ADIT(IT) 1(2), MUMBAI V. CLOUGH PROJECT INTERNATIONAL PTY LTD, MUMBAI

ITA 4930/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9425 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 29-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G C SRIVASTAVA
• Keywords: Rejection of books of accounts; Double taxation relief; Opportunity of being heard; Principle of natural justice; Permanent establishment
• Section: 5(2); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 2952 /MUM/20 10 (ASSESSMENT YEAR 20 06 - 07 ) I.T.A. NO. 4930/MUM/2014 (ASSESSMENT YEAR 2007 - 08) I.T.A. NO. 4931/MUM/2014 (ASSESSMENT YEAR 2008 - 09) DDIT (IT) - 2(1)(1) / ACIT - 1(2) SCINDIA HOUSE BALLARD PIER, N.M. ROAD MUMBAI - 400 038. VS. M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. G.C. SRIVASTAVA & ASSOCIATES ADV. 14D, 14 TH FLOOR NANSALAYA BUILDING 15, BARAKHAMBA ROAD NEW DELHI - 110 001. ( A PPELLANT ) ( RESPONDENT ) C.O. NO. 09/MUM/2011 (ASSESSMENT YEAR 2006 - 07) C.O. NO. 61/MUM/2016 (ASSESSMENT YEAR 2007 - 08) C.O. NO. 62 /MUM/2011 (ASSESSMENT YEAR 200 8 - 0 9 ) M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. G.C. SRIVASTAVA & ASSOCIATES ADV. 14D, 14 TH FLOOR NANSALAYA BUILDING 15, BARAKHAMBA ROAD NEW DELHI - 110 001. VS. DDIT (IT) - 2(1)(1)/ ACIT - 1(2) SCINDIA HOUSE BALLARD PIER, N.M. ROAD MUMBAI - 400 038. ( APPELLANT ) ( RESPONDENT ) PAN : AACCC6057C ASSESSEE BY SHRI G.C. SRIVASTAVA DEPARTMENT BY S HRI SAMUEL DARSE DATE OF HEARING 28 . 9 . 201 7 DATE OF PRONOUNCEMENT 6 . 10 . 201 7 O R D E R PER BENCH: ALL THE THREE APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A) - 10, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEARS 2006 - 07 TO 2008 - 09. SINCE M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 2 ISSUES URGED IN THESE APPEALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE FACTS RELAT ING TO THE CASE ARE DISCUSSED IN BRIEF. THE ASSESSEE IS A COMPANY REGISTERED IN AUSTRALIA AND IS ENGAGED IN THE BUSINESS OF PROVIDING ENGINEERING AND CONSTRUCTION SERVICES TO VARIOUS OIL AND GAS COMPANIES. IT BELONGS TO CLOUGH GROUP WHICH PROVIDES TURNK EY ENGINEERING, CONSTRUCTION, OPERATIONS AND MAINTENANCE SOLUTIONS TO ITS VARIOUS CLIENTS IN ON SHORE AND OFF SHORE OIL AND GAS, MINERALS, INFRASTRUCTURES, MANUFACTURING FIELDS ETC. THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S BG EXPLORATION AND PRODUC TION INDIA P LTD (BG), AN INDIAN COMPANY, ON 05 TH NOVEMBER, 2004 TO DEVELOP THREE NEW PLATFORMS, UPGRADE THREE EXISTING PLATFORMS AND ASSOCIATED FIELDS IN PANNA, MUKTA AND TAPTI FIELDS, OFF THE WEST COAST OF INDIA. THE WORK SCOPE INCLUDES PROJECT MANA GEMENT, ENGINEERING, PROCUREMENT, FABRICATION, TRANSPORTATION, INSTALLATION, PRE - COMMISSIONING AND COMMISSIONING ASSISTANCE FOR THREE FOUR LEGGED JACKETS AND TOPSIDE PLATFORMS (PH, PJ AND STD) IN WATER DEPTHS RANGING FROM 23M TO 52M, FOUR INFIELD PIPELINES AND ASSOCIATED RISERS RANGING FROM 4 TO 18 DIAMETER FOR A ROUTE LENGTH OF APPROXIMATELY 30 KM AND MODIFICATIONS TO THREE EXISTING PLATFORMS (PPA, PB AND TPP). IT WAS A TURNKEY PROJECT. THE PROJECT OPERATIONS ARE TO BE CARRIED OUT PARTLY INSIDE INDIA A ND PARTLY OUTSIDE INDIA AS PER THE TERMS OF CONTRACT. IT WAS STATED THAT THE CONTRACT CLEARLY DEMARCATES THE WORK TO BE CARRIED OUT INSIDE INDIA AND OUTSIDE INDIA AND THE PRICES ATTRIBUTABLE TO THE SAME. 3. WE SHALL FIRST TAKE UP THE APPEAL RELATING TO AY 2006 - 07. THE ASSESSEE DECLARED LOSS OF RS.1619.54 LAKHS IN ITS RETURN OF INCOME. THE ASSESSEE DID NOT DECLARE INCOME FROM OPERATIONS CARRIED OUT OUTSIDE INDIA ON THE REASONING THAT THE INCOME ARISING FROM OPERATIONS CARRIED OUTSIDE INDIA IS NOT ATT RIBUTABLE TO THE PERMANENT ESTABLISHMENT (PE) IN INDIA IN TERMS OF INDIA - AUSTRALIAN TREATY AND HENCE THE SAME IS NOT TAXABLE IN INDIA. THE AO DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE. HE TOOK THE VIEW THAT THE PE OF THE ASSESSEE IS M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 3 REQUIRED T O BE DETERMINED IN TERMS OF ARTICLE 5(2)(F) AND 5(2)((J), WHICH READS AS UNDER: - 5(2) THE TERM, PERMANENT ESTABLISHMENT SHALL INCLUDE ESPECIALLY: (A) TO (E) .. (F) A MINE, AN OIL OR GAS WELL, A QUARRY OR ANY OTHER PLACE OF EXTRACTION OF NATURAL RESO URCES; (G) ..(I) (J) AN INSTALLATION OR STRUCTURE OR PLANT OR EQUIPMENT USED FOR THE EXPLORATION OR EXPLOITATION OF NATURAL RESOURCES. THEN THE AO EXAMINED THE SCOPE OF WORK CARRIED ON BY THE ASSESSEE AS ENUMERATED IN THE AGREEMENT AND FINALLY CONCLUDED AS UNDER: - 9 . A SYNOPSIS OF THE VARIOUS CLAUSES OF THE AGREEMENT, AS MENTIONED ABOVE, HAD TO BE MENTIONED TO PROVE THAT WHATEVER PAYMENTS THE ASSESSEE RECEIVED IN THE INITIAL STAGES OF THE WORK ESPECIALLY FOR THE YEAR UNDER REFERENCE INVOLVED SUCH A CO MPLEX AND MULTIPLE DIVERSIFIED ACTIVITIES FOR WHICH THE ASSESSEE HAD TO BE PHYSICALLY PRESENT THROUGH VARIOUS TECHNICAL PERSONS ETC IN CONNECTION WITH AFOREMENTIONED WORKS SO AS TO COMMENCE THE PROJECT . THE ASSESSEE CANNOT TAKE THE PLEA THAT WORK IN INDIA STARTED WITH THE TRANSPORTATION OF SALEAWAY JACKETS WHICH WERE FABRICATED OUTSIDE INDIAN WATERS IN THE MIDDLE EAST. THIS SUGGESTS THAT THE ASSESSEE HAD TO UNDERGO VARIOUS EXERCISES AND ACTIVITIES IN THE INDIAN TERRITORIAL WATERS IN ORDER TO COMMENCE THE PROJECT WORK SO THAT THE PROJECT WAS SUCCESSFULLY COMMENCED, INSTALLED AND COMMISSIONED. THE AO ALSO DISCUSSED VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE AND HELD THAT THEY ARE DISTINGUISHABLE. FINALLY THE AO CONCLUDED AS UNDER: - 11. SINCE THE ASS ESSEE WAS EXCLUSIVELY DEALING WITH THE COMMISSIONING OF PLATFORMS MEANT FOR OIL WELLS FOR WHICH VARIETIES OF WORK INCLUDING PRECONSTRUCTION WORK BY WAY OF PREPARING LAYOUTS, DESIGNS AND UNDERGOING SURVEYS AS MENTIONED HEREIN EARLIER PARAS, THE ASSESSEE WAS DEFINITELY HAVING A PE KEEPING IN VIEW THE NATURE OF WORK WHICH RELATED TO OIL WELLS. IN THE LIGHT OF ABOVE DISCUSSION, IT IS THUS CONCLUSIVELY ESTABLISHED THAT ASSESSEE HAD A PE IN INDIA AND WHATEVER PAYMENTS WERE RECEIVED THOUGH FOR THE WORK PERFORMED OUTSIDE THE INDIAN TERRITORIAL WATERS, THE SAME ARE LIABLE TO TAX IN INDIA, SINCE THE WORK RELATED TO THE OIL/GAS WELLS AND WHICH IS EXPRESSLY COVERED UNDER ARTICLE 5(2)(F) AND (J) OF THE TREATY. M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 4 ACCORDINGLY THE AO HELD THAT THE ENTIRE PAYMENTS RECEIVED B Y THE ASSESSEE FOR THE WORKS CARRIED OUT IN INDIA AND OUTSIDE INDIA SHALL BE SUBJECTED TO TAX IN INDIA. 4. THE AO NOTICED THAT THE PROVISIONS OF SEC. 44BB(1) PROVIDES FOR TAXATION OF RECEIPTS @ 10%. HOWEVER THE ASSESSEE CAN DECLARE LOWER PROFITS IN T ERMS OF SEC. 44BB(3) IF HE KEEPS AND MAINTAIN SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED U/S 44AA(2) OF THE ACT. THE ASSESSEE HAD DECLARED LOWER PROFITS ON THE BASIS OF A STATEMENT PREPARED UNDER SOFTWARE. FURTHER THE ASSESSEE HAD ALSO DECLARE D PROFIT UNDER PERCENTAGE COMPLETION BASIS, INSTEAD OF COMPUTING INCOME ON ACTUAL RECEIPTS. THE AO WAS NOT SATISFIED WITH THE SAME AND ACCORDINGLY REJECTED THE WORKINGS FURNISHED BY THE ASSESSEE UNDER SEC. 145(3) OF THE ACT, BY CITING VARIOUS DEFECTS. AC CORDINGLY THE AO COMPUTED THE INCOME U/S 44BB(1) @ 10% OF THE AGGREGATE RECEIPTS (BOTH FOR WORKS CARRIED INSIDE AND OUTSIDE INDIA). 5, BEFORE LD CIT(A), THE ASSESSEE CONTENDED THAT THE PE OF THE ASSESSEE IS REQUIRED TO BE DETERMINED IN TERMS OF ARTIC LE 5(2)(K) OF INDIA - AUSTRALIA DTAA, WHICH READS AS UNDER: - 5(2)(K) A BUILDING SITE OR CONSTRUCTION, INSTALLATION OR ASSEMBLY PROJECT, OR SUPERVISORY ACTIVITIES IN CONNECTION WITH SUCH A SITE OR PROJECT WHERE THAT SITE OR PROJECT EXISTS OR THOSE ACTIVITI ES ARE CARRIED ON (WHETHER SEPARATELY OR TOGETHER WITH OTHER SITES, PROJECTS OR ACTIVITIES) FOR MORE THAN SIX MONTHS. ACCORDINGLY IT WAS CONTENDED THAT THE PROFIT ATTRIBUTABLE TO PE ALONE CAN BE BROUGHT TO TAX, I.E. THE RECEIPTS PERTAINING TO OPERATIONS CARRIED OUTSIDE INDIA SHOULD NOT BE BROUGHT TO TAX. THE LD CIT(A) AGREED WITH THE CONTENTIONS OF THE ASSESSEE. ACCORDINGLY HE HELD THAT THE PROFIT ATTRIBUTABLE TO INDIAN PE WOULD ONLY BE TAXABLE IN INDIA. 6. THE LD CIT(A), HOWEVER, UPHELD THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS. M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 5 7. WITH REGARD TO THE INCOME COMPUTATION, THE LD CIT(A) HELD THAT ONLY GROSS RECEIPTS RELATING TO INSIDE INDIA OPERATIONS ALONE IS ATTRIBUTABLE TO PE AND TO BE TAXED U/S 44BB(1) OF THE ACT. 8. THE LD CIT(A) ALSO HELD THAT THE INTEREST U/S 234B CANNOT BE CHARGED ON THE ASSESSEE, SINCE THE ENTIRE PAYMENT IS SUBJECT TO TDS. IN THIS REGARD, THE LD CIT(A) PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF NGC NETWORK A SIA LLC (2009)(222 CTR (BOM) 86). 9. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN EXCLUDING THE RECEIPTS PERTAINING TO OPERATIONS CARRIED OUT OUTSIDE INDIA AND ALSO IN HOLDING THAT THE INTEREST U/S 234B IS NOT CHARGEABLE. 