Pride Foramer SAS, New Delhi V. Addl. DIT, Dehradun

ITA 5405/DEL/2012

• Counselvise Citation: 540520114 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 04-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Assessee Lawyers: VIDUR PURI
• Keywords: Deemed to accrue or arise in india
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SMT. DIVA SINGH , JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.5405/DEL/2012 ASSESSMENT YEAR : 2008-09 M/S PRIDE FORAMER SAS, ADDL. CIT, C/O SP PURI & CO. 4/18, INT. TAXATION, ASAF ALI ROAD, N. DELHI. V. 13-SUBASH ROAD, N. DELH I. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AACCP AACCP AACCP AACCP- -- -1572 1572 1572 1572- -- -D DD D APPELLANT BY : SHRI VIDUR PURI, FCA. RESPONDENT BY : SHRI SANJEEV SHARMA, CIT-DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF ASSESSING OFFICER DATED 11 TH SEPTEMBER, 2012 PASSED U/S 143(3)/144C OF THE INCOME TAX ACT, 1961. THE GROUNDS OF APPEALS T AKEN BY THE ASSESSEE ARE AS UNDER:- 1. (A) THE LD ASSESSING OFFICER ERRED IN LAW IN HOLDING T HAT MOBILIZATION FEE OF ` .6,08,55,000/- (US$ 15,00,000) RECEIVED BY THE ASSESSEE UNDER THE CONTRACT FROM ONGC IS TAXABLE UND ER SEC. 44BB OF THE INCOME TAX ACT, 1961 EVEN WHEN THE MOBI LIZATION FEE IS FOR THE WORK CARRIED OUT BY THE ASSESSEE OUTSIDE INDIA BEFORE THE DRILLING OPERATIONS CARRIED OUT BY THE EST ABLISHMENT IN INDIA. (B) THE LD ASSESSING OFFICER ERRED IN LAW IN APPLYING THE PROVISION OF SEC. 44BB OF THE IT ACT ON TAXABILITY OF MOBILIZA TION FEE IN INDIA ITA NO5405/DEL/2012 2 WITHOUT CONSIDERING THE TERMS OF DOUBLE TAX AVOIDANCE AGREEMENT WITH FRANCE AND IGNORED THE BENEFICIAL PR OVISIONS IN TERMS OF SEC. 90(2) OF THE IT ACT. 2. THE LD ASSESSING OFFICER ERRED IN LAW AND ON FACTS I N MAKING ADDITION OF REIMBURSEMENT OF COMMUNICATION IMMERSAT C HARGES OF ` .13,90,937/- AS TAXABLE AS PER SEC. 44BB OF THE IT ACT . 3. THE LD ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF REIMBURSEMENT OF REPAIR COST OF EQUIPMENT S OF ` .4,03,485/- AS TAXABLE AS PER SEC. 44BB OF THE IT ACT WHEN EQUIPMENT SUPPLIED AT THE INSTANCE AND COST OF ONGC UN DER THE TERMS OF CONTRACT. 4. THE LD ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF THE REIMBURSEMENT OF SERVICE TAX RECEIVED /RECEIVABLE OF ` .3,00,17,523/- IN COMPUTING INCOME U/S 44BB OF THE A CT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED IN FRANCE. DURING THE PREVIOUS YEAR UND ER CONSIDERATION THE ASSESSEE WAS ENGAGED IN EXECUTING CONTRACT WITH ONGC LTD. FOR OFFSHORE DRILLING OPERATIONS RELATING TO MINERAL OIL IN INDIA. THE ASSESSEE HAS COMPUTED ITS INCOME AS PER THE PROVISIONS OF SECTION 44BB(1) APPLYING THE DEEMED NET PROFIT RATE OF 10% OF GROSS REVENUES. THE ASSESSING OFFICER MADE THE ADDITIONS ON ACCOUNT OF THE F OLLOWING ITEMS OF RECEIPTS WHICH THE ASSESSEE HAD NOT INCLUDED IN GROSS RECEIPTS FOR CALCULATION OF TAXABLE PROFITS U/S 44BB OF THE ACT. I) MOBILIZATION FEE FOR WORK CARRIED OUT BY THE ASSESSEE O UTSIDE INDIA. II) REIMBURSEMENT OF COMMUNICATION CHARGES. ITA NO5405/DEL/2012 3 III) REIMBURSEMENT OF REPAIR/COST OF EQUIPMENTS. IV) REIMBURSEMENT OF SERVICE TAX. 3. AT THE OUTSET, THE LD AR INVITED OUR ATTENTION TO PAPER BOOK PAGE 92 ONWARDS WHEREIN A COPY OF ITAT ORDER IN I.T.A. NO .4512/DEL/2012 IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2000-01 WAS PLACED. THE LD AR SUBMITTED THAT FIRST ISSUE OF MOBILIZATION FEES WAS D ECIDED IN FAVOUR OF ASSESSEE. HOWEVER, THE MATTER TRAVELED UP TO THE HON 'BLE HIGH COURT AND HON'BLE HIGH COURT HAS DECIDED THE MATTER AGAINST THE ASSESSEE AND THEREFORE HE FAIRLY CONCEDED THAT FIRST ISSUE IS COVERED AGAINST THE ASSESSEE. HOWEVER, HE SUBMITTED THAT THE ASSESSE E HAD INVOKED PROVISIONS OF DOUBLE TAXATION AVOIDANCE AGRE EMENT AND ASSESSING OFFICER HAD IGNORED THE BENEFICIAL PROVISIONS OF SECTION 90(2) OF THE ACT. THEREFORE, IN VIEW OF THE ABOVE TREATY PROVISION, THE LD AR SUBMITTED THAT ASSESSEE SHOULD HAVE BEEN GIVEN BENEFIT OF PROVISIONS OF TREATY. 4. REGARDING GROUND NO. 2 & 3 WITH RESPECT TO REIMBU RSEMENT OF COMMUNICATION CHARGES AND COST OF REPAIR CHARGES, THE LD AR SUBMITTED THAT THE ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE IN ASSESSMENT YEAR 2002-03 AND OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 238 WHERE A COPY OF ORDER IN THE CASE OF ASSESSEE ITSELF FOR ASSESSMENT YEAR 2002-03 WAS PLACED. 5. AS REGARDS GROUND NO.4, REGARDING REIMBURSEMENT OF SERVICE TAX, IT WAS ARGUED THAT THE ISSUE WAS COVERED IN FAVOUR OF A SSESSEE VIDE JUDGMENT OF SEDCO FOREX INTERNATIONAL DRILLING CO. V. ADIT 139 ITD 188 PLACED AT PAPER BOOK PAGE 263 TO 287. HE FURTHER RE LIED ON THE CASE LAW OF DDIT V. MITCHELL DRILLING INTERNATIONAL PTY . LTD. IN I.T.A. NO. 698/DEL/2012 PLACED AT PAPER BOOK PAGES 268 TO 273 A ND IN VIEW OF ITA NO5405/DEL/2012 4 THE ABOVE IT WAS ARGUED THAT ISSUE WAS COVERED IN FAVO UR OF ASSESSEE, THE SAME MAY BE DECIDED IN FAVOUR OF THE ASSESSEE. 6. THE LD DR, ON THE OTHER HAND, SUBMITTED THAT WITH RESPECT TO GROUND NO. 1 FOR MOBILIZATION FEES IT WAS COVERED AGA INST THE ASSESSEE BY THE ORDER OF SEDCO FOREX INC. V. CIT IN 299 ITR 238 AND FURTHER SUBMITTED THAT IN THE CASE OF ASSESSEE ITSELF THE HON'BLE HIGH COURT OF UTTRAKHAND HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. REGA RDING ARGUMENT OF THE LD AR THAT ASSESSEE SHOULD HAVE BEEN GIV EN BENEFIT OF PROVISIONS OF TREATY, HE SUBMITTED THAT HON'BLE HIGH C OURT HAS ALREADY DECIDED THE MATTER AGAINST ASSESSEE AND AT THIS STAGE THIS GROUND IS NOT TENABLE. ARGUING UPON 2ND AND 3RD GROUND, THE L D DR PLACED RELIANCE ON THE ORDER OF M/S SCHILUMBER ASIA SERVIE L TD. 317 ITR 156 WHEREIN IT WAS HELD THAT ALL RECEIPTS OTHER THAN CUSTO MS DUTY WERE TAXABLE U/S 44BB OF THE ACT. HE FURTHER ARGUED THAT SECTION 44BB IS A DEEMING PROVISION AND IS A COMPLETE CODE IN ITSELF AND IT OVER RIDE ALL OTHER SECTIONS OF THE ACT AND THEREFORE, HE ARGUED T HAT ASSESSING OFFICER HAS RIGHTLY INCLUDED THE REIMBURSEMENT OF EXP ENSES IN THE GROSS RECEIPTS FOR THE PURPOSE OF COMPUTATION U/S 44BB O F THE ACT. REGARDING THE ARGUMENT OF LD AR THAT IN EARLIER YEA RS THE CASE WAS DECIDED IN FAVOUR OF ASSESSEE, THE LD DR ARGUED THAT IN THE ORDER RELIED UPON BY LD AR THE REIMBURSEMENT WAS ON ACCOUNT OF DIF FERENT ITEMS WHICH HAD NOTHING TO DO WITH THE CONTRACTUAL OBLIGA TIONS OF THE ASSESSEE WHEREAS IN THE PRESENT CASE THE REIMBURSEMENT OF E XPENSES ARE WITH RESPECT TO CONTRACTUAL OBLIGATIONS AND HENCE THE FACTS OF PRESENT CASE ARE DISTINGUISHABLE. REGARDING SERVICE TAX THE LD DR SUBMITTED THAT CASE LAW OF TECHNIP OFFSHORE CONTRACTI NG BV 29 SOT 33 (DEL.) WAS IN FAVOUR OF REVENUE AS IN THAT CASE THE SE RVICE TAX WAS CONSIDERED AS PART OF GROSS RECEIPTS. ITA NO5405/DEL/2012 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE OF MOBILIZATION FEES IS SQUARELY COVERED AGAINST TH E ASSESSEE. THE HON'BLE UTTRAKHAND HIGH COURT IN THE CASE OF ASSES SEE ITSELF IN I.T.A. NO. 134/2007 HAS DECIDED THE MATTER AGAINST T HE ASSESSEE. THE HON'BLE HIGH COURT HAS RELIED UPON THE CASE LAW SEDCO FOREX INC. V. CIT 299 ITR 238. THE ARGUMENT OF LD AR THAT THE ASSESSEE SHO ULD HAVE BEEN GIVEN BENEFIT OF DOUBLE TAX AVOIDANCE AGREEMEN T DOES NOT HOLD ANY FORCE AS THE ISSUE HAS ALREADY BEEN DECIDED BY TH E HON'BLE HIGH COURT. THEREFORE, THE FIRST GROUND OF APPEAL IS DECI DED AGAINST THE ASSESSEE AND IS DISMISSED. 8. GROUND NO.2 & 3 IS AGAINST INCLUSION IN THE GROSS RE CEIPTS AMOUNT RECEIVED ON ACCOUNT OF COMMUNICATION CHARGES AND ON ACCOUNT OF REPAIR/COST OF EQUIPMENT CHARGES. THE LD AR HAD ARGU ED THAT THE ISSUES WERE COVERED IN ITS FAVOUR BY THE ORDER OF TRIBU NAL IN ITS OWN CASE FOR ASSESSMENT YEAR 2002-03 PLACED AT PAPER BOOK PA GE 238. WE HAVE GONE THROUGH THE FINDINGS OF THE ORDERS AND WE O BSERVE THAT DURING THIS YEAR THE HON'BLE TRIBUNAL HAD MADE A FI NDING OF FACT VIDE PARA 20 OF THE ORDER. THE RELEVANT FINDINGS ARE REPR ODUCED AS UNDER:- NO DOUBT, SECTION 44BB IS A CODE IN ITSELF AND IT STAR TS WITH NON OBSTANTE CLAUSE WHICH EXCLUDES APPLICATION OF SEC. 28 TO 41 AND SECTION 43 AND 43A BUT AT THE SAME TIME TO ASSESS ANY SUM UNDER THAT SECTION, THE ACTIVITY MUST FALL WITHIN THE ACTIVITY DESCRIBED IN SUB SECTION (2) OF SEC . 44BB. SUPPLY OF DRY FRUITS AND RECOVERY OF COMMUNIC ATION EXPENSES SPECIFICALLY DO NOT FIND MENTION IN SUB SEC. (2 ) OF SEC. 44BB AS THESE ACTIVITIES HAVE NOTHING TO DO WITH ACTIVITY OF PROSPECTING FOR MINERAL OIL OR EXTRACTIO N OR ITA NO5405/DEL/2012 6 PRODUCTION OF MINERAL OILS IN INDIA OR OUTSIDE INDIA. AS REGARDS THE REIMBURSEMENT OF COST OF EQUIPMENT, THE SAM E ALSO DOES NOT FALL WITHIN THE AMBIT OF SUB SEC/(2) OF SE C. 43BB AS THE SAME APPLIES TO SUPPLY OF PLANT AND MACHINE RY ON HIRE OF THE EQUIPMENT, 75% COST OF WHICH WAS REIMBURSABLE WAS NOT MACHINERY ON HIRE BEING USED IN SUCH ACTIVITY. THERE WAS NO MATERIAL ON RECORD TO SHOW THAT THE SAID EQUIPMENT WAS USED ON HIRE EITHER BY THE ASSESSEE OR THE CONTRACTEE. THEREFORE, THE REIMBURSEMENT PAYMENTS RECEIVED BY THE ASSESSEE NOT COMING WITHIN THE SCOPE OF SEC. 44BB HAD RIGHTLY BEEN HELD TO BE EXCLUD IBLE BY THE COMMISSIONER (APPEALS). THE REIMBURSEMENT OF EXPENSES WAS ALSO NOT TAXABLE UNDER OTHER PROVISIONS OF THE ACT AS THERE WAS NO MATERIAL ON RECORD TO SHOW THA T ANY ELEMENT OF PROFIT WAS EMBEDDED IN THE REIMBURSEME NT RECEIVED BY THE ASSESSEE. IN ABSENCE OF ELEMENT OF PROF IT IN THE AMOUNT RECEIVED BY THE ASSESSEE AS REIMBURSEMENT NO INCOME COULD BE ASSESSED UNDER OTHER PROVISIONS OF THE ACT ALSO. 9. WE FURTHER FIND THAT HON'BLE UTTRAKHAND HIGH IN THE CASE OF CIT V. HALLIBURTON OFFSHORE SERVICE INC. 300 ITR 265 HAS SUM MED UP THE FINDINGS ON ACCOUNT OF RECEIPTS VIDE PARA 5 & 6 WHICH ARE REPRODUCED BELOW:- SECTION 44BB PROVIDES THAT THE DEEMED PROFITS AND G AINS UNDER SUB SEC.(1) SHALL BE AT THE RATE OF 10% OF THE AGGREGA TE AMOUNT SPECIFIED IN SUB SEC. (2). WE PROCEED TO ANALYZE SUB S EC.(2) CLAUSE (A) OF SUB SEC. (2) REFERS TO THE AMOUNTS (A) P AID TO THE ASSESSEE (WHETHER IN OR OUT OF INDIA) ON ACCOUNT OF THE PROVISION ITA NO5405/DEL/2012 7 OF SERVICES AND FACILITIES IN CONNECTION WITH OR SUPPLY OF PLANT AND MACHINERY ON HIRE USED, OR TO BE USED IN THE PROSPECT ING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OILS IN INDIA A ND (B) PAYABLE TO THE ASSESSEE (WHETHER IN OR OUTSIDE INDIA) ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH OR SUP[PLY OF PLANT & MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MIN ERAL OILS IN INDIA. CLAUSE (B) OF SUB SEC. (2) REFERS TO THE AMOUNTS (A) RECEIVED BY ASSESSEE IN INDIA ON ACCOUNT OF THE PROVISIO N OF SERVICES AND FACILITIES IN CONNECTION WITH OR SUPPLY OF PLANT AND MACHINERY ON HIRE USED OR TO BE USED IN THE PROSPECTI NG FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS OUTSIDE INDI A AND (B) DEEMED TO BE RECEIVED BY THE ASSESSEE IN INDIA ON ACCO UNT OF PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH OR SUPPLY OF PLANT & MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OILS OUT SIDE INDIA. THUS IT IS CLEAR FROM THE PERUSAL OF SEC. 44BB THAT ALL THE AMOUNTS EITHER PAID OR