Siem Offshore Inc., Mumbai V. DDIT, Dehradun

ITA 5745/DEL/2012

• Counselvise Citation: 574520114 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: POONAM KHERA SIDHU

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI H.S. SIDHU: JUDICIAL MEMBER ITA NO. 5745/DEL/2012 A.Y. 2006-07 SIEM OFFSHORE INC. VS. DY. DIRECTOR OF INCOME-TA X, 601, GATEWAY PLAZA, INTERNATIONAL TAXATION, HIRANANDANI GARDEN, POWAI, DEHRADUN. MUMBAI-400076. PAN: AAKCS 6466 R ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI AMIT ARORA RESPONDENT BY : MS. POONAM KHERA SIDHU CIT( DR) DATE OF HEARING : 05-06-2015 DATE OF ORDER : 08-06-2015. O R D E R PER S.V. MEHROTRA, A.M:- THIS APPEAL, PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST CIT(A)S ORDER DATED 7-8-2012 RELATING TO A.Y. 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A NON-RESIDENT COMPANY, DURING THE YEAR UNDER CONSIDERATION OFFERED ITS REV ENUES ON ACCOUNT OF TIME 2 ITA 5745/DEL/2012 M/S SIEM OFFSHORE INC. VS. DDIT CHARTERED AGREEMENT DATED 31-10-2005, VIDE WHICH I T HAD AGREED TO LEASE A VESSEL TO EMGS (ANOTHER NON-RESIDENT COMPANY). THE GROSS RECEIPTS RECEIVED BY THE ASSESSEE HAD BEEN OFFERED TO TAX @ 10% AS PER THE PROVISIONS OF SECTION 44BB OF THE I.T. ACT. THE ASS ESSEE MADE SUBMISSIONS DATED 11-11-2008, WHEREIN IT WAS, INTER ALIA, SUBMI TTED THAT ASSESSEE HAD INADVERTENTLY RETURNED THE INCOME AT RS. 8,95,72,98 2/- INSTEAD OF RS. 8,31,60,337/- ON THE GROUND THAT IT HAD INADVERTENT LY INCLUDED TWO INVOICES IN GROSS REVENUES THAT DID NOT PERTAIN TO INDIAN OP ERATIONS. THE ASSESSEES CLAIM WAS THAT THESE TWO INVOICES PERTAINED TO REIM BURSEMENT OF EXPENDITURE INCURRED BY ASSESSEE ON BEHALF OF EMGS. 3. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION, INTER ALIA, OBSERVING THAT AS PER THE TDS CERTIFICATES WHICH HAD BEEN FUR NISHED ALONG WITH ITS SUBMISSIONS DATED 31-10-2008 ISSUED BY M/S EMGS, A TOTAL SUM OF RS. 14,84,30,505/- HAD BEEN PAID TO ASSESSEE IN RESPECT OF WHICH TDS HAD BEEN MADE BY EMGS. ACCORDINGLY, THE WHOLE AMOUNT WAS BRO UGHT TO TAX U/S 44BB. HE FURTHER POINTED OUT THAT ASSESSEES PLEA T HAT THESE EXPENSES HAD BEEN REIMBURSED FOR THE OPERATIONS CARRIED OUT OUTS IDE INDIA, WAS ALSO NOT ACCEPTABLE BECAUSE THE INCOME HAD BEEN OFFERED U/S 44BB. HE POINTED OUT THAT THE REIMBURSEMENTS WERE ON ACCOUNT OF PROVIDIN G SERVICES OR FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINER Y ON HIRE, OR TO BE USED, 3 ITA 5745/DEL/2012 M/S SIEM OFFSHORE INC. VS. DDIT IN PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OILS OUTSIDE INDIA, HENCE INCLUDIBLE AS PER PROVISIONS OF SECTION 44BB. HE RELIED ON THE DECISION OF HONBLE UTTRAKHAND HIGH COURT IN THE CASE OF CIT VS. HALLIBURTON OFFSHORE SERVICES INC. 300 ITR 265 THAT REIMBURSEME NT OF EXPENDITURE WAS INCLUDIBLE IN THE REVENUE AS CONTEMPLATED BY SEC. 4 4BB OF THE I.T. ACT. 4. LD. CIT(A), WHILE PARTLY ALLOWING THE ASSESSEES APPEAL, CONFIRMED THE AOS ACTION ON THIS ISSUE. BEING AGGRIEVED, THE ASSESSEES IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL : 1. THE LD. CIT(A) ERRED IN BRINGING TO TAX THE TW O INVOICES AMOUNTING TO RS. 64,12,645/- NOT RELATING TO INDIAN OPERATIONS, AS REIMBURSEMENTS CHARGEABLE TO TAX IN INDIA U/S 44 BB OF THE ACT. 