WesternGeco Interational Ltd., Gurgaon V. ADIT, Dehradun

ITA 4906/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74049 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 01-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Keywords: Double taxation relief; Deemed to accrue or arise in india; Permanent establishment
• Section: 143(3); 5(2); 234B; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H: NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO.4906/DEL/ 2012 (ASSESSMENT YEAR :2009-10) WESTERNGECO INTERATIONAL LTD. VS. ADIT 14 TH FLOOR, TOWER C, INTERNATIONAL TAXATION, BUILDING NO.10, 13A, SUBHASH ROAD DLF CYBER CITY, PHASE-11, GURGAON. DEHRADUN. PAN:AAACW4324J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NAGESHWAR RAO, ADV. REVENUE BY : SHRI SANJEEV SHARMA, CIT. DR. ORDER PER J. S. REDDY, AM: THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE I NCOME TAX ACT, 1961. THE FACTS ARE BROUGHT OUT AT PARA 2, 3 AND 4 OF THE DRA FT ASSESSMENT ORDER WHICH IS EXTRACTED FOR READY REFERENCE: 2. THE ASSESSEE IN ITS RETURN OF INCOME HAS ADMITT ED THAT THERE IS A PERMANENT ESTABLISHMENT IN INDIA. (PAGE 1 OF THE RETURN IN ITR -6). THE ASSESSEE NRC, THEREFORE, HAS ADMITTED HAVING A PERMANENT ESTABLISHMENT IN INDIA AS PER TH E RETURN OF INCOME ITSELF. THE ASSESSEE HAS NEITHER CLAIMED ANY BENEFIT UNDER THE DTAA NOR HAS FILED ANY TAX RESIDENCY CERT IFICATE AND THEREFORE, THE CASE IS TO BE DISCUSSED AND ASSESSED UNDER THE PROVISIONS OF THE INDIAN INCOME TAX ACT. ITA NO.4906 /DEL/2012 2 3. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE , HAS OFFERED THE REVENUES FROM THE FOLLOWING CONTRACTS: CONTRACTS WITH OIL & NATURAL GAS CORPORATION LIMITED CONTRACT NO: MR/ WOB/MM/QMV/SC/41/2006/EB/2013 CONTRACT NO: MR/WOB/MM/GP/QML/SC/08/2006/EB-2109 CONTRACT NO: MR/WOB/MM/GP/QML/SC/08/2006/EB-2132 CONTRACT NO: 9010005356 CONTRACT NO: AMT/IMP/E-1/SCON/2D-3D/2734/WG/05-06 RELIANCE INDUSTRIES LIMITED CONTACT NO.OGI-3588925 CONTACT NO.OGI-3606488 CONTACT NO.OGI-3621135 CONTACT NO.OGF-3623954 ESSAR CONTACT NO.2007/ESSR/CB/ON/3/DP/L/001 PRIZE PETROLEUM CONTACT NO.PPCL-JAL/WG/2D-SD/2008/01 CAIRN CONTACT NO.1000000381-3D/PSTM/SEISMIC DATA HARDY CONTACT NO.CY-OS-2/052/3D/SEISMIC DATA RE-PROCESSIN G ENI CONTACT NO.058/AN?PROC?2007-3D/SEISMIC DATA PROCESS ING SERVICES 4. THE ABOVE CONTRACTS HAVE BEEN CONTINUING SINCE P REVIOUS YEAR IN RESPECT OF MOST OF THEM AND IN RESPECT OF N EW CONTRACTS EXECUTED FOR WHICH REVENUES HAVE BEEN OFFERED DURIN G THIS YEAR ARE ALSO HAVING SIMILAR NATURE OF SCOPE OF WORK. TH E SCOPE OF WORK OF THE ABOVE CONTRACTS INCLUDES PROCESSING OF PD LINE DATA SURVEY LONG TERM LEASE OF MARINE TECHNOLOGY. HIRING OF Q. MARINE VESSEL WITH THE HELP OF ITS PERSONNEL AND EQ UIPMENT, SEISMIC DATA ACQUISITION AND PROCESSING, HIRING OF VESSEL AND TECHNOLOGY IN CONTRACTS WITH RIL & ONGC AND UNDERTA KES SEISMIC DATA PROCESSING SERVICES FOR ESSAR. THE ASS ESSEE WAS ITA NO.4906 /DEL/2012 3 REQUESTED TO EXPLAIN WHY ALL THE RECEIPTS FROM THES E CONTRACTS AMOUNTING TO RS.684,33,36,220/- SHOULD NOT BE TAXED AS FEE FOR TECHNICAL SERVICES AND CLAIM OF SECTION 44BB BE DIS ALLOWED. 2. THE ASSESSEE CARRIED THE MATTER BEFORE THE DRP W ITHOUT SUCCESS. THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER HAS FOLLOWED THE DIRECTIONS OF THE DRP AND HELD AS FOLLOWS: 3. THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL U/S 144C(5) OF I. T. ACT 1961 VIDE ORDERS DATED 27.06.2 012 HAVE BEEN RECEIVED IN THIS OFFICE ON 05.07.2012. COPY OF ORDER DATED 27.06.2012 IS ENCLOSED AS ANNEXURE A. THE DRP HAS OBSERVED/ DIRECTED AS UNDER: WITH REGARD TO OBJECTION NO.1, THE DRP HAS OBSERVED / DIRECTED IN PARA 3.1 (III) OF THE ORDER AS UNDER:- THEREFOR E PROVISIONS OF SECTION 9(1) (VII) (C) WOULD APPLY TO THE INCOME RE CEIVED BY THE ASSESSEE FROM THESE THREE NON-RESIDENT COMPANIES. H ERE IT MAY BE ALSO BE POINTED OUT THAT SEC 44DA AND SEC. 115A ONLY LAY DOWN, RESPECTIVELY, THE MANNER OF COMPUTATION OF IN COME OF VARIOUS TYPES INCLUDING FEES FOR TECHNICAL SERVICES IF SUCH INCOME IS RECEIVED FROM GOVERNMENT OR AN INDIAN CONCERN AND THE RATE OF TAX APPLICABLE ON SUCH INCOME. THE CHARGEABILITY OF THE INCOME OF THE NATURE OF FEES FOR TECHNICAL S ERVICES RECEIVED FROM A NON RESIDENT FROM A NON-RESIDENT U/ S 44DA OR SEC.115A, THE MANNER OF COMPUTATION OF SUCH INCOME AND THE RATE OF TAXABLE APPLICABLE ON SUCH INCOME WOULD BE GOVERNED BY THE NORMAL PROVISIONS LAID DOWN IN THE ACT. THUS THE INCOME RECEIVED BY THE ASSESSEE FROM THE THREE NON- RESIDE NT COMPANIES IN QUESTION WILL BE TAXED AS FEES FOR TECHNICAL SER VICES U/S 9(1) (VII) (C) SUBJECT TO THE CONDITIONS LAID DOWN THERE IN. THE ASSESSING OFFICER IS THEREFORE DIRECTED THESE THREE COMPANIES U/S 9 (1) (VII) (C) AND TAX IT AT THE NORMAL RATES APPLICABLE TO THE INCOME OF A FOREIGN COMPANY. IF THE PROVISIONS OF S EC. 9 (1) (VII) (C) DO NOT APPLY DUE TO NON-FULFILLMENT OF CO NDITIONS LAID DOWN THEREIN, THE ASSESSING OFFICER SHALL TAX THE I NCOME FROM THESE THREE NON- RESIDENT COMPANIES U/S 44BB. ITA NO.4906 /DEL/2012 4 ACCORDINGLY IN VIEW OF THE ABOVE DIRECTIONS DRP TH E INCOME OF THE ASSESSEE FROM CONTRACTS EXECUTED WITH THESE THREE COMPANIES ARE HELD TAXABLE U/S 9 (1) (VII) (C) OF I . T. ACT AS THE CONDITIONS LAID DOWN IN SAID SECTION ARE FULFILLED. ACCORDINGLY GROSS RECEIPTS ARE TAXED AS PER PROVISIONS OF SEC. 9 (1) (VII) (C) OF THE I. T. ACT AND TAXED AT NORMAL RATE APPLICABL E TO FOREIGN COMPANIES. 3. REGARDING BRINGING TAX OF THE AMOUNT OF MOBILIZA TION/DEMOBILIZATION CHARGES ON ACTIVITIES ATTRIBUTABLE TO MOBILIZATION UNDER TAKEN OUTSIDE THE TERRITORIAL WATER OF INDIA. THE ASSESSING OFFICER H ELD AS FOLLOWS: WITH REGARD TO OBJECTION NO.2 TO TAX THE AMOUNT OF MOBILIZATION/DEMOBILIZATION CHARGES EVEN ON THOSE A CTIVITIES OF MOBILIZATION/DEMOBILIZATION CHARGES WHICH ARE UNDER TAKEN OUTSIDE THE TERRITORIAL WATERS OF INDIA, THE DRP HA S OBSERVED/ DIRECTED IN PARA 3.2 OF THE ORDER AS UNDER: THE IS SUE WAS ALSO INVOLVED IN THE EARLIER ASSESSMENT YEAR AND THE OBJ ECTIONS ON THIS POINT WERE CONSIDERED BY THIS PANEL FOR THOSE YEARS AND WERE NOT ACCEPTED. KEEPING IN VIEW OF THE ABOVE TH E STAND TAKEN BY THIS PANEL IN EARLIER YEARS, THE PROPOSAL TO TAX THE MOBILIZATION/DEMOBILIZATION CHARGES IS UPHELD AND T HE OBJECTION MADE BY THE ASSESSEE IS REJECTED. 4. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL ON THE FOLLOWING GROUNDS: 1. THAT THE DIRECTION OF HONBLE DRP AND ASSESSMEN T ORDER PASSED BY LD. ASSESSING OFFICER U/ S 143(3) READ WI TH SECTION 144C(13) OF THE ACT, PURSUANT TO THOSE DIRECTIONS A RE BAD IN LAW IN AS MUCH AS FAILED TO APPRECIATE THE FACTS INVOLV ED AND THE LAW THEREON, AND THUS LIABLE TO BE QUASHED. DISMISSAL OF CLAIM OF THE APPELLANT FOR TAXABILITY OF SEISMIC DATA ACQUISITION AND PROCESSING SERVICES. ITA NO.4906 /DEL/2012 5 2. THE LD. AR HAS ERRED ON FACTS AND IN LAW IN DISM ISSING THE CLAIM OF THE APPELLANT THAT THE INCOME BEING CONSID ERATION AMOUNTING TO INR 6,780,198,253 RECEIVED FROM BUSINE SS OF RENDERING SEISMIC DATA ACQUISITION AND PROCESSING S ERVICES ARE IN CONNECTION WITH PROSPECTING FOR, EXTRACTION OR P RODUCTION OF MINERAL OIL TO CUSTOMERS AND SHOULD BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44BB OF THE ACT. TAXABILITY OF REVENUES FROM SEISMIC DATA ACQUISITIO N AND PROCESSING SERVICES AS FEES FOR TECHNICAL SERVICES 3. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN ASSESSING REVENUES RECEIVED BY THE APPELLANT AMO UNTING TO INR 6,780,198,253 FOR PROVISION OF SEISMIC DATA ACQ UISITION AND PROCESSING SERVICES AS FEES FOR TECHNICAL SERVI CES ARE IN CONNECTION WITH THE PROSPECTING FOR AND/ OR EXTRACT ION OR PRODUCTION OF MINERAL OIL SUBJECT TO TAX U/S 44BB O F THE ACT. 4. THE HONBLE DRP HAS ERRED IN FACTS AND IN LAW IN DIRECTING THAT GROSS RECEIPTS OF THE APPELLANT FROM THREE NON- RESIDENT COMPANIES ARE LIABLE TO TAX AT NORMAL TAX RATE APPLICABLE FOR FOREIGN COMPANIES, WITHOUT APPRECIAT ING THAT SUCH INCOME CAN BE TAXED ONLY U/S 44BB OF THE ACT, SINCE SERVICES ARE RENDERED BY THE APPELLANT IN CONNECTIO N WITH THE PROSPECTING FOR AND/ OR EXTRACTION OR PRODUCTION OF MINERAL OIL IN INDIA AND THE REVENUES ARE NOT RECEIVED FROM GO VERNMENT OR AN INDIAN CONCERN; ADDITION QUA MOBILIZATION/ DEMOBILIZATION RECEIPTS ATTRIBUTABLE TO DISTANCE TRAVELED OUTSIDE INDIA 5. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN TAXING THE RECEIPTS AMOUNTING TO INR 470,561,011 PERTAINING TO REVENUES RECEIVED BY THE APPELLANT ON ACCOUNT OF MOBILIZATION/DEMOBILIZATION ACTIVITIES ATTRIBUTABLE TO DISTANCE TRAVELED OUTSIDE INDIA AS FEES FOR TECHNICAL SERVIC ES WITHOUT APPRECIATING THAT SUCH ACTIVITIES ARE CARRIED OUTSI DE INDIA AND NOT SUBJECT TO TAX OF INDIA. ITA NO.4906 /DEL/2012 6 ADDITION QUA MOBILIZATION/ DEMOBILIZATION RECEIPTS ATTRIBUTABLE TO DISTANCE TRAVELED IN INDIA TAXABLE FTS 6. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN TAXING THE RECEIPTS AMOUNTING TO INR 63,137,967 PERTAINING TO REVENUES RECEIVED BY THE APPELLANT ON ACCOUNT OF MOBILIZATION/DEMOBILIZATION ACTIVITIES ATTRIBUTABLE TO DISTANCE TRAVELED OUTSIDE INDIA AS FEES FOR TECHNICAL SERVIC ES U/S 9(1) (VII) OF THE ACT, WITHOUT APPRECIATING THAT SUCH REVENUES ARE IN CONNECTION WITH THE PROSPECTING FOR, EXTRACTION OF PRODUCTION OF MINERAL OIL AND SUBJECT TO TAX UNDER LEVY OF INTEREST 7. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN LEVYING INTEREST U/S 234B AND SECTION 234C OF TH E ACT AMOUNTING TO INR 277,546,000 AND INR 10,640,069 RESPECTIVELY DISREGARDING THE FACT THAT APPELLANT I S A NON- RESIDENT ASSESSEE AND ITS ENTIRE REVENUES/ RECEIPTS ARE SUBJECT TO TAX WITHHOLDING IN INDIA U/S 195 OF THE ACT AND THE APPELLANT HAS NO LIABILITY TO PAY ADVANCE TAX U/S 209(1) (D) OF THE ACT. 8. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE APPELLANT HAS CONCEALED THE PAR TICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS AND INIT IATING PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT. 9. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE APPELLANT IS REQUIRED TO COMPLY WITH THE PROVISIONS OF SECTION 44AB OF THE ACT BY FURNISHING THE AUDITED ACCOUNTS BY THE SPECIFIED DATE AND INITIATING PENAL TY PROCEEDINGS U/S 271B OF THE ACT. SHORT GRANT OF CREDIT FOR TAXES DEDUCTED AS SOURCE 10. THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AN D IN LAW IN GRANTING THE CREDIT OF TAXES DEDUCTED AT SOURCE (TDS) ONLY TO THE EXTENT OF INR 81,334,703 AS AGAINST CREDIT OF T DS AMOUNTING TO INR 361,969,036 CLAIMED BY THE APPELLA NT IN ITS ITA NO.4906 /DEL/2012 7 RETURN OF INCOME FOR THE SUBJECT AY: THEREBY GRANTI NG A SHORT CREDIT OF TDS TO THE EXTENT OF INR 280,634,333. 5. GROUND NO.1TO 5 ARE ON ISSUE WHETHER THE INCOME OF THE ASSESSEE HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SEC.44BB OF THE ACT OR BROUGHT TO TAX U/S 9 (1) (VII). THE ASSESSING OFFIC ER APPLIED PROVISIONS OF SECTION 44AB AND SECTION 115A (1) (B). ADMITTEDLY T HIS LEGAL ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT O F DELHI B BENCH OF THE TRIBUNAL IN THE CASE OF CGG VERITAS SERVICES, SA VS . ADIT INTERNATIONAL TAXATION DEHRADUN (2012) REPORTED IN 18 TAXMANN.COM 30 (DEL) WHEREIN IT IS HELD AS FOLLOWS : SECTION 9, READ WITH SECTION 44BB AND 115A, OF THE INCOME- TAX ACT, 1961- INCOME DEEMED TO ACCRUE OR ARISE I N INDIA- ASSESSMENT YEAR 2007-08- WHETHER IN ORDER TO FALL U NDER EXCLUSIONARY CLAUSE OF EXPLANATION 2 TO SECTION 9 ( 1) (VII) ACTIVITIES OF MINING OR A PROJECT SIMILAR TO THAT S HOULD BE UNDERTAKEN BY ASSESSEE HIMSELF HELD, YES- WHETHER SERVICES RENDERED IN CONNECTION WITH CANNOT BE READ AS UNDERTAKEN BY RECEIPIENT AND, THEREFORE, IN A CAS E WHERE AN ASSESSEE IS ENGAGED IN BUSINESS OF PROVIDING SERVIC ES OR FACILITIES IN CONNECTION WITH PROSPECTING FOR OR EX TRACTION OR PRODUCTION OF MINERAL OIL, SUCH SERVICES OR FACILIT IES CANNOT BE EQUATED TO MINING OR LIKE PROJECTS UNDERTAKEN BY ASSESSEE HIMSELF-HELD, YES WHETHER, THEREFORE, ACTIVITIES UNDERTAKEN BY ASSESSEE OF SEISMIC SURVEY, PROCESSING OF 3D SEISMI C DATA AND SUBMISSION OF ITS REPORT IN DESIRED MEDIA AS ALSO P ROVIDING SERVICES OF PERSONNEL WILL CLEARLY FALL UNDER DEFIN ITION OF FEE FOR TECHNICAL SERVICES COVERED IN FIRST LIMB OF EX PLANATION 2 TO SECTION 9(1) (VII) HELD, YES (IN FAVOUR OF REVENU E) ITA NO.4906 /DEL/2012 8 SECTION 44BB, READ WITH SECTION 115A, OF THE INCOME TAX ACT,1961-MINERAL OIL, BUSINESS FOR PROSPECTING/ EXP LORATION, ETC., IN CASE OF, NON RESIDENT ASSESSMENT YEAR 20 07-08 WHETHER PROVISO TO SECTION 