Triton Holding Ltd., New Delhi V. Addl. DIT, Dehradun

ITA 502/DEL/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69677 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 07-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEV SHARMAC I T

Judgement Text

ITA NO. 502/DEL/2013 ASSTT. YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.502/DEL/2013 ASSESSMENT YEAR : 2009-10 TRITON HOLDING LIMITED, VS ASSTT.DIRECTOR OF INCOME TAX, C/O NANGIA & COMPANY, INTERNATIONAL TAXATION, INCOME TAX SUITE 4A, PLAZA M-6, OFFICE, SUBHASH R OAD, JASOLA, NEW DELHI-110025 DEHRADUN-24 8001 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AMIT ARORA RESPONDENT BY : SHRI SANJEV SHARMA,C.I. T. DR O R D E R PER CHANDRAMOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-II, DEHRADUN DATE D 06.11.2012 IN APPEAL NO. 283/C.I.T.(A)-II/2011-12 FOR AY 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN THIS APPEAL:- GROUND NO.1 THAT THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE AO IN HOLDING THAT THE AMOUNT AGGREGATING TO RS. 284,018,951/- RECEIVED BY THE APPELLANT ON ACCOUNT OF REIMBURSEMENT OF SERVICE LAX, IS TO BE INCLUDED IN THE GROSS RECEIPT S U/S 44BB OF THE INCOME TAX ACT, 1956. ITA NO. 502/DEL/2013 ASSTT. YEAR: 2009-10 2 GROUND NO.2 THAT THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE AO IN HOLDING THAT THE AMOUNTS AGGREGATING TO RS. 239,920,538/- RECEIVED B Y THE APPELLANT FROM ITS CUSTOMERS AS REIMBURSEMENT O F ACTUAL EXPENSES (MATERIAL AND CATERING RECHARGE) INCURRED BY THE APPELLANT ON THEIR BEHALF IS TO BE INCLUDED IN THE GROSS RECEIPTS U/S 44BB OF THE INCOME TAX AC T, 1961 (THE ACT). GROUND NO.3 THAT BASED ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL INCOME-TAX APPELLATE TRIBUNAL, DELHI 'G' BENCH IN ITA NO. 5284/0E1L2011 IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING INC VS. ADDL. DIRECTOR OF INCOME-TAX WHEREIN IT WAS HELD THAT SERVICE-TAX REC EIPTS WERE NOT INCLUDIBLE IN THE GROSS RECEIPTS FOR THE P URPOSE OF DETERMINING INCOME UNDER SECTION 44BB OF THE INCOME-TAX ACT, 1961. GROUND NO.1 3. APROPOS GROUND NO. 1, LD. ASSESSEES REPRES ENTATIVE FAIRLY CONCEDED THAT GROUND NO.1 OF THE ASSESSEE IS SQUARELY COVERE D IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BY THE DECISION OF HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS HALLIBURTON OFFSHORE SERVICES INC. (2008) 300 IT R 265(UTTARAKHAND) WHEREIN IT HAS BEEN HELD THAT WHEN IT WAS NOT IN DISPUTE THAT THE AMOUNT HAD BEEN RECEIVED BY THE AS SESSEE I.E. NON- RESIDENT COMPANY RENDERING SERVICES UNDER THE PROVI SIONS OF SECTION ITA NO. 502/DEL/2013 ASSTT. YEAR: 2009-10 3 44BB OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) TO THE ONGC AND THE ASSESSING OFFICER IMPOSED INCOME TAX THEREON, T HEN THE ASSESSING OFFICER WAS JUSTIFIED IN DOING SO. IN VIEW OF ABOV E DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE HOLD THAT GROUND NO. 1 OF THE ASSESSEE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE AND AGAIN ST THE ASSESSEE. ACCORDINGLY, GROUND NO. 1 OF THE ASSESSEE IS DISMIS SED BY RESPECTFULLY FOLLOWING THE DECISION OF HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS HALLIBURTON OFFSHORE SERVICES INC.