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 5,88,57,523 TO THE REVENUES RELATING TO THE PERIOD PRIOR TO THE VESSEL ENTERING INDIA I.E. 200 NAUTICAL MILES FROM INDIAN SHORELINE, AS LIABLE TO TAX U/S 44BB OF THE ACT. 3. THE LD. CIT(A) ERRED IN UPHOLDING THE LEVY OF I NTEREST OF RS. 9,93,168/- U/S 234A OF THE ACT. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH PARTI ES AND HAVE PERUSED THE RECORD OF THE CASE. FACTS ARE NOT DISPUTED. LD. CIT (DR) HAS FILED WRITTEN SUBMISSIONS POINTING OUT THAT BOTH THE ISSUES RAISE D BY THE ASSESSEE IN ITS GROUNDS OF APPEAL ARE COVERED AGAINST THE ASSESSEE. IN ALL THE CASE LAWS IT HAS BEEN HELD THAT 4 ITA 5745/DEL/2012 M/S SIEM OFFSHORE INC. VS. DDIT THE RECEIPTS LIKE MOBILIZATION FEE, REIMBURSEMENT O F COST OF SPARE PARTS; REIMBURSEMENT OF FREIGHT AND TRANSPORTATION CHARGES ; REIMBURSEMENT ON ACCOUNT OF SUPPLY OF PLANT & MACHINERY; REIMBURSEMENT ON ACCOU NT OF CATERING EXPENSES AND FUEL EXPENSES ARE TO BE INCLUDED IN GROSS RECEIPTS U/S 44BB. IN THE CASE OF CIT VS. HALLIBURTON OFFSHORE SERVICES INC. (SUPRA), THE HO NBLE UTTRAKHAND HIGH COURT HAS, INTER ALIA, OBSERVED AS UNDER: IN THAT DECISION, IT WAS DECIDED THAT, FROM A PERU SAL OF SECTION 44BB, IT IS CLEAR THAT ALL THE PAYMENTS, EITHER PAI D OR PAYABLE (WHETHER IN INDIA OR OUTSIDE INDIA) OR RECEIVED OR DEEMED TO BE RECEIVED (WHETHER IN INDIA OR OUTSIDE INDIA), ARE M UTUALLY INCLUSIVE AND THIS AMOUNT IS THE BASIS OF DETERMINA TION OF DEEMED PROFITS AND GAINS OF THE ASSESSEE AT 10 PER CENT AND ALSO THAT THE AMOUNT PAID OR RECEIVED REFERS TO THE TOTA L PAYMENT TO THE ASSESSEE OR PAYABLE TO THE ASSESSEE OR DEEMED T O BE RECEIVED BY THE ASSESSEE; WHEREAS, INCOME HAS BEEN DEFINED U NDER SECTION 2(24) OF THE INCOME-TAX ACT AND SECTION 5 & SECTION 7 DEAL WITH INCOME AND ACCRUED INCOME AND DEEMED INCO ME. IN OTHER WORDS, AN IMPRESSION WAS GIVEN BY THE ASSESSE E, ITSELF, TO THE TRIBUNAL THAT ANY PAYMENT RECEIVED BY AN ASSESS EE, WHO FALLS WITHIN SECTION 44BB, WILL BE TAXED IN ACCORDA NCE WITH THE MANDATE CONTAINED HEREIN. 6. THE ORDER OF THE CIT(A) BEING IN CONFORMITY WITH THE DECISION OF HONBLE UTTRAKHAND HIGH COURT IN THE CASE OF HALLIBURTON OF FSHORE SERVICES INC. (SUPRA), WE SEE NO REASON TO INTERFERE WITH THE SAME. GROUND NOS. 1 & 2 STAND REJECTED ACCORDINGLY. 5 ITA 5745/DEL/2012 M/S SIEM OFFSHORE INC. VS. DDIT 7. APROPOS GROUND NO. 3, LD. CIT(A) HAS OBSERVED IN PARA 6 OF HIS ORDER THAT THE RETURN FOR AY 2005-06 WAS FILED ON 28-3-2008 AND, T HEREFORE, INTEREST U/S 234A HAD BEEN CORRECTLY CHARGED. WE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN QUESTION. GROUND IS DISMISSED. 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08-06-2015. SD/- SD/- (H.S. SIDHU) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08-06-2015. MP: C OPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR