ONGC as representative assessee of Noble Denton & Associates Ltd., Dehradun V. DDIT, Dehradun

ITA 3907/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65201 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 24-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: KAVEESH SAYAL
• Keywords: Double taxation relief; Opportunity of being heard
• Section: 143(3)

Judgement Text

I.T.A. NO. 3907/DEL/2011 1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3907/DEL/2011 A.Y. : 2002-03 ONGC AS REPRESENTATIVE ASSESSEE OF VS. DY. DIREC TOR OF INCOME TAX, NOBLE DENTON & ASSOCIATES LTD., INTERNATIONAL TA XATION, C/O DGM (F&A)-I/C, CTD, AAYAKAR BHAVAN, 13-A, OIL AND NATURAL GAS CORPORATION LTD., SUBHASH ROA D, CORPORATE TAX DIVISION, DEHRADUN 248 001 ROOM NO. 244, OLD SECRETARIAT BUILDING, TEL BHAVAN, DEHRADUN 248003 (PAN : AAACO1598A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAVEESH SAYAL, CA DEPARTMENT BY : DR. B.R.R. KUMAR, SR. D.R. O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, DEHRADUN DATED 02.6.2011 PERTAINING TO ASSESSMENT YEAR 2002-03. 2. THE GROUNDS OF APPEAL READ AS UNDER:- I) THE LD. COMMISSIONER OF INCOME TAX (A)-II, DEHRADU N HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCE S OF THE CASE IN UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3)/254 OF THE I.T. ACT , 1961, WHEREBY THE RECEIPTS OF NOBLE DENTON AND ASSOCIATES LTD. FROM OIL AND NATURAL GAS CORPORATIO N LIMITED WERE BROUGHT TO TAX U/S. 44D READ WITH SECTIO N I.T.A. NO. 3907/DEL/2011 2 115A OF THE I.T. ACT, 1961, AND IN NOT DIRECTING TH E ASSESSING OFFICER TO TREAT SUCH RECEIPTS AS EXEMPT FROM TAX IN INDIA. II) WITHOUT PREJUDICE TO THE PRECEDING GROUND, THE LD. COMMISSIONER OF INCOME TAX (A)-II, DEHRADUN HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT DIRECTING THE ASSESSING OFFICER TO BRING THE RECEIPTS OF NOBLE DENTON AND ASSOCIATES LTD. FRO M OIL AND NATURAL GAS CORPORATION LIMITED TO TAX U/S. 44BB OF THE INCOME TAX ACT, 1961. III) THE APPELLANT CRAVES PERMISSION TO ADD, ALTER AND / OR AMEND ANY GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. IN THIS CASE ASSESSEE FILED RETURN OF INCOME OF ` 46445/- U/S. 143(3) OF I.T. ACT, 1961. DURING THE RELEVANT PRE VIOUS YEAR M/S NOBLE DENTON & ASSOCIATES LTD., DUBAI, UAE (NON-RESIDENT) WAS PAID A SUM OF US $ 9400 EQUIVALENT TO ` 4,43,177/- AGAINST WORK ORDER NO. MRBC/DBG/RM&S/ZA/2000 DATED 1.8.2000. ASSESSING OF FICER HELD THAT THE NON-RESIDENT WAS ENGAGED BY ONGC AND THE R ECEIPTS BY THE NON RESIDENT COMPANY WHICH WERE OFFERED FOR TAXATIO N U/S. 44BB OF THE I.T. ACT IS ASSESSABLE AS FEES FOR TECHNICAL SERVIC ES AS PER THE PROVISIONS OF SECTION 44 D READ WITH SECTION 115A OF THE ACT AND NOT U/S. 44BB OF THE ACT. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) HELD THAT AS PER THE TERMS OF THE CONTRACT, THE CONTRACT WAS NOT PROVIDING SERVICES OR FACILITIES AS CONTEMPLATED U/S. 44BB B UT THE ASSESSEE WAS HIRED ONLY FOR CONSULTANCY SERVICES AND TECHNICAL E VALUATION. THUS, LD. I.T.A. NO. 3907/DEL/2011 3 COMMISSIONER OF INCOME TAX (A) HELD THAT THE PROVIS IONS OF SECTION 44D READ WITH SECTION 115A APPLIES AND NOT SECTION 4 4BB. 5. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED B EFORE THE ITAT AND ITAT IN I.T.A. NO. 5101/DEL/2004 (A.Y. 2002-03) VIDE ORDER DATED 09.2.2007 HELD AS UNDER:- 8. WE FIND THAT THE ISSUE BEING IDENTICAL THAT REC EIPT BY THE NON RESIDENT COMPANY IS TO BE TAXED UNDER THE PROVISIONS OF SECTION 44BB OF THE ACT AND NOT U/S. 44D READ WITH SECTION 115A OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN OTHER CASES RELIED ON BY THE APPELLANT. THE ASSESSING OFFICER IS ACCORDING LY DIRECTED TO COMPUTE THE INCOME UNDER THE PROVISIONS OF SECTION 44BB OF THE ACT. 9. IN GROUND NOS. 2 & 3 THE APPELLANT HAS RAISED AN ISSUE THAT THE INCOME IS NOT CHARGEABLE TO TAX IN VIEW O F THE ARTICLE 22 OF DOUBLE TAX AVOIDANCE AGREEMENT BETWEEN INDIA AND UAE. SINCE IT HAS BEEN HELD THA T THE INCOME IS TO BE TAXED U/S. 44D OF THE ACT STILL THE ISSUE IS WHETHER THE SAME IS CHARGED TO TAX IN VIEW OF ARTICLE 22 OF DTAA BETWEEN INDIA AND UAE. THE ASSESSING OFFICER IS DIRECTED TO LOOK INTO THE MAT TER AND TO GIVE A SPECIFIC FINDING AS TO WHETHER THE ASSESSEE IS ENTITLED TO ANY RELIEF UNDER ARTICLE 22 OF DTAA BETWEEN INDIA AND UAE AND IF SO, GRANT THE SAM E AS PER LAW. THE ASSESSEE IS DIRECTED TO PLACE THE RELEVANT MATERIAL IN THIS REGARD. I.T.A. NO. 3907/DEL/2011 4 6. IN ACCORDANCE WITH THE ABOVE DIRECTIONS, ASSESSI NG OFFICER CONSIDERED THE CASE ONCE AGAIN. BEFORE THE ASSESS ING OFFICER ASSESSEE INTER-ALIA SUBMITTED THAT IN THIS CASE TH E ITAT VIDE ITS ORDER DATED 9.2.2007 DIRECTED TO COMPUTE THE INCOME UN DER THE PROVISIONS OF SECTION 44BB. IT WAS FURTHER SUBMITTED THAT THE MATTER HAD BEEN REMANDED BY THE ITAT TO THE ASSESSING OFFICER FOR C ONSIDERING THE OTHER ARGUMENTS REGARDING THE APPLICABILITY OF IND IA-UAE DTAA. ASSESSEE FURTHER SUBMITTED THAT SUBSEQUENTLY THE HONBLE HIGH COURT OF UTTARAKHAND HAS HELD THAT THE RECEIPTS OF THE NO N-RESIDENTS ARE TAXABLE AS FTS. THE HONBLE HIGH COURT OF UTTARAK HAND VIDE ITS ORDER DATED 08.10.2007 IN I.T.A. NO. 121 OF 2007 IN THE CASE OF C.I.T. VS. ONGC AS REPRESENTATIVE ASSESSEE OF M/S NOBLE DENTON AND ASSOCIATES LTD., DUBAI, UAE HAS HELD AS UNDER:- LD. COUNSEL FOR THE PARTIES AGREE THAT THE CONTROVERSY INVOLVED IN THIS APPEAL, ON FACTS AND L AW, IS SQUARELY COVERED AND HAS ALREADY BEEN RESOLVED BY OUR JUDGEMENT DATED 20.9.2007 RENDERRED IN I.T.A. NO . 86 OF 2007, THE C.I.T., DEHRADUN AND OTHER VS. ONG C (AS AGENT OF M/S ROLLS ROYCE PVT. LTD. SINGAPORE). T HIS APPEAL IS DISPOSED OF IN THE TERMS AND CONDITIONS O F THE AFOREMENTIONED JUDGEMENT. ACCORDINGLY, THE APPEAL IS ALLOWED. THE QUESTION IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 7. AS PER THE ORDER DATED 20.9.2007 THE HONBLE HIG H COURT OF UTTARAKHAND IN THE CASE OF C.I.T. VS. ONGC AS REPRE SENTATIVE ASSESSEE OF M/S ROLLS ROYCE PVT. LTD. SINGAPORE HAD HELD THAT THE SERVICES RENDERED UNDER THE CONTRACT ARE TECHNICAL IN NATURE AND ACCORDINGLY, IT I.T.A. NO. 3907/DEL/2011 5 WAS HELD THAT THE SERVICES RENDERED WAS TECHNICAL SERVICES SQUARELY COVERED UNDER EXPLANATION 2 APPENDED TO CLAUSE (VII ) TO SUB-SECTION 1(1) OF SECTION 9 WHICH HAS BEEN ADOPTED BY REFEREN CE UNDER SECTION 44D AND SECTION 115A OF THE ACT. CONSIDERING THE AB OVE, ASSESSING OFFICER HELD THAT KEEPING IN VIEW THE FACT THAT TH E HONBLE HIGH COURT OF UTTARAKHAND HAS UPHELD THE SERVICES RENDERED BY THE ASSESSEE IN THE ASSESSEES OWN CASE AS TECHNICAL SERVICES, THE ASSESSMENT WAS COMPLETED GIVING THE EFFECT OF THE ORDER OF THE HON BLE HIGH COURT, UTTARAKHAND. ACCORDINGLY, ASSESSING OFFICER HEL D THAT THE REVENUE EARNED BY THE ASSESSEE TO THE EXTENT OF ` 443177/ - UNDER THE CONTRACT ARE BROUGHT TO TAX U/S. 44D READ WITH SECTION 115A OF THE ACT. 8. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) CONSIDERING THAT THE HONBLE JURISDICTIONAL HIGH CO URT HAD ADJUDICATED ON THIS ISSUE IN FAVOUR OF THE REVENUE AFFIRMED TH E ASSESSING OFFICERS ORDER. 9. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE ME. 10. I HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. I FIND THAT ON THE ISSUE AS TO WHETHER SECTION 44BB APPLIES OR SECTION 44D READ W ITH SECTION 115A, THE HONBLE HIGH COURT OF UTTARAKHAND AS MENTIONED ABOVE HAS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND AGA INST THE ASSESSEE. IN THAT VIEW OF THE MATTER, IT CANNOT BE SAID THAT T HERE WAS ANY ERROR IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) W HICH FOLLOWED THE RATIO FROM THE HONBLE JURISDICTIONAL HIGH COU RT AS ABOVE. 11. HOWEVER, IT WAS ALSO NOTED THAT ASSESSEE HAS SU BMITTED BEFORE THE TRIBUNAL THAT LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO TREAT SUCH RECE IPTS AS EXEMPT FROM I.T.A. NO. 3907/DEL/2011 6 TAX IN INDIA. IN THIS REGARD, I FIND THAT THE T RIBUNAL IN ORDER DATED 09.2.2007 HAS NOTED THAT THE ASSESSEES CONTENTION IS THAT THE INCOME IS NOT CHARGEABLE TO TAX IN VIEW OF THE ARTICLE 22 OF DOUBLE TAX AVOIDANCE AGREEMENT BETWEEN INDIA AND UAE. THE TRI BUNAL HAS ALSO NOTED THAT THIS ISSUE OF CHARGEABILITY OF TAX IN VIEW OF ARTICLE 22 OF DTAA BETWEEN INDIA AND UAE HAS TO BE LOOKED AFTER BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS DIRECTED TO LO OK INTO THE MATTER TO GIVE A SPECIFIC FINDING AS TO WHETHER THE ASSESSEE IS ENTITLED TO RELIEF UNDER ARTICLE 22 OF DTAA BETWEEN INDIA AND UAE AND IF SO GRANTED THE SAME AS PER LAW. I FIND THAT THE ASSESSING OFFICER HAS NOT GIVEN A FINDING ON THIS ISSUE. 12. UNDOUBTEDLY, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT THE SERVICES RENDERED UNDER THE CONTRACT ARE TECHN ICAL IN NATURE AND ACCORDINGLY, THE SERVICE RENDERED WAS TECHNICAL S ERVICE SQUARELY COVERED UNDER EXPLANATION 2 APPENDED TO CLAUSE (VII ) TO SEC. 1(1) OF SEC. 9 WHICH HAS BEEN ADOPTED BY REFERENCE U/S. 44D AND SECTION 115A OF THE ACT. HOWEVER, THE LD. COUNSEL OF THE ASSES SEE HAS BROUGHT TO MY NOTICE THAT HONBLE JURISDICTIONAL HIGH COURT W AS NOT CONSIDERING THE ISSUE AS TO WHETHER THE ASSESSEE WAS ENTITLED T O RELIEF UNDER ARTICLE 22 OF THE DTAA BETWEEN INDIA AND UAE. LD. COUNSE L OF ASSESSEE FURTHER BROUGHT TO MY NOTICE THAT THIS ISSUE WAS ALS O EARLIER REMITTED BY THE TRIBUNAL TO THE FILE OF THE ASSESSING OFFICE R AND ASSESSING OFFICER HAS NOT CONSIDERED THE ABOVE. 13. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. I FIND THAT UNDOUBTEDLY HONBLE JURISD ICTIONAL HIGH COURT HAS HELD THAT INCOME IN THIS CASE IS CHARGEABLE U/S. 44D READ WITH SECTION 115A OF THE ACT. HOWEVER, I ALSO NOTE TH AT TRIBUNAL IN EARLIER I.T.A. NO. 3907/DEL/2011 7 ROUND REMITTED THE ISSUE TO THE FILE OF THE ASSES SING OFFICER TO GIVE THE FINDING AS TO WHETHER THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER DTAA BETWEEN THE INDIA AND UAE. IN THIS VIEW OF TH E MATTER, I FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE AS SESSEES COUNSEL THAT THE MATTER NEEDS TO BE REFERRED BACK TO THE A SSESSING OFFICER TO CONSIDER THE SAME. ACCORDINGLY, I REMIT THE ISSUE T O THE FILE OF THE ASSESSING OFFICER TO LOOK INTO MATTER AND GIVE A FINDING AS TO WHETHER THE ASSESSEE IS ENTITLED FOR RELIEF UNDER ARTICLE 22 OF THE DTAA AND IF SO, GRANT THE SAME, AS PER LAW. NEEDLESS TO ADD T HE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07/8/2012. SD/- [SHAMIM YAHYA] ACCOUNTANT MEMBER DATE: 07/8/2012 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES