNATIONAL TAXATION), CIRCLE-1, DEHRADUN VS. BG INTERNATIONAL LIMITED C/O DELOITTE HASKINS AND SELLS LLP, INDIABULLS FINANCE CENTRE, TOWER-3, 28 TH FLOOR, ELPHINSTONE MILL COMPOUND, SENAPATI BAPAT MART, ELPHINSTONE (W), MUMBAI, MAHARASHTRA-200013 (APPELLANT) (RESPONDENT) ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 2 O R D E R PER R.K. PANDA, AM THIS APPEAL FILED BY THE ASSESSSEE IS DIRECTED AGAINST THE ORDER DATED 23.06.2020 PASSED U/S 143(3) R.W.S. 144C(13) OF THE I.T. ACT 1961 FOR THE ASSESSMENT YEAR 2017-18. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A GROUP ENTITY OF BG GROUP OF UK, A NON-RESIDENT COMPANY AND ALSO AN ASSOCIATE ENTERPRISE OF M/S. BG EXPLORATION & PRODUCTION INDIA LIMITED (BGEPIL). THE ASSESSSEE IS ENGAGED IN PROVIDING SUPPORT TO BG GROUP ENTITIES INCLUDING BGEPIL IN INDIA. BGIP OWNS AND OPERATES ITS OWN OIL AND GAS ASSETS. 2.1 THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.11.2017 DECLARING TOTAL INCOME OF RS. 4,42,10,598/-. SUBSEQUENTLY THE ASSESSEE FILED A REVISED RETURN ON 29.01.2018 ON A TOTAL INCOME OF RS. 4,42,10,598/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE BY: SHRI AJAY VOHRA , SR. ADVOCATE SHRI KARAN JAIN, CA DEPARTMENT BY : SHRI A.S. RANA, SR. DR DATE OF HEARING 22 /12 /2020 DATE OF PRONOUNCEMENT 31/12/2020 ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 3 THE AO NOTED THAT THE ASSESSEE RECEIVED THE PAYMENTS FROM BGEPIL, A COMPANY REGISTERED IN THE CAYMAN ISLANDS. IN THE NOTES GIVEN WITH THE STATEMENT OF INCOME IT HAS BEEN STATED THAT BGIL HAS RECEIVED THE FOLLOWING PAYMENTS TOTALLING TO RS. 1,86,32,25,025/- SAID TO BE ON ACCOUNT OF SERVICES PROVIDED ON COST-TO-COST BASIS IN TERMS OF ARTICLE 3.1.4.B OF THE PRODUCTION SHARING CONTRACTS (PANNA-MUKTA & MID AND SOUTH TAPTI) ENTERED INTO BETWEEN BGEPIL. RELIANCE INDUSTRIES LTD. (RIL), ONGC LTD. AND THE GOVERNMENT OF INDIA. SL.NO. NATURE OF RECEIPTS (AS CLAIMED BY THE ASSESSEE) TOTAL AMOUNT RECEIVED I. PAYROLL EXPENSES 14,95,72,807 II. GENERAL & ADMINISTRATIVE AND GEOLOGICAL & GEOPHYSICAL AND OTHER EXPENSES 9,31,09,974 III. MANAGEMENT SERVICE UNIT CHARGES 34,09,08,884 IV. IT PROJECT COST RECHARGES 128,07,33,360 TOTAL 1,86,43,25,025 ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 4 3. IT WAS CLAIMED BY THE ASSESSEE THAT THESE RECEIPTS ARE IN THE NATURE OF REIMBURSEMENT AND REDUCED THE ENTIRE AMOUNT AS EXPENDITURE ON COST TO COST BASIS TO ARRIVE AT NET BUSINESS INCOME AT NIL. IT WAS STATED BY THE ASSESSEE THAT THE FOLLOWING SERVICES HAVE BEEN PROVIDED TO BGEPIL FOR WHICH THE PAYMENTS HAVE BEEN RECEIVED AND EXPENDITURE INCURRED BY THEM ON COST TO COST BASIS. THE SUBMISSION REPRODUCED BY THE AO IN THE BODY OF THE ASSESSMENT ORDER READS AS UNDER :- MANAGEMENT SERVICE UNIT *MSU) CHARGES : - THE MSU COST INCLUDES, COST IN RELATION IT RELATED SERVICE, HR RELATED SERVICES AND OTHER SERVICES. BRIEF DESCRIPTION OF EACH OF THE SERVICE IS AS UNDER :- PAYROLL COST : - AS PART OF ITS CONTINUED PROGRAM OF RUNNING EFFICIENT AND COST EFFECTIVE VENTURES ACROSS THE WORLD THE ASSESSEE DEPUTES VARIOUS EXPERTS, TO ASSETS ALL ACROSS THE WORLD. THE ASSESSEE HAS SIMILARLY DEPUTED ITS EMPLOYEES TO OFFICES/ PROJECTS OF BGEPIL IN INDIA. BGEPIL HAS REIMBURSED THE SALARY OF SUCH PERSONNEL TO THE ASSESSEE ON A COST TO COST BASIS. THE ENTIRE CONTROL OVER THE FUNCTIONS OF THE SAID PERSONNEL LIES WITH BGEPIL ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 5 GENERAL & ADMINISTRATION EXPENSES (G&A) :- DURING THE YEAR UNDER CONSIDERATION, BGEPIL HAD MADE REIMBURSEMENT OF G&A EXPENSE. THE REIMBURSEMENTS WERE MADE TOWARDS TWO BROAD CATEGORIES: TIME-WRITING CHARGES- AND OTHER CHARGES INCLUDING TRAVELLING AND CONVEYANCE COST, EMPLOYEES WELFARE COSTS, BANK CHARGES, VARIOUS GENERAL, ADMINISTRATION OVERHEAD COSTS. A BRIEF DESCRIPTION OF THESE COSTS IS EXPLAINED BELOW: RECHARGE FROM BGIL TOWARDS TIME WRITING CHARGES :- BGEPIL HAS REIMBURSED THE TIME WRITING COSTS OF BGIL PERSONNEL