M/s. Eventure Global Technology, Mumbai V. ADIT, Dehradun

ITA 620/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6674 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUJ ARORA
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.620/DEL/2014 ASSESSMENT YEAR : 2010-11 EVENTURE GLOBAL TECHNOLOGY, B-407, GALLENA HIRANANDANI GARDENS, POWAI, MUMBAI. PAN: AABCE2647K VS. ADIT, INTERNATIONAL TAXATION, DEHRADUN. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT ARORA, CA DEPARTMENT BY : SHRI ANUJ ARORA, CIT, DR DATE OF HEARING : 17.11.2016 DATE OF PRONOUNCEMENT : 18.11.2016 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E FINAL ORDER PASSED BY THE AO U/S 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ITA NO.620 /DEL/2014 2 ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RE LATION TO THE ASSESSMENT YEAR 2010-11. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGA INST INVOKING THE PROVISIONS OF SECTION 115A AND NOT ALLOWING THE BEN EFIT OF SECTION 44BB OF THE ACT. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE ENTERED INTO TWO CONTRACTS WITH OIL AND NATURAL GAS CORPORATION AND RELIANCE INDUSTRIES LTD. THE WORK TO BE EXECUTED B Y THE ASSESSEE IN THE AGREEMENT WITH ONGC WAS OF HIRING OF SOLID EXPANDAB LE CASING TECHNOLOGY SERVICES. AS PER THE SCOPE OF THE WORK, THE ASSESSEE WAS TO PROVIDE CASING TECHNOLOGY SERVICES TO ONGC THROUGH BEST TECHNICIANS AND ENGINEERS. THE EQUIPMENTS PROVIDED WAS TO BE R E-EXPORTED BACK AFTER THE PROVISION OF SERVICES AND ON COMPLETION O F THE CONTRACT. THE SECOND AGREEMENT WITH RELIANCE INDUSTRIES LTD. WAS FOR PROVISION OF TOOLS AND PROVISION OF PERSONNEL AND TECHNICIANS FO R OPERATING THE TOOLS AT RIL SHORE BASE OR RIGS IN INDIA. THE ASSESSEE FU RNISHED ITS RETURN DECLARING GROSS CONTRACTUAL RECEIPTS OF RS.5,97,79, 224/- AND COMPUTED INCOME U/S 44BB OF THE ACT. THE AO, ON PERUSAL OF THE NATURE OF ITA NO.620 /DEL/2014 3 CONTRACT AND SCOPE OF WORK, CAME TO THE CONCLUSION THAT THE ASSESSEE RENDERED TECHNICAL SERVICES AS DEFINED IN SECTION 9 (1)(VII) OF THE ACT ALONG WITH THE PROVISION OF TOOLS AND ITS TECHNICAL PERSONNEL AND ENGINEERS, SPECIALIZED IN THE SPECIFIC JOBS AND TEC HNOLOGY SOLD EXPANDABLE CASING TECHNOLOGY SERVICES. HE, THEREFO RE, HELD THAT THE CASE COULD NOT BE COVERED U/S 44BB OF THE ACT. INVOKING THE PROVISIONS OF SECTION 115A, THE AO TAXED SUCH RECEIPTS @ 10%. TH E LD. CIT(A) UPHELD THE ASSESSMENT ORDER ON THIS POINT. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS NO M ORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ONGC VS. CIT AND ANOTHER (2015) 376 ITR 306 (SC) IN WHICH IT HAS BEEN HELD THAT THE RECEIPTS OF THE NATURE EARNED BY THE ASSESSEE, NAMELY, FOR THE SERVICES IN CONNECTION WITH EXPLORATION AND PRODUCTION OF MI NERAL OIL, ARE TAXABLE U/S 44BB OF THE ACT AS AGAINST SECTION 115A. RESPE CTFULLY FOLLOWING THE PRECEDENT, WE DECIDE THIS ISSUE IN FAVOUR OF THE AS SESSEE. ITA NO.620 /DEL/2014 4 4. THE NEXT ISSUE IS AGAINST THE ADDITION OF RE IMBURSEMENT OF SERVICE TAX TO THE GROSS RECEIPTS FOR THE PURPOSES OF TAXAT ION. THE ASSESSEE IN ITS COMPUTATION OF INCOME DID NOT INCLUDE THE AMOUNT OF SERVICE TAX RECEIVED FOR THE EXECUTION OF CONTRACT AMOUNTING TO RS.1,95,19,881/-. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THIS AMOUNT WAS NOT INCLUDED IN THE RECEIPTS CHARGEABLE TO TAX, THE ASSESSEE CONTEN DED THAT THE SERVICE TAX RECEIPTS FROM ONGC WERE PAID TO THE GOVERNMENT AT A CTUAL AND, HENCE, COULD NOT BE TREATED AS THE ASSESSEES INCOME. NOT CONVINCED, THE AO INCLUDED SUCH AMOUNT IN THE RECEIPTS CHARGEABLE TO TAX. THE LD. CIT(A) AFFIRMED THE ACTION OF THE AO. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE HONBLE DELHI HIGH COURT IN DIRECTOR OF INCOME-TAX VS. MITCHILL DRILLING INTERN ATIONAL (P) LTD. (2016) 380 ITR 130 (DEL) HAS HELD THAT SERVICE TAX CANNOT FORM PART OF GROS S RECEIPTS FOR SECTION 44BB AS IT HAS NO ELEMENT OF I NCOME. THE RELIANCE OF THE LD. DR ON CERTAIN TRIBUNAL ORDERS FAVOURING THE VIEW OF THE REVENUE IS MISPLACED BECAUSE OF THE DIRECT JUDGMENT OF THE HONBLE HIGH COURT ITA NO.620 /DEL/2014 5 ON THE POINT. NO CONTRARY DECISION FROM ANY OTHER HONBLE HIGH COURT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. RESP ECTFULLY FOLLOWING THE PRECEDENT, WE HOLD THAT THE SERVICE TAX SHOULD BE E XCLUDED FROM GROSS RECEIPTS FOR THE PURPOSES OF SECTION 44BB OF THE AC T. 6. ISSUE NO. 3 ABOUT INTEREST U/S 234B IS CONSEQUE NTIAL AND DISPOSED OF ACCORDINGLY. 7. THE LAST ISSUE IS AGAINST NOT ALLOWING PROPER CR EDIT FOR TAX DEDUCTED AT SOURCE. WE DIRECT THE AO TO ALLOW CREDIT FOR THE CORRECT AMOUNT OF TDS AFTER DUE VERIFICATION. 8. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.201 6. SD/- SD/- [KULDIP SINGH] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 18 TH NOVEMBER, 2016. DK ITA NO.620 /DEL/2014 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.