Sedco Forex Intrnational Drilling Inc., New Delhi V. Addl. DIT, Dehradun

ITA 504/DEL/2013

• Counselvise Citation: 50420114 RSA 2013
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 31-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Presumptive income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.504/DEL/2013 504/DEL/2013 504/DEL/2013 504/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 M/S SEDCO FOREX M/S SEDCO FOREX M/S SEDCO FOREX M/S SEDCO FOREX INTERNATIONAL DRILLING INC., INTERNATIONAL DRILLING INC., INTERNATIONAL DRILLING INC., INTERNATIONAL DRILLING INC., C/O NANGIA & COM C/O NANGIA & COM C/O NANGIA & COM C/O NANGIA & COMPANY, PANY, PANY, PANY, SUITE 4A, PLAZA M SUITE 4A, PLAZA M SUITE 4A, PLAZA M SUITE 4A, PLAZA M- -- -6, 6,6, 6, JASOLA, JASOLA, JASOLA, JASOLA, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 025. 110 025. 110 025. 110 025. PAN : AACCS9208D. PAN : AACCS9208D. PAN : AACCS9208D. PAN : AACCS9208D. VS. VS. VS. VS. ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, INTERNATIONAL TAXATION, DEHRADUN. DEHRADUN. DEHRADUN. DEHRADUN. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT ARORA, CA. RESPONDENT BY : SHRI VIVEK KUMAR, DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-II, DEHRADUN DATED 5 TH NOVEMBER, 2012 FOR THE AY 2009- 10. 2. GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL READ AS UNDER :- 1. THAT BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN UPHOLDING THE ORDER OF THE AO THAT RECEIPTS OF RS.123,470,377 ON ACCOUNT OF SERVICE TAX WERE INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE O F DETERMINING INCOME UNDER SECTION 44BB OF THE INCOME- TAX ACT, 1961. 2. THAT BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN NOT FOLLOWING THE JUDGM ENT OF THE JURISDICTIONAL INCOME-TAX APPELLATE TRIBUNAL, DE LHI G BENCH IN ITA NO.5284/DEL/2011 IN THE APPELLANTS OWN CASE ITA-504/DEL/2013 2 WHEREIN IT WAS HELD THAT SERVICE-TAX RECEIPTS WERE NOT INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING INCOME UNDER SECTION 44BB OF THE INCOME- TAX ACT, 1961. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL PLACED BEFORE US. WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2008 -09 DATED 29 TH JUNE, 2012 VIDE ITA NO.5284/DEL/2011, WHEREIN THE ITAT HELD AS UNDER:- THE SERVICE TAX IS A STATUTORY LIABILITY LIKE CUSTOM DUTY. HONBLE UTTARAKHAND HIGH COURT IN THEIR DECISION IN SCHLUMBERGER ASIA SERVICES LTD. (SUPRA) CONCLUDED THAT REIMBURSEMENT OF CUSTOM DUTY PAID BY THE ASSESSEE COULD NOT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED P ROFITS U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. FOLLOWING THE VIEW IN THIS DECISION, MUMBAI BENCH IN THEIR DECISION IN ISLAMIC REPUBLIC OF IRAN SHIPPING LINES (SUPRA) HELD THAT SERVICE TAX BEING A STATUTORY LIABILITY, WOULD NOT INVOLVE ANY ELEMENT O F PROFIT AND ACCORDINGLY, THE SAME COULD NOT BE INCLUDED IN T HE TOTAL RECEIPTS FOR DETERMINING THE PRESUMPTIVE INCOME . IN THE LIGHT OF VIEW TAKEN BY THE MUMBAI BENCH, ESPECIA LLY WHEN THE LD.DR DID NOT PLACE ANY MATERIAL BEFORE US CONTROVERTING THE AFORESAID FINDINGS OF THE LD.CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER NOR BROUGHT TO OUR NOTICE ANY CONTRARY DECISION, WE ARE OF THE OPINION THAT SERVICE TAX PAID BY THE ASSESSEE COULD NOT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED PROFIT S U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. THEREFORE, GROUND NO.3 IN THE APPEAL IS ALLOWED. 