WORKING ON VARIOUS PROJECTS OF BGEPIL. THE CHARGING BASIS I.E TIME WRITING RATE, IS ESTABLISHED BY DETERMINING THE OVERALL TOTAL COST OF THE SKILL CENTRE (FULL EMPLOYEE RELATED COSTS AS WELL AS COSTS ALLOCATED TO THAT SKILL CENTRE) AND DETERMINING THE HOURLY RATE WITH REFERENCE TO THE NUMBERS OF CHARGEABLE HOURS OTHER REIMBURSEMENTS:- BGEPIL HAS REIMBURSED SEVERAL EXPENSES TO BGIL ON A COST- TO-COST BASIS. THESE EXPENSES PERTAIN TO COST OF STOCK OPTION PLAN EXERCISED BY BGEPIL EMPLOYEES, ACTUAL COST OF ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 6 REALLOCATION OF EMPLOYEES, THIRD PARTY EXPENSES SUCH AS CONSULTANCY FEES, PROFESSIONAL SUBSCRIPTION AND LICENSE COSTS BANK CHARGES, TRAVEL EXPENSES. ETC. 4. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNTS TOTALLING TO RS. 1,86,43,25,025/- UNDER VARIOUS HEADS AS MENTIONED IN THE ABOVE TABLE MAY NOT BE TREATED AS INCOME FOR ASSESSMENT YEAR 2017-18. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND FOLLOWING THE ORDER FOR THE PRECEDING YEAR THE AO HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE FORM BGEPIL IS TAXABLE AND CANNOT BE ACCEPTED TO BE REIMBURSEMENT OF EXPENSES BY BGEPIL TO THE ASSESSEE. THE AO HELD THAT THE SUM OF RS. 1,80,16,32,708 FROM INDIA ARE NOT REIMBURSEMENT OF EXPENSES TOWARDS ACTIVITIES PERFORMED BY THE ASSESSEE FOR GROUP ENTITIES IN INDIA AND HENCE, BE REGARDED AS INCOME TAXABLE UNDER THE ACT AS WELL AS UNDER THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND THE UNITED KINGDOM (DTAA). ACCORDING TO THE AO THE CLAUSE IN PRODUCTION SHARING CONTRACT (PSC) FOR NON-CHARGING OF PROFIT ELEMENT IS NOT APPLICABLE IN THE CASE OF SERVICES PROVIDED TO BG EXPLORATION AND PRODUCTION INDIA LIMITED ( BGEPIL EXPENSES OF WHICH IS NOT SHARED BY THE JOINT VENTURE). THE AO DISALLOWED EXPENSES ON THE REASON THAT THE ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 7 ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE EVIDENCE REGARDING THE INCURRENCE OF EXPENSES AND RENDERING OF SERVICES TO BGEPIL BY RELYING ON DECISION OF 'TH E DISPUTE RESOLUTION PANEL/ TRIBUNAL F OR EARLIER YEARS THE AO ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT ALL THE SERVICES PROVIDED TO BGEPIL ARE BEING PROVIDED ON COST-TO-COST BASIS AS PER THE PSC AND GLOBAL COAST ALLOCATION POLICY OF THE ASSESSEE AND CHARGED WITHOUT ANY MARK- UP. THE AO APPLIED THE PROVISIONS OF SECTION 44DA AND REJECTED THE CONTENTION OF THE ASSESSEE OF APPLICABILITY OF PROVISIONS OF 44BB OF THE I.T. ACT 1961. THE AO ALLOWED THE DEDUCTION OF EXPENSES ONLY WITH RESPECT TO THE AMOUNTS WHICH HAVE BEEN APPROVED BY THE JOINT VENTURE PARTNERS IN BGEPIL. THE AO FURTHER HELD THAT INTEREST ON INCOME TAX REFUND IS TAXABLE @40% AS PER THE ACT BY HOLDING THAT SUCH INTEREST HAS BEEN EARNED ON ACCOUNT OF ACTIVITIES CARRIED OUT BY THE ASSESSEE IN INDIA FOR WHICH IT HAS A PERMANENT ESTABLISHMENT (PE) IN INDIA. ACCORDING TO THE AO, THE INTEREST IS LINKED WITH BUSINESS ACTIVITIES IN INDIA AND ACCORDINGLY TAXABLE AS BUSINESS PROFITS. 5. THE AO ACCORDINGLY, IN THE DRAFT ASSESSMENT ORDER, DETERMINED THE TOTAL INCOME OF THE ASSESEE AT RS. ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 8 1,84,58,43,306/-. THE ASSESSEE APPROACHED THE DRP BUT WITHOUT ANY SUCCESS. THE AO ACCORDINGLY IN THE FINAL ORDER DETERMINED THE TOTAL INCOME OF THE ASSESEE AT RS. 1,84,58,43,306/-. 6. AGGRIEVED WITH SUCH ORDER OF THE AO/DRP THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS :- GROUND NO. 1: REIMBURSEMENT OF EXPENSES IS NOT INCOME 1.1 THE LEARNED AO / DRP ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE SUMS FROM INDIA ARE PURELY REIMBURSEMENT OF EXPENSES TOWARDS ACTIVITIES PERFORMED BY THE APPELLANT FOR GROUP ENTITIES IN INDIA AND HENCE, CANNOT BE REGARDED AS INCOME TAXABLE UNDER THE ACT AS WELL AS THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND UNITED KINGDOM (DTAA). GROUND NO. 2: NON-APPLICABILITV OF SECTION 44DA OF THE ACT 2.1 WITHOUT PREJUDICE, THE LEARNED AO / DRP ERRED IN LAW AND IN FACTS IN FOLLOWING THE DIRECTIONS OF THE DRP IN AY 2012-13 TO AY 2016-17 AND CONCLUDING THAT THE PROVISIONS OF SECTION 44DA ARE APPLICABLE TO THE APPELLANT. GROUND NO. 3: INCOME, IF ANY, SHOULD BE TAXABLE UNDER SECTION 44BB OF THE ACT 3.1 WITHOUT PREJUDICE, THE LEARNED AO / DRP ERRED IN LAW AND IN FACTS IN NOT APPLYING THE PROVISIONS OF SECTION 44BB OF THE ACT, AS THE SERVICES RENDERED BY THE APPELLANT WERE IN RELATION TO BUSINESS OF EXTRACTION OR PRODUCTION OF MINERAL OIL. 3.2 THE LEARNED AO / DRP ERRED IN NOT FOLLOWING THE ORDER OF THE HONBLE TRIBUNAL IN THE APPELLANT'S OWN CASE FOR AYS 2007-08 TO 2016-17, AS POINTED OUT BY THE APPELLANT. 3.3 IN REJECTING THE GROUND OF OBJECTION WITH REFERENCE TO SECTION 44BB OF THE ACT, THE LEARNED DRP ERRED IN FOLLOWING THE DIRECTIONS OF THE DRP IN AY 2012-13 TO AY 2016-17 WHEREIN IT WAS OBSERVED THAT THE APPELLANT WAS SHIFTING ITS STAND ON THE MATTER FROM YEAR TO YEAR AND FURTHER, THAT THE APPELLANT HAD NOT OFFERED THE INCOME TO TAX UNDER SECTION 44BB OF THE ACT IN ITS RETURN OF INCOME. GROUND NO. 4: NON-APPLICATION OF PROVISIONS OF DTAA FOR INTEREST INCOME 4.1 THE LEARNED AO / DRP ERRED IN LAW AND IN FACT, IN HOLDING THAT THEPROVISIONS OF THE DTAA DOES NOT APPLY TO THE APPELLANTS INTEREST INCOME. ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 9 GROUND NO. 5: ERRONEOUS COMPUTATION OF TAX ON INTEREST INCOME 5.1 THE LEARNED AO ERRED IN COMPUTING THE TAX LIABILITY ON INTEREST INCOME AT RATES AS PER THE ACT AS WELL AS THE DTAA, THUS ERRONEOUSLY TAXING THE INTERESTINCOME TWICE. GROUND NO. 6: SHORT CREDIT OF TAX DEDUCTED AT SOURCE 6.1 THE LEARNED AO ERRED IN NOT GRANTING CREDIT OF TAXES DEDUCTED AT SOURCE TO THE EXTENT OF RS.76,89,725. GROUND NO. 7: LEVY OF INTEREST UNDER SECTION 234B OF THE ACT 7.1 THE LEARNED AO HAS ERRED IN LAW AND IN FACT, IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT GROUND NO. 8: LEVY OF INTEREST UNDER SECTION 234C OF THE ACT 8.1 THE LEARNED AO HAS ERRED IN LAW AND IN FACT, IN LEVYING INTEREST UNDER SECTION 234C OF THE ACT. GROUND NO. 9: PENALTY UNDER SECTION 270A OF THE ACT 9.1 THE LEARNED AO HAS ERRED IN LAW AND IN FACT, IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 270A OF THE ACT FOR UNDER-REPORTING OF INCOME. GROUND NO. 10: PENALTY UNDER SECTION 271B OF THE ACT 10.1 THE LEARNED AO HAS ERRED IN LAW AND IN FACT, IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 27 IB OF THE ACT FOR NOT GETTING THE ACCOUNTS AUDITED AS REQUIRED UNDER SECTION 44AB OF THE ACT. GROUND NO. 11: VIOLATION OF PRINCIPLES OF NATURAL JUSTICE 11.1 THE LEARNED AO / DRP ERRED IN LAW AND IN FACTS, IN IGNORING THE SUBMISSIONS AND THE INFORMATION FURNISHED BY THE APPELLANT DURING THE PROCEEDINGS. 11.2 GROUND NO. 12 : GENERAL THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE AND/OR MODIFY IN ANY MANNER WHATSOEVER ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 7. GROUND NO. 1 RELATES TO REIMBURSEMENT OF EXPENSES AS NOT INCOME. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 10 REIMBURSEMENT OF EXPENSES IS NOT INCOME WHEREAS GROUND NO. 2 RELATES TO NON-APPLICABILITY OF SECTION 44DA OF THE ACT. IN GROUND NO. 3 THE ASSESSEE HAS TAKE AN ALTERNATIVE GROUND ACCORDING TO WHICH INCOME, IF ANY, SHOULD BE TAXABLE U/S 44BB OF THE ACT. 8. LD. COUNSEL FOR THE ASSESSEE ARGUED ALL THE ABOVE THREE GROUNDS TOGETHER. SO FAR AS GROUND NO. 1 REGARDING REIMBURSEMENT OF EXPENSES IS NOT INCOME IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TRANSACTION OF REIMBURSEMENT OF EXPENSES TO THE NON-RESIDENT DOES NOT RESULT IN ANY INCOME IN THE HANDS OF THE RECIPIENT. HENCE, SUCH REIMBURSEMENT IS NOT CHARGEABLE TO TAX IN INDIA IN THE HANDS OF THE NON-RESIDENT FOR WANT OF ANY INCOME ELEMENT EMBEDDED THEREIN. HE SUBMITTED THAT THE COSTS INCURRED BY THE ASSESSEE IN PROVIDING THIS SUPPORT/SERVICES IS RECHARGED TO THE BENEFICIARY BG GROUP ENTITIES, INCLUDING BGEPIL, ON