Fugro Geoteam AS, New Delhi V. Addl. DIT, Dehradun

ITA 5823/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82021 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Assessee Lawyers: AMIT ARORA SURAJ NANGIA CAS
• Section: 143(3); 234B; 6

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K. , JUDICIAL MEMBER ITA NO . 5823 / DEL / 201 1 ASSESSMENT YEAR : 200 8 - 0 9 FUGRO GEOTEAM AS C/O NANGIA & COMPANY CHARTERED ACC OUNTANTS SUITE - 4 A, PLAZA M - 6, JASOLA, NEW DELHI - 110025 VS. ADDL. DIRECTOR OF INCOME TAX INTERNATIONAL TAXATION, SUBHASH ROAD, DEHRADUN - 248001 (UTTRAKHAND) (PAN AABCF 1411 A ) (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI AMIT ARORA, SURAJ NANGIA, CAS. RESPONDENT BY: SHRI SANJEEV SHARMA, CIT, D.R. ORDER PER SHRI GEORGE GEORGE K , J M : 1. TH IS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE ASSESSI NG OFFICER S ORDER DATED 02 .11.2011 PASSED U/S 143(3) R.W.S 144C(13) OF THE ACT . THE RELEVANT ASSESSMENT YEAR IS 200 8 - 0 9 . 2. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSEE IS FOREIGN COMPANY INCORPORATED UNDER THE LAWS OF NORWAY. IT IS ENGAGED I N THE ACTIVITIES RELATING TO ACQUISITION OF 3D SESISMIC DATA UNDER ITA NO. 5823 /DEL /201 1 ASSESSMENT YEAR : 200 8 - 200 9 2 CONTRACT S WITH RELIANCE INDUSTRIES LTD. AND ONGC. FOR THE YEAR UNDER DISPUTE, THE RETURN OF INCOME WAS FILED ON 28.11.2008 DECLARING INCOME OF RS.18,27,42,870/ - FROM CONTRACT RECEIPT U/S 44 BB OF THE ACT. THE RETURN WAS SELECTED FOR SCRUTINY AND AO PASSED DRAFT ASSESSMENT ORDER , WHEREIN, THE ASSESSEE S CLAIM FOR THE BEING TAXED U/S 44BB WAS REJECTED AND ITS INCOME HAS BEEN TAXED AS FEES FROM TECHNICAL SERVICES. AGGRIEVED BY THE PROPOSED VARIA TION IN ITS INCOME, THE ASSESSEE HAS FILED OBJECTIONS BEFORE THE D ISPUTE R ESOLUTION P ANEL. THE D ISPUTE R ESOLUTION P ANEL AFFIRM ED THE VIEW TAKEN BY THE ASSESSEE. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: ADDITION QU A SE I SMIC SURVEY OPERATIONS IN CONNECTION WITH EXPLORATION/PROSPECTING/EXTRACTION OF MINERAL OIL 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN COMPLETING ASSESSMENT UNDER SECTION 144C/143(3) OF THE INCOME - TAX ACT, 1961 ( THE ACT ) AT AN INCOM E OF RS.527,387,970/ - AS AGAINST THE INCOME OF RS.182,742,870/ - RETURNED BY THE APPELLANT. 2. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN ASSESSING REVENUE OF RS.1,827,428,731/ - ARISING FROM SEISMIC SURVEY SERVICES RENDERED BY THE APPELLANT IN CONNECTION WITH EXPLORATION/PROSPECTING/EXTRACTION NOT CHARGEABLE TO TAX UNDER SECTION 44BB OF THE ACT. 3. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN HOLDING THAT INCOME FROM THE AFORESAID REVENUES OF RS.1,827,428,731/ - WAS TO BE COMPUTED BY A DOPTING A PRESUMPTIVE PROFIT RATE OF 25 PER CENT. ADDITION QUA MOBILIZATION/DEMOBILIZATION OF VESSELS OUTSIDE INDIA 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN HOLDING THAT REVENUE OF RS.282,123,166/ - ARISING FROM MOBILIZATION/DEMOBILISATI ON OF VESSELS OUTSIDE INDIA WERE FEES FOR ITA NO. 5823 /DEL /201 1 ASSESSMENT YEAR : 200 8 - 200 9 3 TECHNICAL SERVICES UNDER SECTION 9(1)(VII) OF THE ACT AS OPPOSED TO REVENUES CLAIMED TO BE EXEMPT FROM TAX UNDER THE ACT. 3. BOTH AR AND DR AGREE D THAT THE ABOVE GROUNDS ARE COVERED BY THE VARIOUS JUDICIAL PRON OUNCEMENTS. IT WAS SUBMITTED THAT THE FIRST GROUND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF PGS GEOPHYSICAL AS VS. ADDL. DIREC TOR OF INCOME TAX REPORTED IN 2014 - TII - 35 - HC - DEL - INTL. 3.1 . IT WAS SUBM ITTED THAT T HE ISSUE RAISED IN THE SECOND GROUND IS COVERED IN FAVOUR OF THE REVENUE BY THE VARIOUS JUDGMENTS OF THE HON BLE UTTRAKHAND HIGH COURT , NAMELY : 1. CIT & ANOTHER VS. ATWOOD OCEANICS PACIFIC LTD. [UTTRAKHAND HIGH COURT] [2010 - TII - 12 - HC - UKHAND - IN TL] DATED MAY 19, 2010. 2. CIT VS. R&B FALCON DRILLING CO. [UTTRAKHAND HIGH COURT] [2009 - TII - 20 - HC - UKHAND - INTL] DATED: APRIL 24,2009 3. CIT VS M/S SUNDOWNER OFFSHORE INTERNATIONAL BURMUDA LTD [UTTRAKHAND HIGH COURT] [2009 - TII - 07 - UKHAND - INTL] DATED FEBRUARY 16, 2009. 4. CIT VS. M/S BJ SERVICE CO [UTTRAKHAND HIGH COURT] [2007 - TII - 05 - HC - UKHAND - INTL] DATED OCTOBER 8, 2007. 5. CIT VS. TRANS OCEAN OFFSHORE INCORPORATION [HIGH COURT OF UTTRAKHAND] [2007 - TII - 13 - HC - UKHAND - INTL] DATED OCTOBER 08, 2007. 6. M/S SEDCO F OREX INTERNATIONAL INC VS CIT, MEERUT [UTTRAKHAND HIGH COURT] [2007 TII - 02 - HC - UKHAND - INTL] DATED SEPTEMBER 28, 2007. 7. CIT VS. M/S HALLIBURTON OFFSHORE SERVICE INC [UTTRAKHAND HIGH COURT] [2007 - TII - 04 - HC - UKHAND - INTL] DATED SEPTEMBER 20, 2007. ITA NO. 5823 /DEL /201 1 ASSESSMENT YEAR : 200 8 - 200 9 4 3.2 . THE T HIRD GROUND , IT WAS SUBMITTED THAT IT IS COVERED IN FAVOUR OF THE ASSESSEE IN THE CASE OF DIT VS. NGC NETWORK ASIA IN ITA NO. 1037 OF 2008 AND DIT VS CLIFFORD CHANCE LLP IN ITA NO.2883 OF 2008. 4 . WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. IN SO FAR AS FIRST GROUND IS CONCERNED, THE DRP REJECTED THE ASSESSEE CONTENTION BY MAKING THE FOLLOWING OBSERVATION: 4.3. THE PANEL HAS CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENTS OF THE ASSESSING OFFICER AS WELL AS THE CONTENTIONS OF THE ASSESSEE. THE PANEL HAS ALSO NOTED THAT THE RULING OF AAR IN THE CASE OF GEOPHZIKA TORUN SP. ZO.0 APPLIES TO THE FACTS OF THE PRESENT CASE AND IN THAT RULING THE AAR HAS CONSIDERED MOST OF THE ARGUMENTS MADE BY THE ASSESSEE AS WELL AS BY THE AO IN THE PRES ENT CASE. ALTHOUGH THE AO HAS DISMISSED THIS RULING ON THE GROUND THAT IT IS APPLICABLE ONLY TO THE CASE IN WHICH IT WAS GIVEN, THE PANEL IS OF THE VIEW THAT SUCH A RULING GIVEN ON SIMILAR SET OF CASES WOULD HAVE CONSIDERABLE PERSUASIVE VALUE. HOWEVER, THE PANEL HAS NOTED THAT THE DEPARTMENT HAS FILED A WRIT BEFORE THE HON BLE DELHI HIGH COURT AGAINST THE RULING OF AAR IN THE CASE OF GEOPHYZIKA TORUN SP. ZO.O. THEREFORE, AS THE MATTER IS SUB - JUDICE BEFORE THE DELHI HIGH COURT NO INTERFERENCE IS BEING MADE B Y THE PANEL IN THE DRAFT ORDER PROPOSED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO PROCEED AND COMPLETE THE ASSESSMENT AS PER THE DRAFT ORDER DATED 29.12.2010 PASSED BY HIM. 5. THE RULING OF AAR IN THE CASE OF GEOPHZIKA TORUN SP. ZO.O HAS BEEN CONFIRMED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX - II VS. OHM LTD. [2012] 28 TAXMANN 120 (DEL). THE SAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX - II VS. OHM LTD. (SUPRA) WAS FOLL OWED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE ITA NO. 5823 /DEL /201 1 ASSESSMENT YEAR : 200 8 - 200 9 5 CASE OF PGS GEOPHYSICAL AS (SUPRA). IN THE LIGHT OF THE ABOVE JUDGMENT S OF HON BLE JURISDICTIONAL HIGH COURT, WE HOLD THAT FOR THE RELEVANT ASSESSMENT YEAR, ASSESSEE IS ENTITLED TO DECLARE ITS INCOME UND ER THE PROVISION OF SECTION 44BB OF THE ACT. IT IS ORDERED ACCORDINGLY. 6 . IN SO FAR AS THE SECOND GROUND NAMELY ADDITION QUA MOBILIZATION/DEMOBILIZATION OF VESSEL OUTSIDE INDIA IS CONCERNED , THE DRP DISMISSED THE PLEA OF THE ASSESSEE BY FOLLOWING THE VA RIOUS JUDGMENTS OF THE HON BLE UTTRAKHAND HIGH COURT. THE RELEVANT FINDING OF THE DRP READS AS FOLLOWS: 5. GROUND NO.2: THIS OBJECTION TO THE PROPOSAL TO TAX THE RECEIPTS ON ACCOUNT OF MOBILIZATION & DEMOBILIZATION AT 25 PER CENT DEEMED PROFIT RATE. IN TH E RETURN OF INCOME THE ASSESSEE HAD CLAIMED THAT MOBILIZATION & DEMOBILIZATION REVENUE AGGREGATING TO RS.282,123,166/ - PERTAINED TO TRANSPORTATION OF THE VESSEL OUTSIDE INDIAN TERRITORIAL WATERS, AND THAT ACCORDINGLY, THE SAME WAS NOT CHARGEABLE TO TAX IN INDIA IN TERMS OF SECTION 5 READ WITH SECTION 9 OF THE INCOME - TAX ACT, 1961. THE PANEL HAS NOTED THAT THE AO HAS RELIED ON A NUMBER OF DECISIONS OF THE JURISDICTIONAL HIGH COURT IN WHICH THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE DEPARTMENT: 1. CIT & AN OTHER VS. ATWOOD OCEANICS PACIFIC LTD. [UTTRAKHAND HIGH COURT] [2010 - TII - 12 - HC - UKHAND - INTL] DATED MAY 19, 2010. 2. CIT VS. R&B FALCON DRILLING CO. [UTTRAKHAND HIGH COURT] [2009 - TII - 20 - HC - UKHAND - INTL] DATED: APRIL 24,2009 3. CIT VS M/S SUNDOWNER OFFSHORE I NTERNATIONAL BURMUDA LTD [UTTRAKHAND HIGH COURT] [2009 - TII - 07 - UKHAND - INTL] DATED FEBRUARY 16, 2009. 4. CIT VS. M/S BJ SERVICE CO [UTTRAKHAND HIGH COURT] [2007 - TII - 05 - HC - UKHAND - INTL] DATED OCTOBER 8, 2007. ITA NO. 5823 /DEL /201 1 ASSESSMENT YEAR : 200 8 - 200 9 6 5. CIT VS. TRANS OCEAN OFFSHORE INCORPORATION [HIGH COURT OF UTTRAKHAND] [2007 - TII - 13 - HC - UKHAND - INTL] DATED OCTOBER 08, 2007. 6. M/S SEDCO FOREX INTERNATIONAL INC VS CIT, MEERUT [UTTRAKHAND HIGH COURT] [2007 TII - 02 - HC - UKHAND - INTL] DATED SEPTEMBER 28, 2007. 7. CIT VS. M/S HALLIBURTON OFFSHORE SERVICE INC [U TTRAKHAND HIGH COURT] [2007 - TII - 04 - HC - UKHAND - INTL] DATED SEPTEMBER 20, 2007. AS THE ISSUE OF TAXATION OF MOBILIZATION AND DEMOBILIZATION CHARGES HAS ALREADY BEEN SETTLED BY THE HON BLE HIGH COURT OF UTTRAKHAND FAVOUR OF REVENUE IN THE ABOVE CASES THE AS SESSEE HAS NO CASE AND SO THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE IS IN ORDER. AS SUCH, THIS GROUND OF OBJECTION IS ALSO REJECTED . 7. IN VIEW OF THE HON BLE UTTRAKHAND HIGH COURT JUDGMENTS MENTIONED ABOVE, WE HOLD THAT THE REVENUE OF RS.2,81,2 3,166/ - ARISING FROM MOBILIZATION/DEMOBILIZATION OF VESSEL OUTSIDE INDIA IS TAXABLE. LEVY OF INTEREST 8. INTEREST U/S 234B & 234C IS NOT CHARGEABLE , SINCE ASSESSEE IS A NON - RESIDENT AND AS SUCH TAX IS TO BE DEDUCTED AT SOURCE BY INDIAN PARTY. THE HON B LE HIGH COURT IN THE CASE OF DIT VS. NGC NETWORK ASIA (SUPRA) AND IN THE CASE OF DIT VS. CLIFFORD CHANCE LLP (SUPRA) HAS DECIDED ISSUE IN FAVOUR OF ASSESSEE. THE SLP FILED FROM THE JUDGMENT OF THE HON BLE UTTRAKHAND HIGH COURT IN THE CASE OF DIT VS. CLIFFO RD CHANCE LLP WAS DISMISSED BY THE HON BLE SUPREME COURT. T HEREFORE, WE HOLD INTEREST U/S 234B & 234C IS NOT CHARGEABLE . ITA NO. 5823 /DEL /201 1 ASSESSMENT YEAR : 200 8 - 200 9 7 9. IN THE LIGHT OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. TH E DECISION WAS PRONOUNCED IN THE OP EN COURT ON 21 ST NOVEMBER , 201 4 . SD/ - SD/ - ( J.S. REDDY ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBER DATED: 21 ST NOVEMBER , 201 4 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITAT, NEW DELHI