DCIT (IT) 4(3)(2), MUMBAI V. WEATHERFORD DRILLING INTERNATIONAL (BVI) LTD, MUMBAI

ITA 514/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6931 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEERAJ AGGARWALA; KISHAN KUMAR MUNDHARA
• Assessee Lawyers: SUMAN KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 495/MUM/2017 (ASSESSMENT YEAR: 2009-10) M/S WEATHERFORD DRILLING INTERNATIONAL (BVI) LTD. 1101 TOWER B, PENINSULA BUSINESS PARK, GANPATRAO KADAM MARG, LOWR PAREL MUMBAI 400013 VS. DCIT (INTL. TAXATION) - 4(3)(2) [FORMERLY DCIT (IT)-2(2)] ROOM NO. 1728, AIR INDIA BLDG. NARIMAN POINT MUMBAI 400021 PAN AAACW7377F APPELLANT RESPONDENT ITA NO. 514/MUM/2017 (ASSESSMENT YEAR: 2009-10) DCIT (INTL. TAXATION) - 4(3)(2) [FORMERLY DCIT (IT)-2(2)] ROOM NO. 1728, AIR INDIA BLDG. NARIMAN POINT MUMBAI 400021 VS. M/S WEATHERFORD DRILLING INTERNATIONAL (BVI) LTD. 1101 TOWER B, PENINSULA BUSINESS PARK, GANPATRAO KADAM MARG, LOWR PAREL MUMBAI 400013 PAN AAACW7377F APPELLANT RESPONDENT APPELLANT BY: SHRI NEERAJ AGGARWALA & SHRI KISHAN KUMAR MUNDHARA RESPONDENT BY: SHRI SUMAN KUMAR DATE OF HEARING: 20.06.2018 DATE OF PRONOUNCEMENT: 20.06.2018 O R D E R PER B.R. BASKARAN, AM THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 20.10.2016 PASSED BY THE LEARNED CIT(A)-59, MUMBAI AND IT PERT AINS TO A.Y. 2009-10. ITA NOS. 495 & 514/MUM/2017 WEATHERFORD DRILLING INTERNATIONAL (BVI) LTD. 2 2. THE ASSESSEE IS A NON-RESIDENT COMPANY INCORPORATED UNDER THE LAWS OF BRITISH VIRGIN ISLANDS. IT IS ENGAGED IN THE BUS INESS OF PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH EXCAVATION OR PROD UCTION OF NATURAL OIL. THE ASSESSEE OFFERED ITS INCOME UNDER SECTION 44BB(1) O F THE INCOME TAX ACT (HEREINAFTER THE ACT). 3. THE ISSUE URGED IN THE APPEAL OF THE ASSESSEE IS W HETHER THE AMOUNT RECEIVED BY THE ASSESSEE FOR MOBILISATION/DEMOBILIS ATION OF VESSELS AND EQUIPMENTS OUTSIDE INDIAN TERRITORIAL WATERS IS REQ UIRED TO BE INCLUDED IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING T OTAL INCOME UNDER SECTION 44BB OF THE ACT. THE AO AS WELL AS THE CIT( A) INCLUDED THE MOBILISATION/DEMOBILISATION RECEIPTS AS PART OF GRO SS RECEIPT. 4. AT THE TIME HEARING THE LEARNED A.R. FAIRLY SUBMITT ED THAT IDENTICAL ISSUE WAS CONSIDERED BY HON'BLE SUPREME COURT IN TH E CASE OF SEDCO FOREX INTERNATIONAL INC (CIVIL APPEAL NO. 4906 OF 2010) A ND VIDE ITS ORDER DATED 30.10.2017, THE HONBLE APEX COURT HAS HELD THAT TH E RECEIPTS RELATED TO MOBILISATION/ DEMOBILISATION OF VESSELS OUTSIDE IND IAN TERRITORIAL WATERS IS REQUIRED TO BE INCLUDED IN THE GROSS RECEIPT FOR TH E PURPOSE OF DETERMINING THE TOTAL INCOME UNDER SECTION 44BB OF THE ACT. 5. WE HAVE HEARD THE LEARNED D.R. AND PERUSED THE RECO RD. SINCE THE ISSUE URGED HEREIN HAS BEEN DECIDED AGAINST THE ASS ESSEE BY THE HON'BLE SUPREME COURT IN THE CASE CITED ABOVE, WE CONFIRM T HE ORDER PASSED BY THE CIT(A) ON THIS ISSUE. 6. WE SHALL NOW TAKE UP THE APPEAL FILED BY REVENUE. THE SOLITARY ISSUE URGED THEREIN IS WHETHER THE SERVICE TAX COLLECTED BY THE ASSESSEE SHALL FORM PART OF GROSS RECEIPTS FOR COMPUTING INCOME UN DER SECTION 44BB OF THE ACT. 7. THE LEARNED A.R. SUBMITTED THAT THE HON'BLE DELHI H IGH COURT IN THE CASE OF MITCHELL DRILLING INTERNATIONAL (P) LTD. 38 0 ITR 130 (DEL) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING THAT SERVICE TAX COLLECTED BY THE ASSESSEE WAS NOT TO BE INCLUDED IN THE GROSS RECEIPTS IN ITA NOS. 495 & 514/MUM/2017 WEATHERFORD DRILLING INTERNATIONAL (BVI) LTD. 3 TERMS OF SECTION 44BB OF THE ACT. HE SUBMITTED THAT THE LEARNED CIT(A) HAS FOLLOWED THE DECISION RENDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE REFERRED ABOVE. 8. ON THE CONTRARY, THE LEARNED D.R. SUBMITTED THAT TH E MUMBAI BENCH OF THE TRIBUNAL HAS HELD IN THE CASE OF CHINA SHIPP ING CONTAINER LINES (HONG KONG) (2013) TIL-1621-ITAT, MUM-INTL) HAS HEL D THAT THE SERVICE TAX COLLECTED FROM DISTRIBUTORS SHALL BE INCLUDED IN GR OSS RECEIPTS. 9. IN THE REJOINDER THE LEARNED A.R. SUBMITTED THAT TH E MUMBAI BENCHES OF TRIBUNAL HAS FOLLOWED THE DECISION RENDE RED BY THE HON'BLE DELHI HIGH COURT (REFERRED SUPRA) IN THE CASES OF O CEANEERING INTERNATIONAL GMBH (ITA NO. 1023/MUM/2014 DATED 06.11.2015 AND JE T DRILLING (S) PTE LTD. IN ITA NO. 6439/MUM/2014 DATED 07.07.2016. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THIS ISSUE A ND PERUSED THE RECORD. WE NOTICED THAT THE LEARNED CIT(A) HAS FOLL OWED THE DECISION RENDERED BY THE HON'BLE DELHI HIGH COURT IN THE CAS E OF MITCHELL DRILLING INTERNATIONAL (P) LTD. (SUPRA) IN HOLDING THAT SERV ICE TAX COLLECTED BY THE ASSESSEE CANNOT FORM PART OF GROSS RECEIPTS. 11. ON THE CONTRARY, REVENUE HAS PLACED RELIANCE ON THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF CHINA SHIPPING CONTAINER LINES (SUPRA). THE LEARNED A.R. HAS, ON THE CONTRARY, POINTED OUT THAT THE COORDINATE BENCHES OF THE TRIB UNAL HAVE FOLLOWED THE DECISION RENDERED BY THE HON'BLE DELHI HIGH COURT I N OTHER CASES (REFERRED ABOVE) AND HAVE HELD THAT THE SERVICE TAX SHALL NOT FORM PART OF GROSS RECEIPTS. SINCE THE HIGH COURT IS SUPERIOR TO THE T RIBUNAL, THE INFERIOR COURT SHOULD BOW TO THE WISDOM OF SUPERIOR COURT. ACCORDINGLY, THE DECISION RENDERED BY THE HIGH COURT SHOULD BE PREFE RRED OVER THE DECISION RENDERED BY THE TRIBUNAL. ACCORDINGLY WE DO NOT FIN D ANY INFIRMITY IN THE ACTION OF THE AO IN FOLLOWING THE DECISION RENDERED BY THE HON'BLE DELHI HIGH COURT. THEREFORE WE AFFIRM THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE. ITA NOS. 495 & 514/MUM/2017 WEATHERFORD DRILLING INTERNATIONAL (BVI) LTD. 4 12. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE A S WELL AS REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2018. SD/ - SD/ - (AMARJIT SINGH) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 20 TH JUNE, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -58, MUMBAI 4. THE CIT (IT) -4, MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.