COST TO COST BASIS, WITHOUT ANY MARK-UP, BASED ON UNIFORM AND CONSISTENT REASONABLE ALLOCATION. HE SUBMITTED THAT THE ASSESSING OFFICER COMPUTED THE INCOME ON THE GROUND THAT THE APPELLANT DID NOT ESTABLISH ONE TO ONE NEXUS OF THE EXPENSES WITH THE SERVICES RENDERED. REFERRING TO THE ORDER OF THE TRIBUNAL HE SUBMITTED THAT THE TRIBUNAL HAS DEALT WITH THIS ISSUE IN FAVOUR OF THE ASSESSEE FROM ASSESSMENT YEARS ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 11 2003-04 TO 2016-17 AND HELD THAT INCOME OF THE ASSESSEE TO BE ASSESSED BY INVOKING PROVISIONS OF SECTION 44BB OF THE ACT. HE ACCORDINGLY SUBMITTED THAT THE RECEIPTS OF THE ASSESSEE FROM BGEPIL ARE PURE REIMBURSEMENTS OF COST INCURRED BY THE ASSESSEE FOR THE PURPOSE OF RENDERING SERVICES TO BGEPIL AND CANNOT BE TREATED AS INCOME OF THE RECIPIENT, LIABLE TO TAX IN INDIA. 9. WITHOUT PREJUDICE TO THE ABOVE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PROVISION OF SECTION 44DA OF THE ACT ARE NOT APPLICABLE AND INCOME, IF ANY, SHOULD BE TAXABLE U/S 44BB OF THE ACT. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT RECEIPTS BY THE ASSESSEE ARE IN THE NATURE OF REIMBURSEMENT, NOT EXIGIBLE TO TAX UNDER THE ACT. HE SUBMITTED THAT IF THE RECEIPTS OF THE ASSESSEE FROM BGEPIL ARE HELD NOT TO BE REIMBURSEMENTS, (NOT LIABLE TO TAX IN INDIA), THEN PROVISIONS OF SECTION 44BB OF THE ACT ARE TO BE APPLIED TO SUCH RECEIPTS. FOR THE ABOVE PROPOSITION, HE DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING WRITTEN SUBMISSIONS :- SECTION 44DA OF THE ACT, PROVIDES THAT WHERE INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES (FTS) IS RECEIVED BY A FOREIGN COMPANY CARRYING ON BUSINESS IN INDIA THROUGH A PERMANENT ESTABLISHMENT (PE), AND THE RIGHT, PROPERTY OR CONTRACT IN RESPECT OF WHICH THE ROYALTY OR FTS ARE PAID, EFFECTIVELY CONNECTED WITH SUCH PE, THEN, TAX ON SUCH INCOME SHALL BE COMPUTED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION AS PER THE NET BASIS OF TAXATION ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 12 FTS, DEFINED UNDER EXPLANATION 2 TO SECTION 9(L)(VII) OF THE ACT EXCLUDES THE ACTIVITIES OF MINING OR LIKE PROJECT, UNDERTAKEN BY THE APPELLANT (INSTRUCTION NO.1862 DATED 22.10.1990) SECTION 44DA OF THE ACT ARE NOT APPLICABLE SINCE THE APPELLANT HAS ENTERED INTO A CONTRACT WITH BGEPIL, WHICH IS A NON-RESIDENT COMPANY FOR THE PURPOSES OF THE ACT THE HONBLE TRIBUNAL HELD THAT SECTION 44DA OF THE ACT IS NOT APPLICABLE SINCE THE PAYMENT IN THE CASE OF THE APPELLANT WAS NEITHER RECEIVED FROM THE GOVERNMENT NOR FROM AN INDIAN CONCERN SECTION 44BB OF THE ACT IS A SPECIAL, SPECIFIC AND EXCLUSIVE PROVISION PROVIDING FOR DEEMED/ PRESUMPTIVE BASIS OF TAXATION IN CASE OF NON-RESIDENTS PROVIDING, INTER ALIA, SERVICES OR FACILITY IN CONNECTION WITH PROSPECTING FOR OR EXPLORATION OR PRODUCTION OF MINERAL OILS IN INDIA THE HONBLE TRIBUNAL HAS DEALT WITH THIS ISSUE IN FAVOUR OF THE APPELLANT FROM ASSESSMENT YEARS 2003-04 TO 2016-17 AND HELD THAT INCOME OF THE APPELLANT TO BE ASSESSED BY INVOKING SECTION 44BB OF THE ACT THEREFORE, INCOME RECEIVED FROM SERVICES RENDERED IN CONNECTION WITH PROVIDING SERVICES IN RELATION TO EXTRACTION AND PRODUCTION OF MINERAL OIL SHOULD BE TAXABLE UNDER SECTION 44BB AS OPPOSED TO SECTION 44DA OF THE ACT AND THE AMENDMENT TO THE AFORESAID SECTIONS BY THE FINANCE ACT, 2010 COULD NOT HAVE THE EFFECT OF ALTERING OR EFFACING THE FUNDAMENTAL NATURE OF BOTH THE PROVISIONS OR THEIR RESPECTIVE SPHERES OF OPERATION OR TO TAKE AWAY THE SEPARATE IDENTITY OF SECTION 44BB OF THE ACT (DIT VS. OHM LTD. 352 ITR 406; DEL. HC) 10. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO/DRP. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO/DRP AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. WE FIND THE TRIBUNAL HAS DISCUSSED ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 13 THE ISSUE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER :- 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE WHICH IS RAISED IN THE PRESENT APPEAL IS AGAINST THE TAXABILITY OF THE RECEIPTS IN THE HANDS OF THE ASSESSEE. THE CLAIM OF THE ASSESSEE IS THAT AGAINST RENDERING ITS SERVICES TO BGEPIL INLINE OF THE PRODUCT PRODUCTION SHARING AGREEMENT AS AN AFFILIATE, IT WAS TO PROVIDE THE SERVICES ON COST TO COST BASIS. HENCE, THE TOTAL RECEIPTS WERE NOT TAXABLE IN THE HANDS OF THE ASSESSEE BEING REIMBURSEMENT OF EXPENSES AND HENCE, WERE NOT LIABLE TO TAX IN INDIA. ON THE OTHER HAND, THE CASE OF THE REVENUE IS THAT THE SAID RECEIPTS WERE TAXABLE IN THE HANDS OF THE ASSESSEE AS THE ASSESSEE WAS NOT IN A POSITION TO ESTABLISH THE LINK BETWEEN THE EXPENSES INCURRED AND THE REIMBURSEMENT OF THE SAME. IN THE PRESENT YEAR, THE ASSESSING OFFICER ALSO APPLIED SECTION 44DA OF THE ACT AS AGAINST THE PLEA OF THE ASSESSEE THAT THE INCOME WAS TO BE COMPUTED U/S 44BB OF THE ACT. 16. WE FIND THAT THE SIMILAR ISSUE AROSE IN THE CASE OF THE ASSESSEE STARTING FROM ASSESSMENT YEAR 2003-04 ONWARDS. THE HON'BLE SUPREME COURT IN THE OIL 85 NATURAL GAS CORPORATION LTD. VS CIT [2015] 376 ITR 306 (SC) HAS HELD THAT THE SERVICES RENDERED IN CONNECTION WITH EXTRACTION AND PRODUCTION OF MINERAL OIL WAS TAXABLE U/S 44BB OF THE ACT. IN SUCH SCENARIO, THE INCOME IN THE HANDS OF THE ASSESSEE IS TO BE COMPUTED BY ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 14 APPLYING THE PROVISIONS OF SECTION 44BB OF THE ACT. WE FIND THAT THE TRIBUNAL IN EARLIER YEARS HAVE ACCORDINGLY APPLIED THE PROVISION OF SECTION 44BB OF THE ACT TO COMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE. 17. THE TRIBUNAL TIME AND AGAIN HAS DEALT WITH THE ISSUE BY DIFFERENT ORDERS. THE FIRST DECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IS FOR ASSESSMENT YEARS 2003-04 TO 2005-06 VIDE ITA NOS.2487 TO 2489/DE1/2006, ORDER DATED 28.08.2009. FURTHER, THE TRIBUNAL DECIDED THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 VIDE ITA NO.4773/DE1/2007 ORDER DATED 29.01.2010 AND FOR ASSESSMENT YEAR 2007-08 IN ITA NO.171/DE1/2012, ORDER DATED 18.03.2015, REPORTED IN 154 ITD 321 (DEL.). THEREAFTER, THE TRIBUNAL ALSO DECIDED THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2008-09 TO 2010-11 IN ITA NOS. 470/DEL/2013, 815/DEL/2014 & 107/DEL/2015, ORDER DATED 17.04.2015. THE TRIBUNAL ALSO DECIDED THE APPEALS OF THE ASSESSEE RELATING TO ASSESSMENT YEARS 2011-12 TO 2014-15 IN ITA NOS. 245 & 3640/DEL/2017, 4839 & 4840/DEL/2018, ORDER DATED 30.01.2019. IT MAY BE POINTED OUT THAT THE TRIBUNAL VIDE ITS ORDER DATED 30.01.2019 WHILE DECIDING THE APPEALS FOR ASSESSMENT YEAR 2014-15 HAD REPRODUCED THE SUBMISSIONS OF THE LD.CIT DR IN PARA 7 AT PAGE 3 TO 12 OF THE TRIBUNAL'S ORDER. THE LD.CIT DR APPEARING BEFORE US HAS RELIED ON THE AFORESAID DECISIONS. THE ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 15 TRIBUNAL IN TURN RELYING ON THE EARLIER DECISIONS OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN EARLIER YEARS HELD THAT THE INCOME OF THE ASSESSEE WAS TO BE ASSESSED BY INVOKING THE PROVISION OF SECTION 44AB OF THE ACT AS THE ASSESSEE WAS PROVIDING SERVICES TO BGEPIL, WHICH WAS ENGAGED IN PRODUCTION OF THE MINERAL OIL. THE CASE OF REIMBURSEMENT OF EXPENSES BY BGEPIL TO THE ASSESSEE WAS NOT ACCEPTED AND THE PROVISIONS OF SECTION 44BB OF THE ACT WERE INVOKED TO COMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE. THE FINDINGS OF THE TRIBUNAL ARE IN PARAS 8 TO 10 AT PAGES 12 TO 15 OF THE SAID ORDER. WE ARE REFERRING THE SAME BUT NOT REPRODUCING THE SAME FOR THE SAKE OF BREVITY. 18. NOW COMING TO THE STAND OF THE REVENUE THAT THE PROVISION OF SECTION 44DA OF THE ACT, WHEREIN 2ND PROVISO WAS INSERTED W.E.F. 01.04.2011, WERE TO BE APPLIED, IN ORDER TO COMPUTE THE INCOME OF THE ASSESSEE. THE TRIBUNAL IN ASSESSMENT YEARS 2011-12 TO 2014-15 (SUPRA) ALSO ADJUDICATED ON THE SAME VIDE PARAS 15 & 16 AT PAGES 16 TO 18 OF THE ORDER DATED 31.04.2019 AND HELD THAT THE PROVISIONS OF SECTION 44DA OF THE ACT WERE APPLICABLE WHERE THE INCOME WAS BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES, WHICH WAS RECEIVED FROM GOVERNMENT OR INDIAN CONCERN IN PURSUANCE TO AN AGREEMENT MADE BY A NON-RESIDENT OR A FOREIGN COMPANY WITH GOVERNMENT OR INDIAN CONCERN AFTER 31.03.2003. SINCE THE PAYMENT IN THE CASE OF THE ASSESSEE WAS NEITHER RECEIVED FROM ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 16 THE GOVERNMENT NOR FROM THE INDIAN CONCERN, IT WAS HOLD THAT THE PROVISIONS OF SECTION 44DA OF THE ACT WERE NOT APPLICABLE. APPLYING THE SAID PARITY OF REASONING, WE ALSO HOLD THAT THE PROVISIONS OF SECTION 44DA OF THE ACT WERE NOT APPLICABLE TO THE FACTS OF THE CASE AND THE INCOME OF THE ASSESSEE IS TO BE COMPUTED U/S 44BB OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, GROUND NOS. 1 TO 3 RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED . 12. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WE HOLD THAT THE PROVISION OF SECTION 44DA OF THE ACT IS NOT APPLICABLE AND INCOME, IF ANY, SHOULD BE TAXED U/S 44BB OF THE ACT. ACCORDINGLY GROUND OF APPEAL NO. 1.1. BY THE ASSESSEE IS DISMISSED WHEREAS GROUNDS OF APPEAL NO. 2 AND 3 ARE DECIDED IN FAVOUR OF THE ASSESSEE. 13. GROUND OF APPEAL NO. 4 RELATES TO NON APPLICATION OF PROVISIONS OF DTAA FOR INTEREST INCOME. 13.1 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN TERMS OF ARTICLE 12(1) OF THE TREATY, INTEREST ARISING IN A CONTRACTING STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE MAY BE TAXED IN BOTH CONTRACTING STATES. PARAGRAPH 2 OF ARTICLE 12 CIRCUMSCRIBES THE PRESCRIPTION CONTAINED IN PARAGRAPH 1, BY ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 17 STIPULATING THAT THE TAX CHARGEABLE IN A CONTRACTING STATE ON INTEREST ARISING IN THAT STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE IN RESPECT OF LOANS OR DEBTS SHALL NOT EXCEED 15% OF THE GROSS AMOUNT OF SUCH INTEREST. HE SUBMITTED THAT IT IS TRITE THAT INTEREST ON INCOME TAX REFUND IS A DEBT CLAIM AND FALLS WITHIN THE DEFINITION OF INTEREST AS DEFINED UNDER ARTICLE 12(5) OF THE TREATY. HE REFERRED TO PROVISIONS OF SECTION 244A OF THE ACT WHICH PROVIDES THAT WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THE ACT, HE SHALL BE ENTITLED TO RECEIVE, IN ADDITION TO THE SAID REFUND, SIMPLE INTEREST THEREON CALCULATED IN THE PRESCRIBED MANNER. IN OTHER WORDS, REFUND PAYABLE BY THE REVENUE TO THE ASSESSEE IS A DEBT PAYABLE BY THE REVENUE AND ANY INTEREST PAYABLE ON SUCH REFUND IS NOTHING BUT INCOME FROM DEBT-CLAIMS THE ASSESSING OFFICER HELD THAT THE INTEREST WAS EARNED ON ACCOUNT OF ACTIVITIES CARRIED OUT BY THE ASSESSEE IN INDIA FOR WHICH IT HAS A PE IN INDIA; THEREFORE, THE INTEREST IS LINKED WITH BUSINESS ACTIVITIES IN INDIA AND ACCORDINGLY TAXABLE AS BUSINESS PROFITS. HE HOWEVER, SUBMITTED THAT IN ALL FAIRNESS, THE MATTER IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HIGH COURT OF UTTARAKHAND IN THE CASE OF B. J. SERVICES CO. MIDDLE EAST LTD. V. ACIT: 380 ITR 138. ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 18 13.2 LD. DR ON THE OTHER HAND SUBMITTED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE JURISDICTIONAL HIGH COURT. 13.3. SINCE THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF B.J SERVICES CO. VS. ACIT (SUPRA) THEREFORE, THE GROUND OF APPEAL NO. 4 BY THE ASSESSEE IS DISMISSED. 14. GROUND OF APPEAL NO. 5 RELATES TO ERRONEOUS COMPUTATION OF TAX ON INTEREST INCOME. 14.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSESSEE HAS FILED AN APPLICATION DATED 13 TH OCTOBER, 2020 FOR RECTIFICATION U/S 154 OF THE ACT WHEREIN IT WAS STATED THAT THE INTEREST INCOME WAS TAXED TWICE AS PER ACT AT 40% AND AS PER DTAA AT 15%. FURTHER SURCHARGE AND CESS HAS ALSO BEEN LEVIED ON THE AGGREGATE TAX AMOUNT. SINCE THE SAME IS PENDING BEFORE THE AO, THEREFORE, AS AGREED BY BOTH SIDES WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO DISPOSE OF THE APPLICATION BEFORE HIM AT THE EARLIEST BY DECIDING THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD BY THE ASSESSEE. GROUND NO. 5 OF THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 19 14.2 IN GROUND OF APPEAL NO. 6, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE AO IN NOT GRANTING CREDIT OF TDS. 14.3 AFTER HEARING BOTH THE SIDES WE FIND THE GRIEVANCE OF THE ASSESSEE IS THAT CREDIT OF TDS TO THE EXTENT OF RS. 76,89,725/- WAS NOT GRANTED BY THE AO. AN APPLICATION U/S 154 DATED 13 TH OCTOBER, 2020 IS ALSO PENDING BEFORE THE AO. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO DISPOSE OF THE 154 APPLICATION PENDING BEFORE HIM AND VERIFY THE TDS CERTIFICATES AND IF THE SAME IS DUE TO THE ASSESSEE THEN GRANT TDS AS APPLICABLE. NEEDLESS TO SAY THE AO SHALL DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 6 IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 15. GROUND NO. 7 RELATES TO LEVY OF INTEREST U/S 234B OF THE ACT. 15.1 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LIABILITY U/S 234B OF THE ACT DOES NOT ARISE SINCE THE REVENUES RECEIVABLE BY THE NON-RESIDENT ASSESSEE ARE SUBJECT TO DEDUCTION OF TAX AT SOURCE. AS PER THE PROVISIONS OF SECTION 208 READ WITH SECTION 209(1)(D) OF THE ACT, ADVANCE TAX PAYABLE HAS TO BE COMPUTED AFTER REDUCING FROM THE ESTIMATED TAX LIABILITY THE AMOUNT OF TAX ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 20 DEDUCTIBLE/ COLLECTIBLE AT SOURCE ON INCOME WHICH IS INCLUDED IN COMPUTING THE ESTIMATED TAX LIABILITY. SUCH BALANCE TAX LIABILITY IS THE ADVANCE TAX PAYABLE UNDER SECTION 208 OF THE ACT. HE SUBMITTED THAT THE WORDS USED IN SECTION 209(L)(D) OF THE ACT ARE 'TAX DEDUCTIBLE AT SOURCE' AND NOT 'TAX DEDUCTED AT SOURCE. HE SUBMITTED THAT THE FINANCE ACT, 2012, W.E.F. 1.4.2012 ADDED PROVISO BELOW SECTION 209(1 )(D) OF THE ACT, WHICH WOULD APPLY ONLY IN A SCENARIO WHERE PERSON RESPONSIBLE FOR DEDUCTING TAX HAS PAID OR CREDITED SUCH INCOME WITHOUT DEDUCTION OF TAX. LD. AR SUBMITTED THAT IN THE PRESENT CASE SINCE THE INCOME HAS BEEN RECEIVED BY THE ASSESSEE AFTER DEDUCTION OF TAX AT SOURCE, THEREFORE, THE AFORESAID PROVISO IS NOT APPLICABLE. REFERRING TO THE DECISION OF THE TRIBUNAL HE SUBMITTED THAT THE TRIBUNAL HAS ALSO HELD THAT PROVISIONS OF SECTION 234B, R.W PROVISO TO SECTION 209(1 )(D) OF THE ACT ARE NOT APPLICABLE SINCE THE DEFAULT IS NOT FOR PAYMENT OF ADVANCE TAX BUT AMOUNTS TO DEFAULT IN DEDUCTION OF TAX AT SOURCE 16. LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE AO/DRP. 16.1 AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 21 PRECEDING ASSESSMENT YEAR. WE FIND THE TRIBUNAL VIDE ITA NO. 62 & 60/DDN/2019 ORDER DATED 24 TH FEBRUARY, 2020 AT PAGE 73 AND 74 OF THE ORDER IN PARA 32 HAS DECIDED THE ISSUE AND ALLOWED THE GROUNDS RAISED BY THE ASSESSEE BY OBSERVING AS UNDER :- 32. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE AO WHILE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE HAS CHARGED INTEREST U/S 234B OF THE ACT AT RS.39.46 CRORES (APPROX.). THE ASSESSEE IS AGGRIEVED BY THE AFORESAID CHARGING OF THE INTEREST. THE CASE OF THE ASSESSEE IS THAT THE TAX DUE ON THE INCOME OF THE ASSESSEE WAS SUBJECTED TO TAX DEDUCTION AT SOURCE. OUR ATTENTION WAS DRAWN TO THE COMPUTATION OF THE TAX LIABILITY IN THE HANDS OF THE ASSESSEE BY THE ASSESSING OFFICER WHICH WAS PLACED ON RECORD. IT WAS POINTED OUT THAT THE ASSESSEE HAD NOT PAID ANY TAXES BY WAY OF ADVANCE TAX AND TOTAL TAX PAYABLE WAS ADJUSTED AGAINST THE TAX DEDUCTED AT SOURCE AT RS.17.54 CRORES (APPROX.). THE QUESTION WHICH ARISES IS THAT WHERE THE LIABILITY TO PAY TAX WAS ON THE PAYER WHICH IN TURN HAD TO DEDUCT TAX AT SOURCE, THEN THE SHORTFALL IF ANY IN THE TAXES DUE CANNOT BE ATTRIBUTED TO THE ASSESSEE AND FOR SUCH DEFAULT, NO INTEREST WAS CHARGEABLE U/S 234B OF THE ACT. ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 22 33. UNDER THE PROVISION OF SECTION 209(1)(D) OF THE ACT, IT IS PROVIDED THAT AGAINST THE INCOME TAX CALCULATED UNDER THE PROVISIONS OF ACT THEN THE AMOUNT OF INCOME TAX WHICH WOULD BE DEDUCTIBLE OR COLLECTIBLE AT SOURCE DURING THE SAID FINANCIAL YEAR FROM ANY INCOME WOULD BE DEDUCTED. 33. THE PROVISIONS OF SECTION 234B OF THE ACT DEALS WITH PAYMENT OF ADVANCE TAX, WHEREAS IN THE PRESENT CASE, THIS DOES NOT AMOUNT TO DEFAULT OF PAYMENT OF ADVANCE TAX, BUT AMOUNTS TO DEFAULT IN DEDUCTION OF TAX AT SOURCE. HENCE, THE PROVISIONS OF SECTION 234B OF THE ACT ARE NOT APPLICABLE AND SO ALSO THE PROVISO UNDER SECTION 209(1)(D) OF THE ACT. THUS, GROUND NO.6 RAISED BY THE ASSESSEE IS ALLOWED. 17. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WE HOLD THAT IN THE INSTANT CASE THE PROVISIONS OF SECTION 234B OF THE ACT ARE NOT APPLICABLE AND SO ALSO THE PROVISIONS U/S 209 (1)(D) OF THE ACT. GROUND NO. 7 OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 18. GROUND NO. 8 RELATES TO LEVY OF INTEREST U/S 234C OF THE ACT. ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 23 18.1 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED RETURN OF INCOME AT RS. 4,42,10,598/- DURING THE YEAR UNDER CONSIDERATION AGAINST WHICH TAX OF RS. 9,99,97,058/- WERE WITHHELD. ACCORDINGLY NO FURTHER TAX WAS PAYABLE BY THE ASSESSEE AND HENCE NO INTEREST U/S 234C OF THE ACT OUGHT TO HAVE BEEN LEVIED UPON IT. HE SUBMITTED THAT THE ASSESSEE FILED AN APPLICATION U/S 154 ON 13 TH OCTOBER, 2020 WHICH IS STILL PENDING WITH THE AO. IN THE SAID APPLICATION IT WAS SPECIFIED THAT NO SHORT FALL HAPPENED ON ACCOUNT OF THE ADVANCE TAX PAYMENT. HE FURTHER SUBMITTED THAT INTEREST U/S 234C IS LEVIABLE ONLY ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME. HE ACCORDINGLY SUBMITTED THAT THE INTEREST U/S 234C OF THE ACT CHARGED ON THE ASSESSED INCOME AMOUNTING TO RS. 235435/-IS INCORRECT AND DESERVES TO BE DELETED. 19. LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE AO. 19.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSESSEE FILED THE RETURN OF INCOME AT RS. 4,42,10,598/- FOR THE YEAR UNDER CONSIDERATION AGAINST WHICH TAX OF RS. 9,99,97,058/- WERE WITHHELD. AS PER PROVISIONS OF SECTION 234C THE INTEREST ON SHORTFALL OF ADVANCE TAX IS TO BE CALCULATED ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME AS HELD IN VARIOUS ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 24 DECISIONS. FURTHER THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE BEFORE THE AO U/S 154 OF THE ACT IS STILL PENDING WITH HIM. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE RESTORE THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DISPOSE OF THE SAID APPLICATION AT THE EARLIEST AND DECIDE THE ISSUE OF LEVY OF INTEREST U/S 234C AS PER LAW. NEEDLESS TO SAY THE AO SHALL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 20. GROUNDS OF APPEAL NO. 9 TO 11 WERE NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE FOR WHICH LD. DR HAS NO OBJECTION. ACCORDINGLY THE ABOVE GROUNDS ARE DISMISSED AS NOT PRESSED. 21. GROUND NO. 12 BEING GENERAL IN NATURE IS DISMISSED. STAY NO. 14/DDN/2020 22. SINCE THE APPEAL OF THE ASSESSEE HAS BEEN DECIDED , VIDE ORDER OF EVEN DATE, THE STAY APPLICATION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS. ACCORDINGLY, THE SAME IS DISMISSED. ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 25 23. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND STAY APPLICATION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 31.12.2020. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST DECEMBER, 2020 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI DATE OF DICTATION 24/12/2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/12/2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 30/12/2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 30/12/2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 31/12/2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 31/12/2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER ITA NO. 31/DDN/2020 STAY NO. 14/DDN/2020 26