PAYABLE (WHETHER IN INDIA OR OUTSIDE INDIA) OR RECEIVED OR DEEMED TO BE RECEIVED (WHETHER IN INDIA OR OUTSIDE INDIA) ARE MUTUALLY INCLUSIVE. THIS AMOUNT IS THE BASIS OF DETERMINATION OF DEEMED PROFIT AND GAINS OF THE ASSESSEE AT THE RATE OF 10%. THEREFORE, IN OUR VIEW, THE TRIBUNAL F ELL INTO ERROR IN NOT APPRECIATING THE DIFFERENCE BETWEEN THE AMOUNT AND THE INCOME. AMOUNT PAID OR RECEIVED REFERS TO THE TOTAL PAYMENT TO THE ASSESSEE OR PAYABLE TO THE ASSESSEE OR DEEMED TO BE RECEIVED BY THE ASSESSEE, WHEREAS INCOME HAS BEEN DEFIN ED U/S 2(24) OF THE IT ACT AND SEC. 5 AND SEC. 9 DEAL WITH T HE INCOME AND ACCRUED INCOME AND DEEMED INCOME. SEC. 4 IS THE CHARGING SECTION OF THE INCOME TAX ACT AND DEFINITION AS WELL AS THE ITA NO5405/DEL/2012 8 INCOMES REFERRED IN SECTIONS 5 & 9 ARE FOR THE PURPOSE OF IMPOSING THE INCOME TAX UNDER SEC. 143(3). SECTION 44 BB IS A COMPLETE CODE IN ITSELF. IT PROVIDES BY A LEGAL FICTI ON TO BE THE PROFITS AND GAINS OF THE NON RESIDENT ASSESSEE ENGAGED IN THE BUSINESS OF EXPLORATION AT THE RATE OF 10% OF THE AGGR EGATE AMOUNT SPECIFIED IN SUB SEC. (2). IT IS NOT IN DISPUTE T HAT THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE COMPANY. THEREF ORE THE ASSESSING OFFICER ADDED THE SAID AMOUNT WHICH WAS REC EIVED BY THE NON RESIDENT COMPANY RENDERING SERVICES AS PER PROVISIONS OF SEC. 44BB TO THE ONGC AND IMPOSED THE INC OME TAX THEREON. 10. IN VIEW OF THE ABOVE, WE FIND THAT RECEIPTS RECE IVED BY THE ASSESSEE NECESSARILY FORMS PART OF GROSS RECEIPTS AND IN VIE W OF THE ABOVE GROUND NO.2 & 3 IS ALSO DISMISSED. 11. AS REGARDS GROUND NO.4 REGARDING RECEIPT OF SERVIC E TAX ISSUE, THIS ISSUE HAS BEEN EXAMINED BY THE TRIBUNAL IN THE CASE OF SEDCO FOREX DRILLING INC. 139 ITD 188 WHEREIN IT HAS BEEN HELD THAT SERVICE TAX BEING A STATUTORY LIABILITY CANNOT FORM PART OF GROSS RECEIPTS FOR THE PURPOSE OF DEEMED PROFIT U/S 44BB. THE RELEVANT FINDI NGS OF THE TRIBUNAL ARE REPRODUCED BELOW:- AS REGARDS REIMBURSEMENT OF AMOUNT IN RESPECT OF SERVI CE TAX, AS POINTED OUT BY BY THE LD. AR, THE ITAT DELHI BENC H IN THEIR DECISION IN TECHNIP OFFSHORE CONTRACTING BV(SUPRA) CO NCLUDED THAT SERVICE TAX COLLECTED BY THE ASSESSEE BEING DIRECT LY IN CONNECTION WITH SERVICES OR FACILITIES OR SUPPLY SPEC IFIED U/S 44BB OF THE ACT PROVIDED BY THE ASSESSEE TO ONGC, HAV E TO BE INCLUDED IN THE TOTAL RECEIPTS FOR THE PURPOSE OF DE TERMINATION OF ITA NO5405/DEL/2012 9 PRESUMPTIVE PROFIT U/S 44BB OF THE ACT. IT IS WELL ESTA BLISHED THAT SECTION 44BB OF THE ACT IS A SPECIAL PROVISION, TREATIN G 10 PER CENT OF THE AGGREGATE AMOUNT SPECIFIED IN SUB-S. (2) O F S. 44BB AS DEEMED PROFITS AND GAINS OF SUCH NON-RESIDENT ASSESSEE W HO IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES OR FACIL ITIES IN CONNECTION