(SUPRA). GROUND NO. 2 & 3 4. APROPOS GROUND NO.2, THE ASSESSEES REPRESENTA TIVE (AR) SUBMITTED THAT THE SERVICE TAX PAID TO THE GOVERNMENT OF INDI A BY THE ASSESSEE IS REIMBURSED BY THE ONGC ON PRODUCTION AND SUBMISSION OF ORIGINAL CHALLAN BY WHICH SERVICE TAX IS DEPOSITED TO THE GO VERNMENT TREASURY. THE AR FURTHER CONTENDED THAT THE ONGC REIMBURSED 1 00% AMOUNT OF SERVICE TAX PAID BY THE ASSESSEE TO THE GOVERNMENT AND THE AMOUNT IS ALWAYS EQUIVALENT TO THE AMOUNT SHOWN IN THE PAYMEN T CHALLAN SUBMITTED BY THE ASSESSEE BEFORE THE ONGC ACCOUNTS DEPARTMENT . THE AR FORTIFIED HIS ARGUMENT WITH FURTHER SUBMISSION THAT THE ASSES SEE IS NEITHER EARNING ANY INCOME NOR INCURRING ANY EXPENSES IN THIS REGAR D BECAUSE THE ITA NO. 502/DEL/2013 ASSTT. YEAR: 2009-10 4 ASSESSEE COMPANY GETS 100% REIMBURSEMENT OF THE SER VICE TAX PAID AND THE AMOUNT OF REIMBURSEMENT IS ALWAYS EQUAL TO THE AMOUNT OF PAYMENT OF CHALLAN PRODUCED BY THE ASSESSEE BEFORE THE ONGC FOR REIMBURSEMENT. THE AR VEHEMENTLY CONTENDED THAT WHEN THE ASSESSEE IS GETTING 100% REIMBURSEMENT OF SERVICE TAX PAID TO THE GOVERNMENT OF INDIA AND THE SAME IS BEING REIMBURSED BY THE ONGC AND IN THIS TR ANSACTION, THE ASSESSEE IS NEITHER EARNING ANY INCOME NOR INCURRIN G ANY EXPENSES, THEN THE ACTION OF THE ASSESSING OFFICER, IN HOLDING THA T THE AMOUNTS SO RECEIVED BY THE ASSESSEE FROM ONGC AS REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE ASSESSEE ON THEIR BEHALF I S TO BE INCLUDED IN THE GROSS RECEIPT FOR THE PURPOSES OF SECTION 44BB OF T HE ACT, IS NOT JUSTIFIED. 5. REPLYING TO THE ABOVE, LD. DR DID NOT DISPUTE THE FACT THAT THE ASSESSEE IS GETTING 100% REIMBURSEMENT FROM ONGC ON PRODUCTION OF PAYMENT CHALLAN PERTAINING TO SERVICE TAX DEPOSITED WITH GOVERNMENT TREASURY. FURTHER, THE DR HAS ALSO NOT DISPUTED TH E FACT THAT THE ASSESSEE IS GETTING 100% REIMBURSEMENT OF THE ACTUAL SERVICE TAX PAID ON PRODUCTION OR SUBMISSION OF ORIGINAL CHALLAN OF PAY MENT FROM ONGC AND THERE WAS NO ELEMENT OF INCOME IN THE HANDS OF ASSE SSEE OR EXPENSE BY THE ASSESSEE IN THIS REGARD. ITA NO. 502/DEL/2013 ASSTT. YEAR: 2009-10 5 6. ON CAREFUL CONSIDERATION OF ABOVE CONTENTIONS AND SUBMISSIONS OF BOTH THE PARTIES, WE CLEARLY OBSERVE THAT THE ASSES SEE IS GETTING REIMBURSEMENT OF SERVICE TAX PAID TO THE GOVERNMENT OF INDIA FROM ITS CLIENT I.E. ONGC ON PRODUCTION OR SUBMISSION OF ORI GINAL TREASURY CHALLAN OF PAYMENT BEFORE ONGC AND THEREFORE, WE ARE UNABLE TO SEE ANY ELEMENT OF INCOME IN THE HANDS OF ASSESSEE OR ANY O CCASION OF INCURRING ANY EXPENSES BY THE ASSESSEE IN THIS REGARD. ACCOR DINGLY, WE HOLD THAT THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOM E TAX(A) WERE NOT JUSTIFIED IN HOLDING THAT THE AMOUNT OF REIMBURSEME NT OF SERVICE TAX RECEIVED BY THE ASSESSEE FORM ITS CUSTOMERS I.E. ON GC AS REIMBURSEMENT OF ACTUAL EXPENSES OF SERVICE TAX INCURRED BY THE A SSESSEE ON THEIR BEHALF IS TO BE INCLUDED IN THE GROSS RECEIPTS FOR THE PUR POSE OF SECTION 44BB OF THE ACT. PER CONTRA, WE HOLD THAT THE AMOUNT OF RE IMBURSEMENT OF SERVICE TAX RECEIVED BY THE ASSESSEE WAS NOT INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING INCOME OF THE ASSESSEE U /S 44BB OF THE ACT. ACCORDINGLY, ORDERS OF THE AUTHORITIES BELOW ARE SE T ASIDE AND THE ASSESSING OFFICER IS DIRECTED NOT TO INCLUDE ACTUAL AMOUNT OF REIMBURSEMENT OF SERVICE TAX FOR THE PURPOSE OF DET ERMINING INCOME U/S 44BB OF THE ACT. IN THE RESULT, GROUND NO. 2 AND 3 OF THE ASSESSEE ARE ALLOWED. ITA NO. 502/DEL/2013 ASSTT. YEAR: 2009-10 6 7. ON THE BASIS OF DISCUSSIONS MADE HEREINABOVE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR GROUND NO. 2 AND 3. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/12/2013 . SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 20TH DECEMBER 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR