Triton Holding Ltd., Noida V. DCIT (International Taxation),Circle-2, Dehradun

ITA 4646/DEL/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9063 (ITAT-DEHRADUN)
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 17-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Set aside
• Section: 28; 44BB; 43; 115A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN Before Sh. Amit Shukla, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 4646/Del/2017 : Asstt. Year : 2012-13 Triton Holding Ltd., C/o Nangia & Co., A-109, Sector 136, Noida-201304 Vs DCIT(Intl. Taxation), Circle-2, Dehradun-248001 (APPELLANT) (RESPONDENT) PAN No. AABCT5272D Assessee by : Sh. Amit Arora, Adv. Revenue by : Sh. N. S. Jangpangi, CIT DR Date of Hearing: 09.11.2021 Date of Pronouncement: 10.02.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of ld. CIT(A)-2, Noida dated 09.05.2017. 2. Following grounds have been raised by the assessee: “1. On the facts and circumstances of the case, the ld. CIT(A) has erred in holding that the receipts on account of reimbursements of expenses (fuel recharge) amounting to Rs.7,74,15,213/- are includible in the revenue chargeable to tax u/s 44BB of the Income Tax Act, 1961 as opposed to the claim of appellant that the same being not chargeable to tax.” Reimbursement of expenses: 3. The assessee company is engaged in the business of providing offshore drilling services in relation to exploration and exploitation of mineral oil and gas in India. ITA No. 4646/Del/2017 Triton Holding Ltd. 2 4. Brief facts of the case are that the assessee has shown receipts on account of reimbursement of expenses of Rs.7,74,15,213/- and claimed that the same cannot give rise to income for taxation purposes. The Assessing Officer has held that since this particular receipt is on account of reimbursement of expenses on fuel charge, the same are to be included under the gross receipts chargeable u/s 44BB of the Income Tax Act, 1961. 5. The issue of chargeability of reimbursement u/s 44BB has now been settled in favour of the revenue by the judgment of Hon’ble Uttrakhand High Court in the case of CIT Vs. Halliburton Offshore Services Inc. 300 ITR 265. 6. It was held as under: “ To answer this question we directly go to section 44BB which reads as under: "Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils.—(1) Notwithstanding anything to the contrary contained in sections 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 extraction or production of, mineral oils, a sum equal to ten per cent 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': Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. (2) The amounts referred to in sub-section (1) shall be the following, namely:— ITA No. 4646/Del/2017 Triton Holding Ltd. 3 (a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils in India; and (b) the amount received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India. (3) Notwithstanding anything contained in sub-section (1), an assessee may claim lower profits and gains than the profits and gains specified in that sub-section, if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB, and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee under sub-section (3) of section 143 and determine the sum payable by, or refundable to, the assessee. Explanation—For the purpose of this section,— (i) 'plant' includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business; (ii) 'mineral oil' includes petroleum and natural gas." 5. Section 44BB provides that the deemed profits and gains under sub- section (1) shall be at the rate of 10 per cent of the aggregate amount specified in sub-section (2). We proceed to analyze sub-section (2). Clause (a) of sub-section (2) refers to the amounts, (A) paid to the assessee (whether in or out of India) on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India, and (B) payable to the assessee (whether in or out of India) on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or ITA No. 4646/Del/2017 Triton Holding Ltd. 4 extraction or production of, mineral oils in India. Clause (b) of sub- section (2) refers to the amounts, (A) received by assessee in India on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India, and (B) deemed to be received by the assessee in India on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India. 6. Thus, it is clear from the perusal of section 44BB that all the amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive. This amount is the basis of determination of deemed profits and gains of the assessee at the rate of 10 per cent. Therefore, in our view, the Tribunal fell into error in not appreciating the difference between the amount and the income. Amount paid or received refers to the total payment to the assessee or payable to the assessee or deemed to be received by the assessee, whereas income has been defined under section 2(24) of the Income-tax Act and section 5 and section 9 deal with the income and accrued income and deemed income. Section 4 is the charging section of the Income-tax Act and definition as well as the incomes referred in sections 5 and 9 are for the purpose of imposing the income- tax under section 143(3). Section 44BB is a complete code in itself. It provides by a legal fiction to be the profits and gains of the non-resident assessee engaged in the business of oil exploration at the rate of 10 per cent of the aggregate amount specified in sub-section (2). It is not in dispute that the amount has been received by the assessee-company. Therefore, the Assessing Officer added the said amount which was received by the non-resident company rendering services as per provisions of section 44BB to the ONGC and imposed the income-tax thereon. 7. Accordingly, for the reasons recorded above, we set aside the judgment and order of the Tribunal and order of the CIT(A). The order of Assessing Officer is confirmed. The question is answered in favour of revenue and against the assessee.” ITA No. 4646/Del/2017 Triton Holding Ltd. 5 7. Since, the decision of the revenue authorities is in consonance with the judgment of the Hon’ble Jurisdictional High Court as mentioned above, we decline to interfere with the order of the ld. CIT(A). 8. In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 10/02/2022. Sd/- Sd/- (Amit Shukla) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 10/02/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. 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