10. THE ASSESSE E HAS FILED CROSS OBJECTION, WHEREIN THE ASSESSEE IS CHALLENGING THE DECISION OF THE LD CIT(A) IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNTS AND ALSO IN UPHOLDING THE DECISION OF THE AO IN ASSESSING INCOME RELATING TO INDIAN OPERATIONS U/S 44BB(1) OF TH E ACT. 11. THE LD D.R SUBMITTED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE RECEIPTS PERTAINING TO OPERATIONS CARRIED ON OUTSIDE INDIA IS NOT CHARGEABLE TO TAX. HE SUBMITTED THAT THE ASSESSEE HAS WON CONTRACT FROM M/S BG AND A COMPOSITE AGR EEMENT WAS ENTERED TO EXECUTE THE PROJECT ON TURNKEY BASIS. HE SUBMITTED THAT THE LD CIT(A) HAS ALSO NOTED THAT THE PROJECT WAS EXECUTED AS A TURNKEY PROJECT. FURTHER THE ENTIRE LIABILITY FOR THE EXECUTION OF THE PROJECT IS PLACED UPON THE ASSESSEE AND I T IS THE ASSESSEE WHO HAS CARRIED OUT THE PROJECT IN TWO PARTS TO SUIT ITS CONVENIENCE, I.E, ONE PART OF WORK WAS PREPARED OUTSIDE INDIA AND THE ENTIRE PROJECT WAS EXECUTED IN INDIA. HE SUBMITTED THAT THE SPLITTING OF WORKS TO SUIT THE CONVENIENCE OF THE ASSESSEE WOULD NOT TAKE AWAY THE LIABILITY TO PAY TAX IN INDIA ON THE WORK CARRIED OUT OUTSIDE INDIA. IN THIS REGARD, THE LD D.R PLACED RELIANCE ON THE DECISION DATED 06 - 01 - 2016 PASSED BY THE CO - ORDINATE BENCH IN THE CASE OF M/S ORPAK SYSTEMS LTD (ITA NO. 8863/MUM/2011), WHEREIN THE CO - ORDINATE BENCH HAD FOLLOWED THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT IN THE CASE OF ANSALDO M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 6 ENERGIA SPA VS. ITO (2009)(310 ITR 237), WHEREIN IT WAS HELD THAT THE SUB - DIVISION OF A COMPOSITE CONTRACT ACCORDING TO THE CONVENIENCE OF CONTRACTOR HAD TO BE IGNORED WHEN THE CONTRACTOR HAS TAKEN UP ENTIRE RESPONSIBILITY FOR EXECUTING THE PROJECT. ACCORDINGLY THE LD D.R CONTENDED THAT THE RECEIPTS PERTAINING TO OPERATIONS CARRIED OUT OUTSIDE INDIA ARE LIABLE FOR TAXATION IN INDIA. 12. WITH REGARD TO THE ISSUE RELATING TO CHARGING OF INTEREST U/S 234B OF THE ACT, THE LD D.R PLACED RELIANCE ON THE ORDER PASSED BY AO. 13. WHEN IT WAS POINTED OUT TO LD A.R THAT THE ASSESSEE HAS ENTERED INTO A COMPOSITE CONTRACT TO EXECUT E THE PROJECT ON TURNKEY BASIS AND FURTHER THE CO - ORDINATE BENCH HAS ALREADY TAKEN A VIEW IN THIS MATTER, THE LD A.R SUBMITTED THAT HE IS AGREEING WITH THE ORDER OF THE AO IN HOLDING THAT THE ENTIRE RECEIPTS, I.E., PAYMENTS RECEIVED FOR OPERATIONS CARRIED OUT INSIDE AS WELL AS OUTSIDE INDIA IS ASSESSABLE TO TAX. 14. SINCE THE LD A.R HAS AGREED THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUTSIDE INDIA IS ALSO CHARGEABLE TO TAX, THE GROUND URGED BY THE REVENUE IS REQUIRED TO BE ALLOWED. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND CONFIRM THE VIEW TAKEN BY THE AO. 15. REGARDING THE ISSUE RELATING TO CHARGING OF INTEREST, WE NOTICE THAT THE LD CIT(A) HAS DECIDED THE ISSUE BY FOLLOWING THE DECISION RENDERED BY THE JURIS DICTIONAL BOMBAY HIGH COURT IN THE CASE OF NGC NETWORK ASIA LLC (SUPRA). HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 16. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS FILED CROSS OBJECTION, WHEREIN IT IS CHALLENGING THE REJECTION OF BOOKS OF ACCOUNT AS WELL AS THE REJECTION OF INCOME COMPUTED BY THE ASSESSEE. THE LD A.R SUBMITTED THAT THE LD CIT(A) HAS CONFIRMED THE ORDER OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS AND IN DETERMINING INCOME @ 10% OF THE GROSS RECEIP TS RELATING TO OPERATIONS CARRIED M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 7 ON IN INDIA. HE SUBMITTED THAT THE ASSESSEE HAD COMPUTED THE INCOME WITHOUT INCLUDING RECEIPTS RELATING TO THE OPERATIONS CARRIED OUT OUTSIDE INDIA. HOWEVER, SINCE THE ASSESSEE HAS ACCEPTED THE VIEW OF THE AO THAT THE ENT IRE RECEIPTS ARE ASSESSABLE IN INDIA, HE SUBMITTED THAT THE FINANCIAL STATEMENTS NEED TO BE RECAST. ACCORDINGLY HE PRAYED THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO REPRESENT ITS CASE FOR THE DETERMINATION OF INCOME. THE LD A.R ALSO MADE SUBMISSIONS AS TO HOW THE INCOME SHOULD HAVE BEEN COMPUTED AND PLEADED THAT A VIEW MAY BE TAKEN BY THE BENCH. 15. THE LD D.R, HOWEVER, OBJECTED TO THE PLEA PUT FORTH BY THE LD A.R. 16. WE FIND MERIT IN THE SUBMISSIONS MADE BY LD A.R WITH REGARD TO THE RECOMP UTATION OF INCOME. WE HAVE NOTICED THAT THE ASSESSEE HAD COMPUTED INCOME BY CONSIDERING THE RECEIPTS RELATING TO INDIAN OPERATIONS. NOW THE ASSESSEE HAS AGREED WITH THE VIEW TAKEN BY THE AO THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUTSIDE INDIA R ELATING TO THE PROJECT CARRIED ON IN INDIA ALSO REQUIRES TO BE TAKEN INTO ACCOUNT FOR DETERMINING THE INCOME OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE WHOLE SCENARIO RELATING TO COMPUTATION OF INCOME GETS CHANGED FROM THE POINT OF VIEW OF THE ASSES SEE. HOWEVER, WE DECLINE TO GIVE ANY DIRECTION TO THE AO IN THIS REGARD WITH REGARD TO THE MANNER OF COMPUTATION OF INCOME AND WE LEAVE IT TO THE WISDOM OF THE AO. THE LD A.R ALSO SUBMITTED THAT THE ASSESSEE WOULD BE IN A POSITION TO FURNISH THE ACCOUNTS TO THE SATISFACTION OF THE AO. HENCE, IN THE INTEREST OF NATURAL JUSTICE, WE ARE OF THE VIEW THAT THE ASSESSEE MAY BE PROVIDED WITH AN OPPORTUNITY TO REPRESENT ITS CASE RELATING TO DETERMINATION OF INCOME BEFORE THE AO. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THE ISSUES RELATING TO REJECTION OF BOOKS OF ACCOUNT AND DETERMINATION OF INCOME AND RESTORE THEM TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE SAME AFRESH. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE FINANCIAL STATEMENT S AND OTHER DOCUMENTS AS REQUIRED UNDER THE LAW. AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE AO MAY DECIDE THE ISSUES IN ACCORDANCE WITH THE LAW. M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 8 17. WE SHALL NOW TAKE UP THE APPEAL FILED FOR AY 2007 - 08 BY THE REVENUE. IN T HIS YEAR ALSO, THE LD CIT(A) HELD THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUT OUTSIDE INDIA IS NOT REQUIRED TO BE CONSIDERED FOR DETERMINING THE INCOME. WE HAVE SET ASIDE IDENTICAL DECISION RENDERED BY LD CIT(A) IN AY 2006 - 07 ON THE BASIS OF THE STATEMENT MADE AT BAR BY LD A.R IN THE PRECEDING PARAGRAPHS. CONSISTENT WITH THE VIEW TAKEN IN AY 2006 - 07, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND CONFIRM THE VIEW TAKEN BY THE AO THAT THE RECEIPT RELATING TO OPERATIONS CARRIED OUT OU TSIDE INDIA IS REQUIRED TO BE CONSIDERED FOR DETERMINING INCOME OF THE ASSESSEE. 18. THE REVENUE HAS ALSO TAKEN A GROUND IN NOT CONSIDERING THE FOREIGN EXCHANGE GAIN AS PART OF GROSS RECEIPTS. WE NOTICE THAT THE LD CIT(A) DID NOT ADJUDICATE THE SAME, SINCE HE HAD HELD THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUTSIDE INDIA IS NOT REQUIRED TO BE CONSIDERED. NOW WE HAVE HELD THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUTSIDE INDIA IS REQUIRED TO BE CONSIDERED. ACCORDINGLY THE FOREIGN EXCHA NGE GAIN RELATING THERETO IS ALSO REQUIRED TO BE TAKEN INTO ACCOUNT FOR DETERMINING THE INCOME OF THE ASSESSEE. ACCORDINGLY WE CONFIRM THE VIEW TAKEN BY THE AO ON THIS ISSUE. 19. THE ASSESSEE HAS FILED CROSS OBJECTION FOR AY 2007 - 08, WHEREIN IT IS CHAL LENGING THE ORDER OF THE AO IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNT AND IN ESTIMATING INCOME U/S 44BB(1) OF THE ACT. IDENTICAL ISSUE WAS CONSIDERED BY US IN AY 2006 - 07 IN THE PRECEDING PARAGRAPHS AND BOTH THE ISSUES HAVE BEEN RESTORED TO THE FILE OF THE AO FOR THE REASONS DISCUSSED THEREIN. CONSISTENT WITH THE VIEW TAKEN THEREIN WE RESTORE THESE ISSUES TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS. 20. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE REVENUE FOR AY 2008 - 09. IN THIS YEAR ALSO, THE L D CIT(A) HELD THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUT OUTSIDE INDIA IS NOT REQUIRED TO BE CONSIDERED FOR DETERMINING THE INCOME. WE HAVE SET ASIDE IDENTICAL DECISION RENDERED BY LD CIT(A) IN AY 2006 - 07 ON THE BASIS OF THE STATEMENT GIVEN BY L D A.R IN THE PRECEDING M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 9 PARAGRAPHS. CONSISTENT WITH THE VIEW TAKEN IN AY 2006 - 07, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND CONFIRM THE VIEW TAKEN BY THE AO THAT THE RECEIPT RELATING TO OPERATIONS CARRIED OUT OUTSIDE INDIA IS REQUIRED TO BE CONSIDERED FOR DETERMINING INCOME OF THE ASSESSEE. 21. THE REVENUE HAS ALSO TAKEN A GROUND IN NOT CONSIDERING THE FOREIGN EXCHANGE GAIN AS PART OF GROSS RECEIPTS. WE NOTICE THAT THE LD CIT(A) DID NOT ADJUDICATE THE SAME, SINCE HE HAD HELD THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUTSIDE INDIA IS NOT REQUIRED TO BE CONSIDERED. NOW WE HAVE HELD THAT THE RECEIPTS RELATING TO OPERATIONS CARRIED OUTSIDE INDIA IS REQUIRED TO BE CONSIDERED. ACCORDINGLY THE FOREIGN EXCHANGE GAIN RELATING THERETO IS ALSO REQUIRED TO BE TAKEN INTO ACCOUNT FOR DETERMINING THE INCOME OF THE ASSESSEE. ACCORDINGLY WE CONFIRM THE VIEW TAKEN BY THE AO ON THIS ISSUE. 22. THE ASSESSEE HAS FILED CROSS OBJECTION FOR AY 2008 - 09, WHEREIN IT IS CHALLENGING THE ORDER OF THE AO IN CONFIRMING THE REJECTION OF BOOKS OF ACCOUNT AND IN ESTIMATING INCOME U/S 44BB(1) OF THE ACT. IDENTICAL ISSUE WAS CONSIDERED BY US IN AY 2006 - 07 IN THE PRECEDING PARAGRAPHS AND BOTH THE ISSUES HAVE BEEN RESTORED TO THE FILE OF THE AO FOR THE REASON S DISCUSSED THEREIN. CONSISTENT WITH THE VIEW TAKEN THEREIN WE RESTORE THESE ISSUES TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS. 23. IN THE RESULT, THE APPEAL FILED BY THE REVENUE FOR AY 2006 - 07 IS PARTLY ALLOWED. THE APPEALS FILED BY REVENUE FOR AY 2007 - 08 AND 2008 - 09 ARE ALLOWED. THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 6 . 10 .201 7. SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 6 / 10 / 20 1 7 M/S. CLOUGH PROJECTS INTERNATIONAL PTY. LTD. 10 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI