ADIT, Dehradun V. M/s. Tidewater Marine International Inc., Dehradun

ITA 5927/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7058 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA ANAND
• Keywords: Depreciation
• Section: 244A; 142(1); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5864/DEL./2013 (ASSESSMENT YEAR : 2010-11) TIDEWATER MARINE INTERNATIONAL INC., VS. ADIT, C/O NANGIA & COMPANY, INTERNATIONAL TAXATION, SUITE 4A, PLAZA M 6, NEW DELHI. JASOLA, NEW DELHI 110 025. (PAN : AAACT7573Q) ITA NO.5927/DEL./2013 (ASSESSMENT YEAR : 2010-11) ADIT, VS. TIDEWATER MARINE INTERNATIONAL INC., INTERNATIONAL TAXATION, C/O NANGIA & COMPANY, NEW DELHI. SUITE 4A, PLAZA M 6, JASOLA, NEW DELHI 110 025. (PAN : AAACT7573Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT ARORA, CA REVENUE BY : MS. ANUPAMA ANAND, CIT DR DATE OF HEARING : 28.06.2016 DATE OF ORDER : 29.06.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE AFORESAID CROSS APPEALS QUA THE ASSESSMENT YEAR 2010-11 ARE BEING DISPOSED OFF WITH CONSOLIDATED ORDER TO A VOID REPETITION OF DISCUSSION. ITA NOS.5864 & 5927/DEL./2013 2 2. THE APPELLANT, TIDEWATER MARINE INTERNATIONAL IN C., (HEREINAFTER REFERRED TO AS THE ASSESSEE) IN ITA NO.5864/DEL/2013 BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE TH E IMPUGNED ORDER DATED 26.08.2013 PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS)-II, NEW DELHI QUA THE ASSESSMENT YEAR 201 0-11 ON THE GROUND THAT :- 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 AMOUNT AGGREGATING TO RS.37,198,378/- BEING THE PROPORTIONATE AMOUNT RECEIVED BY THE APPELLANT FOR DEMOBILIZATION OF VESSELS OUTSIDE INDIAN TERRITORIA L WATERS IS TO BE INCLUDED IN THE GROSS RECEIPTS U/S 44BB OF THE INCOME TAX ACT, 1961 AS OPPOSED TO THE CLAIM OF THE APPELLANT THAT THE SAME DOES NOT CONSTITUTE INCOME CHARGEABLE TO TAX IN INDIA AS PER SECTION 5 READ WI TH SECTION 9 OF THE INCOME-TAX ACT, 1961. 3. THE APPELLANT, ADIT, INTERNATIONAL TAXATION, DEH RADUN (HEREINAFTER REFERRED TO AS THE REVENUE) IN ITA N O.5927/DEL/2013 BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE TH E IMPUGNED ORDER DATED 26.08.2013 PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS)-II, NEW DELHI QUA THE ASSESSMENT YEAR 201 0-11 ON THE GROUNDS INTER ALIA THAT :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN HOLDING THAT NO DISTINCTION CAN BE MADE BETWEEN RECEIPTS FROM PRODUCTION SHARING PARTICIPANTS (PSC PARTNERS') AN D NON-PRODUCTION SHARING PARTICIPANTS ('NON-PSC PARTNERS') AND BETWEEN SERVICES RENDERED BY FIRST-L EG AND SECOND-LEG VENDORS, IGNORING THE FACT THAT THE RECE IPTS FROM NON-PSC PARTNERS ON ACCOUNT OF SUPPLIES OF PLA NT & ITA NOS.5864 & 5927/DEL./2013 3 MACHINERY ON HIRE ('EQUIPMENT RENTAL') ARE IN RESPE CT OF CONTRACTS WHICH ARE ENTERED INTO WITH COMPANIES NOT DIRECTLY ENGAGED IN OIL PRODUCTION AND EXPLORATION AND, THEREFORE, LIABLE TO TAX U/S 9(1)(VI) / 9(1)(VII) R EAD WITH SECTION 44DA AND NOT SECTION 44BB OF THE IT ACT, 19 61 ('ACT'). 1 (A) THE LD CIT(A) HAS ERRED IN HOLDING THAT THE RECEIPTS FROM NON-PSC PARTNERS ON ACCOUNT OF SUPPLI ES OF PLANT & MACHINERY ON HIRE ('EQUIPMENT RENTAL') ARE NOT IN THE NATURE OF ROYALTY U/S 9(1)(VII) OF THE ACT, 196 1 READ WITH SECTION 44DA OF THE ACT ELIGIBLE FOR TREATMENT UNDER PRESUMPTIVE PROVISIONS OF SECTION 44BB OF THE ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD CIT(A) HAS ERRED IN IGNORING THE D ISTINCT SCHEME OF TAXATION OF FEE FOR TECHNICAL SERVICES AN D ROYALTY AND DISREGARDING THE INSERTION OF PROVISOS IN SECTION(S) 44BB / 44DA / 115A AND THE RATIONALE BEH IND THE INTRODUCTION OF SAID C1ARIFICATORY PROVISIONS I N THE FINANCE BILL 2010 WHILE HOLDING THAT THE INCOME OF THE ASSESSEE COMPANY FROM EQUIPMENT RENTAL FROM NON-PSC PARTNERS WAS COVERED UNDER THE PRESUMPTIVE PROVISIO NS OF SECTION 44BB. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT PROVISO TO SECTION 44DA BROUGHT ABOUT BY THE FINANCE ACT 2010 WAS ONLY CLARIFICATORY IN NATURE A ND ITS APPLICATION HAS TO BE READ INTO THE MAIN PROVISIONS WITH EFFECT FROM THE TIME THE MAIN PROVISION CAME INTO E FFECT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING V/S CIT. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN IGNORING THE DECIS ION OF JURISDICTIONAL HIGH COURT IN THE CASES OF A GC AS A GENT OF FORAMER FRANCE AND M/S ROLLS ROYCE PVT LTD [2007-TI I- 03-HC-UKHAND-INTL] 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN REVERSING THE AC TION OF THE AO WHO, HAVING HELD THAT THE ASSESSEE REVENUES ON ITA NOS.5864 & 5927/DEL./2013 4 ACCOUNT OF EQUIPMENT RENTAL UNDER CONTRACTS WITH NON- PSC PARTNERS ARE LIABLE TO BE TAXED U/S 44DA, RIGHT LY ESTIMATED THE INCOME BY APPLYING 25% RATE OF PROFIT ON GROSS RECEIPTS, IN THE ABSENCE OF BOOKS OF ACCOUNTS AND DETAILS OF EXPENSES INCURRED IN PROVIDING THE SERVI CES. 4. BRIEFLY STATED FACTS OF THIS CASE ARE : PURSUANT TO THE NOTICES ISSUED UNDER SECTION 143(2) AND 142(1) OF THE INCOM E-TAX ACT, 1961 (FOR SHORT THE ACT) ALONG WITH QUESTIONNAIRE DURING THE SCRUTINY PROCEEDINGS, SHRI R.P. EASWARAN, FCA ALONG WITH SHRI HITESH DODHI, CA PUT IN APPEARANCE AND FILED WRITTE N REPLIES. DURING THE YEAR UNDER ASSESSMENT, ASSESSEE OFFERED GROSS REVENUE OF RS.102,20,66,402/- AND HAS COMPUTED THE INCOME B Y APPLYING DEEMED PROFIT RATE AT 10% U/S 44BB OF THE ACT IN RE SPECT OF ALL THE SEVEN CONTRACTS ENTERED INTO BETWEEN THE ASSESSEE A ND THE OTHER SEVEN PARTIES DULY DETAILED IN PARA 2 OF THE ASSESS MENT ORDER. ASSESSEE OFFERED AN AMOUNT OF RS.5,68,000/- ON ACCO UNT OF INTEREST INCOME U/S 244A OF THE ACT. AO OBSERVED FROM THE C OMPUTATION OF INCOME AND DETAILS FILED BY THE ASSESSEE ALONG W ITH RETURN THAT MOBILIZATION CHARGES AMOUNTING TO RS.3,71,98,378/- HAS BEEN REDUCED FROM THE GROSS RECEIPT FOR WORKING OUT PROF IT U/S 44BB OF THE ACT. IT IS ALSO OBSERVED FROM THE DETAIL FILED IN RESPECT OF QUERY RAISED REGARDING MOB-DE-MOB CHARGES RECEIVED THAT C HARGES AMOUNTING TO RS.4,12,04,800/- HAS BEEN RECEIVED UND ER THE WORK ITA NOS.5864 & 5927/DEL./2013 5 CONTRACT OUT OF WHICH ASSESSEE HAS ONLY OFFERED MOB -DEMOB CHARGES AMOUNTING TO RS.40,06,422/- AND ACCORDINGLY , ASSESSEE WAS CALLED UPON TO EXPLAIN. FINDING THE EXPLANATION FU RNISHED BY THE ASSESSEE NOT TENABLE, AO CAME TO THE CONCLUSION THA T BY TAKING THE GROSS RECEIPT, IT MEANS THAT WHAT IS TO BE BROUGHT TO TAX IS THE TOTAL COST BURDEN OF THE SUB-CONTRACT GIVEN TO THE ASSESS EE PLUS ITS PROFIT MARGIN AND SINCE, IN THIS CASE, THE REVENUES ARE BE ING ASSESSED U/S 44BB REIMBURSEMENT OF THE SERVICE-TAX RECEIPTS OF T HE ASSESSEE SHALL ALSO BE INCLUDED IN REVENUE TAXABLE AS PER SE CTION 44BB, AT DEEMED PROFIT RATE OF 10% OF THE GROSS RECEIPT. SO, THE AMOUNT RECEIVED BY ASSESSEE BY WAY OF MOBILIZATION ARE TO BE INCLUDED IN THE GROSS RECEIPT EARNED BY THE ASSESSEE AND THEREB Y MADE AN ADDITION OF RS.3,71,98,378/-. 5. AO FURTHER NOTICED THAT DURING THE YEAR UNDER AS SESSMENT, ASSESSEE HAS EXECUTED CONTRACT OF HIRE OF OFFSHORE SUPPLY VESSELS WITH THREE CONTRACTORS/COMPANIES ARE WITH NON-PRODU CTION SHARING CONTRACT COMPANIES (NON-PSC) NOT ENGAGED IN PRODUCT ION AND EXPLORATION OF THE ACTIVITIES ITSELF AND FOUND THE SAME TO BE A SECOND LEG CONTRACT. TOTAL RECEIPT IN RESPECT OF A FORESAID CONTRACT CAME TO RS.90,65,24,815/-. AO NOTICED SECOND CATEG ORY OF CONTRACTS WHERE PAYMENTS RECEIVED BY NON-RESIDENT C OMPANY FROM ANOTHER NON-RESIDENT (NOT A MEMBER OF PRODUCTION SH ARING CONTRACT) ITA NOS.5864 & 5927/DEL./2013 6 (PSC) FOR SUPPLYING PLANT AND MACHINERY ON HIRE USE D OR TO BE USED BY A THIRD PARTY FOR THE ACTIVITIES SPECIFIED IN SE CTION 44BB (1) OF THE ACT AND FOUND THE SAME NOT ELIGIBLE FOR CLAIM U NDER THE PROVISIONS OF SECTION 44BB (1) AS THAT WOULD BE AGA INST THE MANDATE OF SECTION 44BB AND OBSERVED THAT SUCH RECE IPT WOULD CONSTITUTE EQUIPMENT ROYALTY IN TERMS OF SECTION 9( 1)(VI) OF THE ACT. AO CAME TO THE CONCLUSION THAT BENEFIT OF SECTION 4 4BB WOULD NOT BE APPLICABLE TO THOSE CASES AND COMPUTED THE TOTAL INCOME AT RS.25,14,61,030/-, LATER ON RECTIFIED U/S 154 OF TH E ACT AT RS.19,14,54,330/-. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT (A) BY WAY OF CHALLENGING THE ASSESSMENT ORDER WHO HAS PAR TLY ALLOWED THE APPEAL. FEELING AGGRIEVED, BOTH THE REVENUE AS WELL AS ASSESSEE APPROACHED THE TRIBUNAL BY WAY OF FILING SEPARATE A PPEALS BY CHALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CI T (A). 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.5864/DEL/2013 (FILED BY THE ASSESSEE) GROUND NO.1 ITA NOS.5864 & 5927/DEL./2013 7 8. BY WAY OF PRESENT APPEAL, ASSESSEE RACKED UP THE SOLE ISSUE AS TO INCLUDING THE AMOUNT OF RS.3,71,98,378/- BEIN G THE PROPORTIONATE AMOUNT RECEIVED BY THE ASSESSEE FOR D EMOBILIZATION OF VESSELS OUTSIDE INDIAN TERRITORIAL WATERS TO BE INCLUDED IN THE GROSS RECEIPTS U/S 44BB OF THE ACT IS AGAINST THE C LAIM OF THE ASSESSEE THAT THIS INCOME IS NOT CHARGEABLE TO TAX IN INDIA AS PER SECTION 5 READ WITH SECTION 9 OF THE ACT. 9. HOWEVER, AT THE VERY OUTSET, THE LD. AR FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS ISSUE HAS ALREADY BEEN DE CIDED BY THE HONBLE HIGH COURT IN CASE OF SEDCO FOREX INTERNATIONAL INC. VS. COMMISSIONER OF INCOME-TAX [2008] 299 ITR 238 (UTTARAKHAND) AGAINST THE ASSESSEE, SO THE LD. CIT (A) HAS RIGHTLY HELD THAT MOBILIZATION CHARGES CONSTITUTE PART OF T HE GROSS RECEIPTS OF THE ASSESSEE AS PER PROVISIONS CONTAINED U/S 44B B. CONSEQUENTLY, GROUND NO.1 IS DETERMINED AGAINST THE ASSESSEE. ITA NO.5927/DEL/2013 (FILED BY THE REVENUE) GROUNDS NO.1 TO 5 10. LD. AR FOR THE ASSESSEE CONTENDED THAT THE ISSU E RAISED IN THIS APPEAL IS COVERED IN ASSESSEES OWN CASE CITED A S ADIT, INTL. TAXATION VS. TIDEWATER MARINE INTL.INC. (ITA NOS.59 2, 746 & 1810/DEL/2013 AYS 2004-05, 2009-10) AND TIDEWATER M ARINE INTL.INC. VS. ADIT, INTL. TAXATION (ITA NOS.5289/DE L/2010 AY ITA NOS.5864 & 5927/DEL./2013 8 2007-08 AND ITA NOS.5775/DEL/2011 AY 2008-09) AND THE JUDGMENT RELIED UPON BY THE AO IN CASE OF OIL AND N ATURAL GAS COMMISSION LTD. HAVE SINCE BEEN OVERRULED BY THE HO NBLE SUPREME COURT. 11. NOW, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER REVENUE RECEIVED BY THE ASSESSEE FRO M NON-PRODUCTION SHARING PARTICIPANTS (NON-PSC) PARTNERS ARE IN THE NATURE OF ROYALTY PERTAINING TO SECOND LEG CONTRACT AND AS SUCH NOT ELIGIBLE FOR TREATMENT UNDER PRESUMPTIVE PROVISIONS OF SECTION 44BB OF THE ACT AND CHARGEABLE TO TAX @ 25%? 12. IDENTICAL ISSUE STANDS DECIDED BY THE COORDINAT E BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE QUA AYS 2004-05, 2007-08, 2008- 09 AND 2009-10 (SUPRA) BY ANSWERING THE QUESTION IN FAVOUR OF THE ASSESSEE AND THEREBY DISMISSING THE APPEAL FILED BY THE REVENUE. 13. FOR FACILITY OF READY REFERENCE, OPERATIVE PARA S NO.22 TO 26 ARE REPRODUCED AS UNDER :- 22. THERE IS NO DISPUTE ON APPLICABILITY OF THIS S ECTION TO THE BUSINESS OF THE ASSESSEE. ONLY LIMITED ISSUE BEFORE US IS WHETHER SUPPLYING PLANT OR MACHINERY ON HIRE TO A COMPANY WHICH IN TURNS PROVIDES SERVICES OR FACILIT Y TO THE COMPANY WHICH IS ENGAGED IN THE SPECIFIED BUSIN ESS IS ELIGIBLE FOR CLAIM OF CONCESSIONAL RATE OF TAXATION U/S 44BB OF THE ACT OR NOT. THIS IS IN COMMON PARLANCE REFERRED TO AS SECOND LEG CONTRACTS. THE PLANT SUPPLIED BY THE ASSESSEE ARE VESSELS AND THEREFORE THEY ITA NOS.5864 & 5927/DEL./2013 9 COVER IN THE DEFINITION OF PLANT WHICH IS ALSO NOT IN DISPUTE. 23. COORDINATE BENCH OF ITAT IN SBS MARINE LIMITED V ADIT [ITA 107/DEL/2012 DATED 13.2.2015] AFTER CONSIDERING THE DECISIONS OF HONOURABLE SUPREME COU RT IN CASE OF UOI V GOSALIA SHIPPING PVT. LIMITED [113 IT R 307] & POOMPHUR SHIPPING CORPORATION LIMITED V ITO [360 ITR 257], BOTH OF WHICH ARE HEAVILY RELIED BY THE REVENUE HAS DECIDED THIS ISSUE. FURTHER THIS DECISI ON OF COORDINATE BENCH HAS ALSO BEEN UPHELD BY HONOURABLE UTTARAKHAND HIGH COURT VIDE ORDER DATED 6.8.2015 IN ITA NO 36/2015 APPLYING JUDGEMENT OF HONOURABLE SUPREM E COURT IN CASE OF OIL AND NATURAL GAS COORP. LIMITED V CIT [376 ITR 306 ( SC)]. THERE IS NO CONTRADICTORY DECISION OF ANY HIGH COURT PLACED BEFORE US. THEREF ORE WE ARE DUTY BOUND TO FOLLOW THE DECISION APPROVED BY HONOURABLE UTTARAKHAND HIGH COURT. COORDINATE BENC H HAS HELD AS UNDER :- 23. FURTHER, THERE IS NO REQUIREMENT OF A DIRECT CONTRACT OR AGREEMENT WITH THE PERSON ACTUALLY ENGAGED IN PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AS CANVASSED BY THE REVENUE FOR THE APPLICABILITY OF SECTION 44BB. ONE MAY REFER OTHER PROVISIONS OF THE STATUE WHICH INSISTS ON AN AGREEMENT. FOR INSTANCE, SECTION 42 DEALS WITH ALLOWANCES ALLOWABLE IN COMPUTING THE PROFITS OR GAINS OF ANY BUSINESS CONSISTING OF THE PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS IN RELATION WHICH THE CENTRAL GOVT. HAS ENTERED INTO AN AGREEMENT. SECTION 80IA(4)(I)(B) PROVIDES THAT THE ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY HAS TO ENTE R INTO AN AGREEMENT WITH THE CENTRAL GOVERNMENT OF A STATE GOVT. OR A LOCAL AUTHORITY ETC. IN THE ABSENCE OF ANY REQUIREMENT IN SECTION 44BB THAT THE PERSON PROVIDING SERVICES, FACILITIES OR PLANT AND MACHINERY ON HIRE SHOULD HAVE DIRECTLY ENTERED INTO A CONTRACT OR AGREEMENT WITH THE PERSON ACTUALLY ENGAGED IN PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF, MINERAL OILS, ONE ITA NOS.5864 & 5927/DEL./2013 10 CANNOT CURTAIL THE SCOPE OR APPLICABILITY OF SECTIO N 44BB TO SECOND LEG CONTRACTORS WHOSE CONTRACTS OR AGREEMENTS ARE WITH FIRST LEG CONTRACTORS BUT WHOSE SERVICES OR FACILITIES OR PLANT AND MACHINERY ARE USED IN CONNECTION WITH PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AS REQUIRED UNDER SECTION 44BB. THE HON'BLE SUPREME COURT IN ICDS LTD V CIT [2013] 350 ITR 527 HELD THAT THE ASSESSEE LEASING THE VEHICLES TO OTHERS WHO USE THE SAID VEHICLES IN THEIR BUSINESS OF RUNNING THEM ON HIRE IS ENTITLED FOR HIGHER RATE OF DEPRECIATION ON THE VEHICLES GIVEN ON LEASE. IT WAS HELD BY THE HON'BLE SUPREME COURT THAT THE LESSOR NEED NOT HIMSELF USE THE VEHICLES IN THE BUSINESS OF RUNNING THEM ON HIRE. THE RATIONALE OF THE AFORESAID DECISION OF THE SUPREME COURT MAY BE APPLIED IN THE CONTEXT OF SECTION 44BB IN AS MUCH AS SECTION 44BB DOES NOT MANDATE THAT THE ASSESSEE SHOULD DIRECTLY ENTER INTO CONTRACT WITH THE PERSON ENGAGED IN THE BUSINESS OF PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF, MINERAL OILS OR THE SERVICES OR FACILITIES OR PLANT AND MACHINERY O N HIRE SHOULD BE DIRECTLY PROVIDED TO THE SAID PERSON ALONE. WE HAVE ALREADY GIVEN A FINDING OF FACT THAT THE SERVICES AND FACILITIES PROVIDED BY THE ASSESSE E ALONG WITH PLANT AND MACHINERY ARE USED IN OFFSHORE DRILLING OPERATIONS I.E., THE ACTIVITY OF PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS. CONSEQUENTLY, THE REQUIREMENTS OF SECTION 44BB ARE SATISFIED IN THE PRESENT CASE. 24. IN VIEW OF THE ABOVE, THERE IS NO MERIT IN THE CONTENTIONS OF THE REVENUE THAT THE ASSESSEE IS NOT AN ELIGIBLE ASSESSEE UNDER SECTION 44BB SINCE IT HAS NOT DIRECTLY ENTERED INTO CONTRACT WITH THE ONGC AND IT IS NOT UNDERTAKING THE ACTIVITIES SPECIFIED IN SECTION 44BB ITSELF AND BEING SECOND LEG CONTRACTORS THEY ARE NOT ELIGIBLE UNDER SECTION 44BB. 24. THEREFORE IN VIEW OF THE DECISION OF SBS MARINE LIMITED V ADIT (SUPRA) WE HOLD THAT EVEN SECOND LEG ITA NOS.5864 & 5927/DEL./2013 11 CONTRACTS ARE ALSO ELIGIBLE FOR THE BENEFIT OF TAX TREATMENT PROVIDED U/S 44BB OF THE ACT. 25. SECOND CONTENTION RAISED WAS THAT AMENDMENT IN SECTION 44BB AND 44DA SHOULD BE READ AS RETROSPECTI VE. HONOURABLE UTTARAKHAND HIGH COURT IN ASSESSEES OWN CASE IN 339 ITR 169 HAS HEL D THAT AS STATED EARLIER, THE COMBINED EFFECT OF THE PROVISIONS OF SECTIONS 44BB, 44DA AND 115A OF THE ACT WILL NOT HAVE A BEARING TO THE CASES IN HAN D INASMUCH AS THE EXPLANATORY NOTE TO THE FINANCE BILL, 2010 CLEARLY INDICATES THAT THE AMENDMENTS PROPOSED IN SECTION 44BB AND 44DA OF THE ACT WOULD TAKE EFFECT FROM 1ST APRIL, 2011 AND WOULD APPLY IN RELATION TO THE ASSESSMENT YEAR 2011-12 AND SUBSEQUENT YEARS. THE AMENDMENT IS PROSPECTIVE IN NATURE AND WOULD NOT APPLY TO THE CASES IN HAND WHICH IS OF THE EARLIER ASSESSMENT YEARS. HENCE WE REJECT THIS ARGUMENT OF THE REVENUE. 26. AS WE HAVE ALREADY HELD THAT RECEIPT OF THE ASSESSEE IS CHARGEABLE TAX PERTAINING TO SECOND LEG CONTRACTS ALSO U/S 44BB OF THE INCOME TAX ACT, CONSEQUENTLY WE REJECT THE ARGUMENT OF THE REVENUE THAT IT IS EQUIPMENT ROYALTY CHARGEABLE U/S 9(1)(VI) OF THE AND CONSEQUENTLY LIABLE TO TAX @ 25 % ON GROSS BASI S U/S 115A OF THE INCOME TAX ACT. IN VIEW OF ABOVE GROUND NO (1) TO (V) OF APPEAL OF REVENUE ARE DISMISSED. 14. SINCE THE ISSUE RACKED UP BY THE REVENUE IN THE PRESENT APPEAL TREATING THE RECEIPTS FROM NON-PSC PARTNERS ON ACCOUNT OF SUPPLIES OF PLANT AND MACHINERY ON HIRE NOT ELIGIBL E FOR TREATMENT UNDER PRESUMPTIVE PROVISIONS OF SECTION 44BB OF THE ACT HAS ALREADY BEEN DETERMINED IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE ITA NOS.5864 & 5927/DEL./2013 12 QUA AYS 2004-05, 2007-08, 2008-09 AND 2009-10 (SUPR A) IN ITA NOS.592, 746 & 1810/DEL/2013 AND ITA NOS.5289/DEL/2 010 AND 5775/DEL/2011 (SUPRA), WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE LD. CIT (A) REVERSING THE ORDER PASSED BY THE AO AS TO THE HOLDING THE ASSESSEES REVENUE ON ACCOUNT OF EQUIPMENT RENT UNDER CONTRACT WITH NON-PSC PARTNERS TAXED U/S 44DA OF THE ACT. SO, WE ARE OF THE CONSIDERED VIEW THAT THE CONTRACTS ENTERED INTO BETWEEN THE ASSESSEE AND OTH ER PARTIES, KNOWN AS SECOND LEG CONTRACTS ARE ELIGIBLE FOR BENE FITS OF TAX TREATMENT U/S 44BB OF THE ACT. CONSEQUENTLY, GROUN DS NO.1 TO 5 ARE DETERMINED AGAINST THE APPELLANT / REVENUE. 15. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, BOTH THE APPEALS FILED BY THE ASSESSEE AS WELL AS REVENUE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF JUNE, 2016. SD/- SD/- (N.K. SAINI) (KULDIP SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF JUNE, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-II, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.