WITH, OR SUPPLYING PLANT AND MACHINERY ON HIGHER USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTR ACTION OR PRODUCTION OF, MINERAL OILS. THE AMOUNT REFERRED IN SUB-S. (2) OF S. 44BB ARE THE AMOUNTS (A) PAID TO THE ASSESSEE (WHETHER IN OR OUT OF INDIA) ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINERY ON HIGHER USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTR ACTION OR PRODUCTION OF, MINERAL OILS IN INDIA, (B) PAYABLE TO THE ASSESSEE (WHETHER IN OR OUT OF INDIA) ON ACCOUNT OF THE PROV ISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY O F PLANT AND MACHINERY ON HIGHER USED, OR TO BE USED, IN THE PROSPE CTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS IN INDI A, (C) RECEIVED BY THE ASSESSEE IN INDIA ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINERY ON HIGHER USED, OR TO BE USED, IN THE PROSPE CTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS OUTSIDE INDIA AND (D) DEEMED TO BE RECEIVED BY THE ASSESSEE IN INDIA ON ACCO UNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINERY ON HIGHER USED, OR TO B E USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF , MINERAL OILS OUTSIDE INDIA. THE SERVICE TAX IS A STATUTORY LIABILITY LIKE CUSTOM DUTY. HONBLE UTTARAKHAND HIGH COURT IN THEIR DECI SION IN SCHLUMBERGER ASIA SERVICES LTD.(SUPRA) CONCLUDED THAT REIMBURSEMENT OF CUSTOM DUTY PAID BY THE ASSESSEE COULD N OT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED PROFIT S U/S 44BB ITA NO5405/DEL/2012 10 UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEME NT. 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 OF PROFIT AND ACCORDINGLY, THE SAME COULD NO T BE INCLUDED IN THE TOTAL RECEIPTS FOR DETERMINING THE P RESUMPTIVE INCOME. IN THE LIGHT OF VIEW TAKEN BY THE MUMBAI B ENCH, ESPECIALLY WHEN THE LD. DR DID NOT PLACE ANY MATERIA L 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 OPIN ION THAT SERVICE TAX PAID BY THE ASSESSEE COULD NOT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED PROFITS U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. THEREFORE, G ROUND NO.3 IN THE APPEAL IS ALLOWED. 12. THEREFORE, FOLLOWING THE ABOVE, WE ALSO HOLD THA T SERVICE TAX RECEIVED BY THE ASSESSEE CANNOT FORM PART OF GROSS RECEI PTS FOR THE PURPOSE OF CALCULATION OF DEEMED PROFIT. IN VIEW OF THE ABOVE GROUND NO. 4 IS DECIDED IN FAVOUR OF THE ASSESSEE. IN NUTSHELL, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH DAY OF JANUARY, 2014. SD/- SD/- (DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 24.1.2014. HMS ITA NO5405/DEL/2012 11 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 25.11.2013 DATE OF DICTATION 13.1.2014 DATE OF TYPING 15.1.2014 DATE OF ORDER SIGNED BY 24.1.2014 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.