44BB(1) CONVEYS NO MEANI NG INDEPENDENT OF SECTION 44BB(1) AND, HENCE, IT CANNO T BE CONSTRUED AS AN INDEPENDENT PROVISION HELD, YES W HETHER IN CASE OF A NON-RESIDENT ASSESSEE WHERE PROVISIO0NS O F SECTION 42 OR SECTION 44D OR 44DA OR SECTION 115A OR SECTION 2 93A ARE APPLICABLE FOR PURPOSES OF COMPUTING PROFITS OR GAI NS OR ANY OTHER INCOME REFERRED TO IN THOSE SECTIONS, PROVISO TO SECTION 44BB(1) WILL BE PRESSED INTO SERVICE AND, ACCORDING LY, PROVISIONS OF SECTION 44BB(1) WOULD NOT APPLY-HELD, YES- WHETHER WITH EFFECT FROM 1.4.2004 FEE FOR TECHNICAL SERVICES, WHICH IS NOT CONNECTED WITH PERMANENT ESTABLISHMENT OF BUSINESS OR FIXED PLACE OF PROFESSION IN INDIA, WIL L BE TAXABLE U/S 115A(1) (B) HELD, YES, (IN FAVOUR OF REVENUE) SECTION 115A, READ WITH SECTION 44BB, OF THE INCOME TAX ACT, 1961-FOREIGN COMPANIES TAX ON DIVIDENDS, ROYALTIES , ETC.- ASSESSEE, A FRENCH COMPANY ENGAGED IN PROVIDING GE OLOGICAL AND GEOPHYSICAL SERVICES FOR EXPLORING MINING POTEN TIAL, DERIVED INCOME IN INDIA FROM EXECUTION OF EXPLORATI ON PROJECTS FOR PROSPECTING MINERAL OIL DEPOSITS IN THE OFFSHOR E WATERS UNDER FOUR CONTRACTS WITH ONGC AND ONE CONTRACT WITH ENI, U.K PROJECTS INVOLVED CONDUCTING SEISMIC SURVEY OF LARG E AREA OF SEA BED AND ACQUISITION OF SEISMIC DATA- ASSESSEE FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR IN STATUS OF NO N-RESIDENT, DECLARING AN INCOME U/S 44BB(1) ASSESSING OFFICER, HOWEVER, ASSESSED RECEIPTS U/S 115A READ WITH SECTION 9(1) ( VII)-WHETHER, ACTIVITIES UNDERTAKEN BY ASSESSEE UNDER AFORESAID C ONTRACTS WOULD FALL UNDER DEFINITION OF FEE FOR TECHNICAL S ERVICES COVERED IN FIRST LIMB OF EXPLANATION2 TO SECTION 9( 1) (VII) HELD, YES- WHETHER SINCE ADMITTEDLY, RECEIPTS WERE NOT CO NNECTED WITH PE IN INDIA FEE FOR TECHNICAL SERVICES RENDERED IN CONNECTION WITH PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OIL WOULD BE ASSESSABLE U/S 115A AND, THUS, PROVISIONS OF SECTION 44BB(1) WOULD NOT APPLY-HELD, YES (IN FAVOUR OF REV ENUE) ITA NO.4906 /DEL/2012 9 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT THE ISSUE WHETHER THE ASSESSEE HAS A P.E. IN INDIA OR NOT HAS TO BE VERIFIED AND FOR THAT REASON THE MATTER SHOULD BE REMITTED BACK TO THE ASSESSING OFFICER. MR. NAGESHWAR RAO POINTED OUT THAT TO APPLY SECTION 44A D ALSO, HAVING PERMANENT ESTABLISHMENT IS A MUST. HE FURTHER SUBMI TTED THAT THE ASSESSING OFFICER HAS RECORDED THAT THE ASSESSEE HAS A PERMAN ENT ESTABLISHMENT. 7. WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE WHETHER THE ASSESSEE HAS A PERMANENT ESTABLISHMENT OR NOT, IN INDIA, D OES NOT ARISE IN THE APPEAL BEFORE US, FOR THE REASON NEITHER THE ASSESSING OFF ICER NOR THE DRP DISPUTED THE CLAIM OF THE ASSESSEE THAT IT HAS A P.E. IN IN DIA. UNDER THE CIRCUMSTANCES WE SEE NO MERIT IN THE CONTENTIONS OF THE LD. DEPAR TMENTAL REPRESENTATIVE THAT A FRESH ISSUE HAS TO BE RAISED ON THE ISSUE OF P.E. AND THAT IT HAS TO BE SENT FOR CONSIDERATION TO THE ASSESSING OFFICER. WE ALSO FIND THAT THE C BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FO R A. Y. 2007-08 IN ITA NO.5977/DEL/ 2010 ORDER DATED 4 TH MAY, 2012 FOLLOWED THE DECISION IN THE CASE OF CGG VERITAS SERVICES, SA VS. ADIT AND DIREC TED THE ASSESSING OFFICER ACCORDINGLY. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE. ON THESE FACTS AND CIRCUMSTANCES, WE RESPECTFULLY FOLL OW THE ORDER OF THE COORDINATE BENCH IN THE ASSESSEES OWN CASE AND ALL OW GROUND NO.1 TO 4. ITA NO.4906 /DEL/2012 10 8. ON GROUND NO.5 AND 6 THE SUBMISSIONS OF LD. COUN SEL FOR THE ASSESSEE ARE AS FOLLOWS. 2. TAXABILITY OF MOBILIZATION/DEMOBILIZATION REVE NUES NATURE OF MOBILIZATION/DEMOBILIZATION ACTIVITIES MOBILIZATION/DEMOBILIZATION ACTIVITIES INCLUDE ALL THE ACTIVITIES INVOLVED IN MOVEMENT OF EQUIPMENT FROM ONE OPERATING AREA TO ANOTHER. IN T HE OIL AND GAS SECTOR AS A NORMAL PRACTICE, CUSTOMERS GENERALLY COMPENSATE A CONTRACT OR FOR SUCH MOVEMENTS KNOWN AS MOBILIZASTION/DEMOBILIZATION FEE. FURTHER, WHEN DR ILLING EQUIPMENT IS MOBILIZED FROM OUTSIDE INDIA AND THE SAME IS DEMOBILIZED FROM INDI A, SUBSTANTIAL PORTION OF OPERATIONS ARE ACTUALLY PERFORMED OUTSIDE INDIA. DEFINITION OF THE TERM 'INDIA' THE DEFINITION OF 'INDIA' FOR THE PURPOSES OF LEVYI NG INCOME TAX INCLUDES EXCLUSIVE ECONOMIC ZONES OF INDIA AND THEREFORE THE PROVISION S OF THE ACT EXTENDS TO 200 NAUTICAL MILES FROM THE INDIAN COAST. TAXABILITY OF MOBILIZATION/ DEMOBILIZATION ACTIVITY IN INDIA SECTION 4 OF THE ACT IS THE CHARGING SECTION. SECTI ON 5(2) PROVIDES FOR THE SCOPE OF TOTAL INCOME OF A NON-RESIDENT PERSON AS PER WHICH THE TO TAL INCOME OF A NON-RESIDENT IN ANY PREVIOUS YEAR INCLUDES ALL INCOME FROM WHATEVER SOU RCE DERIVED WHICH: IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA; OR ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE IN INDIA. DURING AY 2009-10, WGIL HAS RECEIVED REVENUES AMOUN TING TO RS 53.37 CRORES IN RESPECT OF MOBILIZATION/ DEMOBILIZATION OF VESSELS. PAYMENT IN RESPECT OF THE MOBILIZATION/ DEMOBILIZATION WAS RECEIVED BY WGIL OUTSIDE INDIA. OUT OF THE SAME, WGIL HAS OFFERED RS 6.31 CRORES TO TAX ON ACCOUNT OF MOBILIZATION/ D EMOBILIZATION ACTIVITIES ATTRIBUTABLE TO INDIAN OPERATIONS FOR THE SUBJECT AY UNDER SECTION 44 (BB) OF THE ACT. HOWEVER, REVENUES AMOUNTING TO RS 47.06 CRORES WERE NOT OFFE RED TO TAX BY WGIL AS THE SAME WERE ATTRIBUTABLE TO ACTIVITY/ DISTANCE TRAVELLED OUTSID E INDIA. IT WAS CLARIFIED THAT THE MOBILIZATION/ DEMOBILIZAT ION CONSIDERATION IS AGREED AND MENTIONED SEPARATELY IN THE CONTRACT AS IT IS SEPAR ATE FROM THE CONSIDERATION FOR SERVICES FOR EXPLORATION, WHICH ARE THE SUBJECT MATTER OF AS SESSMENT UNDER SECTION 4488 OF THE ACT. ITA NO.4906 /DEL/2012 11 IT WAS SUBMITTED THAT AS PER THE CHARGING PROVISION S OF SECTIONS 4 AND 5 OF THE ACT, THE MOBILIZATION/ DEMOBILIZATION REVENUES COULD BE SUBJ ECT TO TAX IN INDIA ONLY IF THE SAME ACCRUED OR AROSE IN INDIA OR WERE DEEMED TO ACCRUE OR ARISE IN INDIA. FURTHER, SECTION 9(1)(I) OF THE ACT, INTER ALIA, PR OVIDES THAT INCOME ARISING THROUGH OR FROM ANY BUSINESS CONNECTION IS DEEMED TO ACCRUE OR ARISE IN INDIA. CLAUSE (A) OF EXPLANATIONS TO SECTION 9(1 )(I) OF T HE ACT, UNDER WHICH CERTAIN INCOME DEEMED TO ACCRUE OR ARISE IN INDIA, PROVIDES THAT I N THE CASE OF A BUSINESS OF WHICH ALL THE OPERATIONS ARE NOT CARRIED OUT IN INDIA, THE INCOME OF THE BUSINESS DEEMED UNDER THIS CLAUSE TO ACCRUE OR ARISE IN INDIA SHALL BE ONLY SU CH PART OF THE INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA . THUS, THE ACT SPECIFICALLY PROVIDES THAT IN A SITUA TION WHERE THE OPERATIONS ARE CARRIED ON PARTLY IN INDIA AND PARTLY OUTSIDE INDIA, ONLY SUCH PORTION OF THE INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA IS DEEMED TO ACCRUE OR ARISE IN INDIA AND HENCE, TAXABLE IN INDIA. IN VIEW OF THE ABOVE, MOBILIZATION/ DEMOBILIZATION REVENUES SHOULD BE APPORTIONED ON THE BASIS OF TOTAL JOURNEY UNDERTAKEN BY THE EQUIPMENT IN INDIAN TERRITORIES. ACCORDINGLY, MOBILIZATION/ DEMOBILIZATION REVENUES TAXABLE IN IN DIA SHOULD BE RESTRICTED ONLY TO THE REVENUES ATTRIBUTABLE TO THE DISTANCE TRAVELLED IN THE INDIAN TERRITORIAL WATERS AS COMPARED TO THE TOTAL DISTANCE TRAVELLED. LEGAL PRECEDENTS IN SUPPORT OF NON-TAXABILITY OF MO BILIZATION/DEMOBILIZATION REVENUES ATTRIBUTABLE TO DISTANCE TRAVELLED OUTSIDE INDIA AS SUBMITTED BEFORE THE LOWER AUTHORITIES ALSO THE REVENUES FROM MOBILIZATION! DEMOBILIZATION ATTRIBUTABLE TO DISTANCE TRAVELLED O UTSIDE INDIA SHOULD NOT BE TAXABLE, THE APPELLANT PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRECEDENTS: RAND B FALCON DRILLING CO VS. ACIT [(2007) 14 SOT 281(DELHI ITAT)] SAIPEM S.P.A. VS DEPUTY COMMISSIONER OF INCOME TA X [(2003) 86 ITD 572 (DELHI ITAT)] ASSISTANT COMMISSIONER OF INCOME TAX VS JINDAL DR ILLING LEASING [(1991) ITA NO 6452 (MUMBAI ITAT)] (UNREPORTED JUDGMENT) DEPUTY COMMISSIONER OF INCOME TAX VS SONAT OFFSHO RE DRILLING INC [(1994) ITA NO 7414 (MUMBAI ITAT)](UNREPORTED JUDGMENT) ITA NO.4906 /DEL/2012 12 JOINT COMMISSIONER OF INCOME TAX VS FUGRO ENGINEE RS BV [(1999) ITA NO 6246 (MUMBAI ITAT)](UNREPORTED JUDGMENT) MCDERMOTT ETPM VS DEPUTY COMMISSIONER OF INCOME T AX [(2005) 92 ITD 385 (MUMBAI ITAT)] JOINT DIRECTOR OF INCOME-TAX (OSD) VS J RAY MCDER MOTT EASTERN HEMISPHERE LIMITED - (2010) ITA NO 1557! MUM! 2007 IT WAS SUBMITTED THAT EVEN IN A CASE WHEREIN A COMP OSITE AND LUMPSUM CONSIDERATION IS AGREED, THE HON'BLE SUPREME COURT IN THE CASE OF IS HIKAWAJIMA AND HYUNDAI HEAVY INDUSTRIES CLARIFIED THAT THE REVENUE AUTHORITIES A RE DUTY BOUND TO DETERMINE THE PORTION ATTRIBUTABLE TO TAXABLE ACTIVITIES UNDER THE ACT AN D THE NON-TAXABLE PORTION. ACCORDINGLY, IT IS SUBMITTED THAT IN THE INSTANT CA SE FOR AY 2009-10, OUT OF THE TOTAL REVENUES RECEIVED BY WGIL WITH RESPECT TO MOBILIZAT ION! DEMOBILIZATION OF VESSELS AMOUNTING TO RS 53.37 CRORES, ONLY REVENUES AMOUNTI NG TO RS 63.13 CRORES SHOULD BE SUBJECT TO TAX (UNDER SECTION 44BB) ON ACCOUNT OF MOBILIZATION/ DE MOBILIZATION ACTIVITIES ATTRIBUTABLE TO INDIAN OPERATIONS. DISTINGUISHING THE RULING OF SEDCO FOREX INTEMATION AL INC. DURING THE COURSE OF THE HEARING, THE LEARNED DEPAR TMENT REPRESENTATIVE ('DR') PLACED RELIANCE ON UTTARAKHAND HC RULING IN SEDCO FOREX IN TERNATIONALLNC ('SEDCO FOREX') TO SUPPORT DEPARTMENT'S CONTENTION THAT THE ENTIRE AMO UNT MOBILIZATION! DEMOBILIZATION REVENUES RECEIVED BY WGIL SHOULD BE TAXABLE IN INDI A WHILE COMPUTING ITS INCOME UNDER SECTION 44BB OF THE ACT. AS SUBMITTED BY THE APPELL ANT'S COUNSEL THE DECISION IN SEDCO FOREX IS DISTINGUISHABLE AS THE FOLLOWING ASPECTS D ID NOT RECEIVE THE CONSIDERATION OF THE HON'BLE HC: WGIL HAS SUBMITTED THE CERTIFICATES ISSUED BY NOB LE DENTON, CHARTERED MARINE ENGINEERS, CERTIFYING THE DISTANCE TRAVELLED WITHIN INDIA AND OUTSIDE INDIA SECTION 44BB OF THE ACT SPECIFICALLY OVERRIDES TH E PROVISIONS OF SECTIONS 28 - 41 OF THE ACT (THE COMPUTATION MECHANISM)'. HOWEVER, SECT ION 44BB DOES NOT OVERRIDE THE PROVISIONS OF CHARGING SECTIONS 4, 5, AND 9 OF THE ACT. ACCORDINGLY, BASED ON THE COMBINED READING OF SEC TIONS 4, 5 AND 9 AND THE DECISION OF ISHIKAWAJIMA HARIMA HEAVY INDUSTRIES LT D, IN THE INSTANT CASE, IT WAS SUBMITTED THAT ONLY THE MOBILIZATION/ DEMOBILIZATIO N INCOME ATTRIBUTABLE TO DISTANCE TRAVELLED IN INDIA SHOULD BE TAXABLE IN INDIA. ITA NO.4906 /DEL/2012 13 THE MEASURE OF TAX CANNOT ALSO BE ASSUMED TO EXTE ND BEYOND THE VERY SCOPE OF CHARGING SECTION. AS UNLIKE IN CASE OF SEDCO FOREX THE APPELLANT IS NOT SEEKING A DEDUCTION FROM TAXABLE INCOME ON THE GROUND OF REIM BURSEMENT BUT IS CONTENDING THAT A PORTION OF THE REVENUE CANNOT FORM PART OF INCOME A T ALL. BY REFERENCE TO THE FACTS IN THE SED CO FOREX DECIS ION IT WAS SUBMITTED THAT THE DISPUTE CONSIDERED BY HON'BLE HC THEREIN WAS WHETHER REIMB URSEMENT COULD BE EXCLUDED FOR PURPOSES OF SECTION 44BB OF THE ACT. THE HON'BLE HE DID NOT HAVE TO DEAL WITH THE FACTUAL ASPECTS, AS INVOLVED IN PRESENT CASE OR THE LEGAL D ISPUTES ARISING IN PRESENT CASE. BASED ON THE ABOVE ARGUMENTS, THE HE RULING OF SEDCO FORE X IS NOT APPLICABLE TO THE FACTS OF APPELLANT'S CASE. THE DEPARTMENTAL REPRESENTATIVE OTHER SUBMISSION WA S THAT EVEN PAYMENTS MADE OUTSIDE INDIA ARE INCLUDABLE FOR PURPOSES OF SECTION 44BB. REFERENCE WAS MADE TO SECTION 44BB(2)(A) WHEREIN THE PHRASE 'WHETHER IN OR OUT OF INDIA' WAS USED. APPELLANT RESPECTFULLY SUBMITS THAT SUCH AN INTERPRETATION WO ULD BE INCORRECT AS SUCH PHRASE HAS TO BE READ IN THE CONTEXT AND THE ONLY POSSIBLE INTERP RETATION WOULD BE THAT CONSIDERATION RECEIVED FOR PROVISION OF SERVICES REFERRED TO IN T HAT CLAUSE FOR PROSPECTING ETC., WOULD BE TAXABLE WHETHER THE SAME ARE RECEIVED IN INDIA OR O UTSIDE OF INDIA. SUCH A PHRASE CANNOT BE READ IN A WAY TO SUBJECT TRANSACTIONS WHICH ARE EFFECTED OUTSIDE INDIA AND PAID OUTSIDE INDIA AND WHICH ARE CLEARLY OUTSIDE THE SCOPE OF CH ARGING SECTION OF THE ACT. PRAYERWE REQUEST YOUR HONOURS TO KINDLY TAKE THE AB OVE SUBMISSION ON RECORD, CONSIDER THE SAME AND TO ALLOW OUR APPEAL IN TOTO. IN CASE Y OUR HONOURS REQUIRE ANY CLARIFICATIONS, WE WOULD BE MOST WILLING AND FEEL D UTY BOUND TO SUBMIT THE SAME. 9. THE LD.D.R. ON THE OTHER HAND SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE JUDGEM ENTS OF THE UTTARAKHAND HIGH COURT IN THE CASES OF (A) SEDCO FOREX INTERNAT IONAL INC. REPORTED IN 299 ITR 238; (B) IN THE CASE OF HALLIBURTON OFFSHORE S ERVICE INC. REPORTED IN 300 ITR 265 AND (C) IN THE CASE OF TRANS OCEAN OFFS HORE INC. 299 ITR 248. HE FURTHER RELIED UPON THE ORDER OF THE ASSESSING O FFICER AS WELL AS THE FINDINGS OF THE D.R.P. HE SUBMITTED THAT : ITA NO.4906 /DEL/2012 14 THE ISSUE OF TAXABILITY OF THESE AMOUNTS IS SETTLE D BY A NUMBER OF THE DECISIONS OF THE HON'BLE UTTARAKHAND HIGH COURT. SOME OF THESE DECIS IONS ARE: SEDCO FOREX INTERNATIONALLNC 2991TR 238; HALLIBURTON OFFSHORE S ERVICE INC 300 ITR 265; AND TRANS OCEAN OFFSHORE INC 299 ITR 248. THE HON'BLE HIGH COURT HAS HELD THAT SECTION 44BB I S A COMPLETE CODE IN ITSELF. IF THE ASSESSEE CHOOSES TO BE TAXED UNDER SECTION 44BB OF THE ACT THEN THE PROVISIONS OF THE SECTION APPLY. THE AMOUNTS THAT ARE TAXABLE ARE EXP LICITLY STATED IN SECTION 44 BB (2). THE WORDING OF THE SECTION LEAVES NO DOUBT THAT ANY AMOUNT RECEIVED BY THE ASSESSEE IS NOT BE TAXABLE. THE AMOUNTS RECEIVED BY THE ASSESSEE FOR MOBILIZATI ON/DEMOBILIZATION ARE ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECT ION WITH, OR SUPPLY OF PLANT AND MACHINERY (SECTION 44 BB92)). THE ASSESSEE HAS CLAIMED THAT REVENUE OF INR 47.06 CRORES WERE NOT OFFERED TO TAX BY WGIL AS THE SAME WERE ATTRIBUTABLE TO ACTIVITY/DIST ANCE TRAVELLED OUTSIDE INDIA. THE MAIN ARGUMENTS OF THE ASSESSEE ARE DEALT BELOW: PROVISIONS OF SECTION 5 (2) (B) APPLIES TO THE AS SESSEE BEING A NON-RESIDENT. IT REFERRED TO CLAUSE (A) OF EXPLANATION TO SECTION 9 (1) (I) OF THE ACT TO CLAIM THAT ONLY SUCH PORTION OF REVENUE AS IS REASONABLE ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA IS DEEMED TO ACCRUE OR ARISE IN INDIA AND ACCORDINGLY REVENUE TAXABLE IN INDIA SHOULD BE RESTRICTED ONLY TO THE REVENUE ATTRIBUTABLE TO THE DISTANCE TRAVELLED IN THE INDIA N TERRITORIAL WATERS AS COMPARED TO THE TOTAL DISTANCE TRAVELLED. THIS CLAIM OF THE ASSESSE E IS NOT PROPER AND UNACCEPTABLE FOR THE FOLLOWING REASONS: SECTION 28 DEFINES THE SCOPE OF PROFITS AND GAINS OF THE BUSINESS OR PROFESSION. SECTION 28(I) DEALS WITH THE PROFITS AND GAINS OF A NY BUSINESS OR PROFESSION WHICH WAS CARRIED ON BY THE ASSESSEE AT ANY GIVEN TIME DURING THE PREVIOUS YEAR. THEREFORE, WHAT IS IMPORTANT IS THE BUSINESS OR PROFESSION CARRIED OUT BY THE ASSESSEE. SECTION 44BB OVERRIDES SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A . HERE EMPHASIS IS ON THE BUSINESS CARRIED OUT BY THE ASSESSEE. MOBILIZATION AND DEMOB ILIZATION ARE ACTIVITIES IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE IN INDIA. THE MOVEMENT OF THE RIG IS A PART OF THE BUSINESS OF THE ASSESSEE AND IT IS NOT AN INDEPENDENT BUSINESS OR E VEN AN INDEPENDENT ACTIVITY. ITA NO.4906 /DEL/2012 15 THE INCOME IN THE CASE OF THE ASSESSEE IS NO DOUB T ACCRUING OR ARISING IN INDIA AS THE BUSINESS IS BEING UNDERTAKEN IN INDIA. THE ASSESSEE CLAIM THAT SECTION 9 REFERS TO THE R EVENUES AND REVENUES CANNOT BE ATTRIBUTED TO THE OUT OF INDIA ACTIVITIES, IS BASEL ESS AND UNTENABLE. FIRST, SECTION 9 REFERS TO INCOME AND NOT TO REVENUE. SECTION 9 TAKES INTO ACCOUNT SITUATIONS WHERE A BUSINESS CONSISTS OF MANY OPERATIONS/ACTIVITIES WHICH ARE MA INLY CARRIED OUT 'OUT OF INDIA' BY THE NON-RESIDENT AND DUE TO SOME BUSINESS CONNECTION IN INDIA IN RELATION TO THE SAME BUSINESS, THE INCOME ACCRUING OR ARISING, WHETHER D IRECTLY OR INDIRECTLY, IS TAXABLE IN INDIA. IN THE CASE OF THE ASSESSEE THE BUSINESS IS BEING CARRIED OUT IN INDIA. IT CANNOT BE THE CASE OF THE ASSESSEE THAT IT IS CARRYING OUT IT S MAIN 'BUSINESS' OUTSIDE INDIA AND ONLY INCOME FROM THE OPERATIONS CARRIED OUT IN INDIA IS TAXABLE. THE ASSESSEE HAS CARRIED OUT ITS BUSINESS IN INDIA AND ALL RECEIPTS ARE TAXABLE IN INDIA. IN CASE OFTHE ASSESSEE THERE ARE NO BUSINESS OPERATIONS OUTSIDE INDIA IN CONNECTION WITH THE PAYMENTS RECEIVED BY IT. THE ASSESSEE'S CLAIM COULD BE JUSTIFIED WHEN THE RIG FOR EXAMPLE WAS WORKING OR USED OUTSIDE INDIA FOR EXAMPLE ALSO TO DRILL A WELL IN THE NORTH SEA FOR THE SAME CLIENT. IN THAT CASE, SOME OF THE OPERATIONS WERE CARRIED OUT OUTSIDE INDIA AND INCOME IN RELATION THOSE OPERATIONS MAY NOT BE TAXABLE IN INDIA. THE MOVEMENT OF RIG FROM ANY PLACE WAS FOR THE PU RPOSE OF THE BUSINESS IN INDIA AND THAT IS THE REASON THAT THE PROJECT OWNER AGREE S TO PAY THE MOVING CHARGES. THE RELIANCE OF THE ASSESSEE ON VARIOUS CASE LAWS INCLUDING THE DECISION IN THE CASE OF ISHIKAWAJIMA AND HYUNDAI HEAVY INDUSTRIES A RE OF NO HELP BECAUSE IN THOSE CASES THE CONTRACTS CONSISTED OF VARIOUS DIVISIBLE PARTS. VARIOUS PARTS TAKEN TOGETHER FORMED THE FULL CONTRACT. SOME OF THESE PARTS WERE CARRIED OUTSIDE INDIA AND THE DECISIONS OF THE HON'BLE SUPREME COURT DEALT WITH I NCOME FROM THOSE STIPULATED ACTIVITIES AS PER CONTRACT CARRIED OUTSIDE INDIA. I N THE PRESENT CASE NO CLEARLY IDENTIFIABLE ACTIVITIES OTHER THAN THE BUSINESS OF THE ASSESSEE IN INDIA ARE CARRIED OUT OF INDIA. THE CERTIFICATE OF NOBLE DENTON CLARIFYING THAT D ISTANCE ARE TRAVELLED CANNOT BE ANY BASIS TO DECIDE THE TAXABILITY AS THE CERTIFICA TE ONLY CERTIFY THE MOVEMENTS OF SHIP IN INDIAN WATER OR OUT OF INDIAN WATER. IT DOES NOT JU STIFY THAT THESE ARE DIFFERENT OPERATIONS. THE MOVEMENTS WHETHER IN INDIAN WATER OR OUT OF IND IAN WATER ARE FOR THE PURPOSE OF BUSINESS IN INDIA? THE ASSESSEE NEED TO APPRECIATE THAT SHIP STARTED MOVING OF ITS PRESENT LOCATION FOR CARRYING OUT THE WORK IN INDIA. THE MO VEMENT ITSELF IS NOT A SEPARATE OPERATION. ITA NO.4906 /DEL/2012 16 THE CLAIM THAT MEASURE OF TAX CANNOT ASSUMED TO E XTEND BEYOND THE VERY SCOPE OF CHARGING SECTION AND PORTION OF THE REVENUE IS NOT TAXABLE. THIS IS AGAIN UNACCEPTABLE PROPOSITION, AS ALL RECEIPTS ARE TAXABLE AS PER THE PROVISIONS OF SECTION 5 AND 9 OF THE ACT. FURTHER, SECTION 44 BB (2) EXPLICITLY DEFINES THE C HARGEABLE AMOUNTS. THE CLAIM THAT IN THE CASE OF SEDCO THE ISSUE WAS OF REIMBURSEMENTS. IT DOES NOT CHANGE THE ISSUE BECAUSE THE REIMBURSEMENT WAS ALSO A RECEIPT. THE PROPOSITION ADVANCED BY THE ASSESSEE IF APPLI ED TO SECTION 44B (SIMILAR DEEMING/PRESUMPTIVE SECTION) WILL LEAD TO ABSURD RE SULTS AS THEN ONLY AMOUNTS PROPORTIONATE TO DISTANCE TRAVELLED IN INDIAN WATER WOULD BE TAXABLE. THE RESULTS ARE NOT WHAT THE LEGISLATURE HAS INTENDED. 10. AFTER HEARING RIVAL CONTENTIONS, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IS COVERED BY THE JUDGEMENT OF THE JURISD ICTIONAL HIGH COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL INC.(SUPRA). WE ARE NOT CONVINCED WITH THE ARGUMENTS OF THE LD.COUNSEL FOR THE ASSESSEE TRYING TO DISTINGUISH THIS CASE LAW FOR THE REASON THAT THE ENTIRE PAYMENT IN QUESTION WAS MADE FOR THE PURPOSE OF EXECUTION OF THE CONTRACT IN INDIA. MOB ILISATION IS A STAGE PAYMENT, AS PART OF THE TOTAL CONSIDERATION FOR EX ECUTION OF THE CONTRACT. THE ASSESSEE WOULD BE MOVING ITS MACHINERY FROM ONE PLACE OF WORK TO ANOTHER PLACE OF WORK. MOBILISATION IS PAID AS AN ADVANCE FOR SUCH MOVEMENT AND IS GENERALLY ADJUSTED AGAINST RUNNING BILLS. IT IS NOT A CASE WHERE A SEPARATE PAYMENT IS MADE FOR A TRANSPORTATI ON CONTRACT. THE SUBMISSION THAT THE ASSESSEE WOULD TRY TO WORK OUT, BASED ON SOME BASIS, THE REVENUES ATTRIBUTABLE TO THE ACTIVITY OF MOBILIZAT ION CARRIED OUT OUTSIDE INDIA, CANNOT BE ACCEPTED, AS SUCH AN EXERCISE WO ULD AMOUNT TO ESTIMATING INCOME FOR ACTIVITIES OUTSIDE INDIA, WHEN THE SCOPE OF THE CONTRACT IS FOR EXECUTION OF THE CONTRACT IN INDIA. MOBILISATION I N OUR VIEW IS AN INCIDENTAL ACTIVITY TO THE MAIN ACTIVITY OF CARRYING OUT THE C ONTRACT IN INDIA. THE ITA NO.4906 /DEL/2012 17 JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ISHIKAWAJIMA AND HYUNDAI HEAVY INDUSTRIES LTD. VS. DIT, REPORTED IN 288 ITR 408 HAS BEEN DISCUSSED BY THE HONBLE HIGH COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL INC. (SUPRA). THE RATIO LAID DOWN B Y THE HONBLE SUPREME COURT IN THAT CASE IS NOT APPLICABLE HERE AS IT IS NOT A CASE WHERE SEPARATE PARTS OF A CONTRACT ARE EXECUTED AT DIFFERENT PLACE S. THE ARGUMENT THAT THE PAYMENT WAS IN THE NATURE OF REIMBURSEMENT OF EXPEN SES INCURRED BY THE ASSESSEE COMPANY AND HENCE NOT INCOME WAS ALSO REJE CTED BY THE HONBLE HIGH COURT. THUS, WE ARE UNABLE TO AGREE WITH THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE. THUS THESE GROUNDS OF THE ASSESSEE ARE DISMISSED. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. SD/- SD/- (A. T. VARKEY) (J. S. REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 24 TH DAY OF JANUARY, 2014 S.SINHA ITA NO.4906 /DEL/2012 18 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DELHI.