4. FROM THE ABOVE, IT IS EVIDENT THAT THE ITAT DECID ED THE ABOVE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) AND ANOTHER VS. SCHLUMBERGE R ASIA SERVICES LTD. [2009] 317 ITR 156 (UTTARAKHAND). NO CONTRA RY DECISION OF THE ITA-504/DEL/2013 3 HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN POINTED OU T. IN VIEW OF THE ABOVE, WE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AND ALSO THE DECISION OF ITA T IN ASSESSEES OWN CASE CITED SUPRA, DIRECT THE ASSESSING OFFICER TO E XCLUDE SERVICE TAX FROM THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMIN ING THE INCOME UNDER SECTION 44BB OF THE INCOME-TAX ACT, 1961. AC CORDINGLY, GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL ARE ALLOWED. 5. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UNDER:- THAT THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE A.O. IN HOLDING THAT TH E AMOUNTS AGGREGATING TO RS.284,583,205/- RECEIVED BY THE APPE LLANT FROM ITS CUSTOMERS AS REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE APPELLANT ON THEIR BEHALF IS TO BE I NCLUDED IN THE GROSS RECEIPTS U/S 44BB OF THE INCOME TAX ACT, 1961. 6. AT THE TIME OF HEARING BEFORE US, THE LEARNED COU NSEL FAIRLY AGREED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY T HE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT AND ANOTHER VS. HALLIBURTON OFFSHORE SERVICES INC. [2008] 300 ITR 2 65 (UTTARAKHAND). THE FACTS IN THE SAID CASE WERE THAT THE ASSESSEE RENDERED SERVICES TO THE ONGC. FOR THE ASSESSMENT YEAR 1991-92, IT CLAIMED THAT THE AMOUNT OF ` 6,16,989/- RECEIVED ON ACCOUNT OF REIMBURSEMENT OF F REIGHT AND TRANSPORTATION CHARGES ACTUALLY INCURRED IN RESPE CT OF EQUIPMENT WAS NOT INCLUDIBLE WHILE COMPUTING ITS INCOME UNDER S ECTION 44BB. THE ASSESSING OFFICER REJECTED THE CLAIM BUT THE CIT(A) AND THE TRIBUNAL ACCEPTED IT. ON APPEAL, THE HONBLE HIGH COURT HELD AS UNDER:- HELD, ALLOWING THE APPEAL, THAT IT WAS NOT IN DISPUT E THAT THE AMOUNT HAD BEEN RECEIVED BY THE ASSESSEE. THEREFO RE, THE ASSESSING OFFICER ADDED THE SAID AMOUNT WHICH WAS ITA-504/DEL/2013 4 RECEIVED BY THE NON-RESIDENT COMPANY RENDERING SERVIC ES UNDER THE PROVISIONS OF SECTION 44BB TO THE ONGC AND IMPOSED THE INCOME TAX THEREON. HE WAS JUSTIFIED IN D OING SO. 7. THE RATIO OF THE ABOVE DECISION OF HON'BLE JURISDI CTIONAL HIGH COURT WOULD BE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAME, WE REJECT GROUND NO. 3 OF THE ASSESSEES APPEAL. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 2 ND AUGUST, 2013. SD/- SD/- ( (( (I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PR VICE PR VICE PR VICE PRESIDENT ESIDENT ESIDENT ESIDENT DATED : 02.08.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S SEDCO FOREX INTERNATIONAL DRILLIN G INC., M/S SEDCO FOREX INTERNATIONAL DRILLING INC., M/S SEDCO FOREX INTERNATIONAL DRILLING INC., M/S SEDCO FOREX INTERNATIONAL DRILLING INC., C/O NANGIA & COMPANY, C/O NANGIA & COMPANY, C/O NANGIA & COMPANY, C/O NANGIA & COMPANY, SUITE 4A, PLAZA M SUITE 4A, PLAZA M SUITE 4A, PLAZA M SUITE 4A, PLAZA M- -- -6, JASOLA, NEW DELHI 6, JASOLA, NEW DELHI 6, JASOLA, NEW DELHI 6, JASOLA, NEW DELHI 110 025. 110 025. 110 025. 110 025. 2. RESPONDENT : ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, INTERNATIONAL TAX INTERNATIONAL TAX INTERNATIONAL TAX INTERNATIONAL TAXATION, DEHRADUN. ATION, DEHRADUN. ATION, DEHRADUN. ATION, DEHRADUN. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR