Transocean Offshore Discoverer, New Delhi V. ADIT, Dehradun

ITA 6477/DEL/2012

• Counselvise Citation: 647720114 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 01-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURAJ NANGIA
• Section: 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H NEW DELHI BEFORE SHRI I.C. SUDHIR, J.M. AND SHRI J.SUDHAKAR REDDY, A.M. ITA NO. 6477/DEL/2012 ASSESSMENT YEAR : 2009-10 TRANSOCEAN OFFSHORE, VS. ASSTT. DIRECTOR OF I NCOME-TAX, DISCOVERER 534 LLC INTE RNATIONAL TAXATION, C/O NANGIA & CO. INC OME-TAX OFFICE, 75/7 RAJPUR ROAD, SUBH ASH ROAD, DEHRADUN 248001 DEHRAD UN 248001 PAN AABCT9595F UTTARA KHAND (APPELLANT) (RESPONDENT) ASSESSEE BY :- S/SHRI AMIT ARORA & SURAJ NANGIA, CA DEPARTMENT BY:- SH. VIVEK KUMAR, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF LD.CIT(APPEALS)-II, DEHRADUN DT. 18.10.2012 PERTAIN ING TO THE ASSESSMENT YEARS 2009-10 ON THE FOLLOWING GROUNDS : 1. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE AO IN HOLDING THAT THE SUM OF RS. 107,464,50 0/- RECEIVED BY THE APPELLANT TOWARDS FEE FOR MOBILIZATION OF THE RIG T O INDIA ATTRIBUTABLE TO THE VOYAGE UNDERTAKEN OUTSIDE INDIAN TERRITORIAL WA TERS, IS TO BE INCLUDED IN THE GROSS RECEIPTS U/S 44BB OF THE ACT WITHOUT A PPRECIATING THAT THE SAID AMOUNT DOES NOT ACCRUE OR ARISE TO THE APPELLA NT IN INDIA IN TERMS OF S. 5(2) READ WITH S. 9 OF THE ACT. 2. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N AFFIRMING THE ACTION OF THE AO IN HOLDING THAT THE AMOUNTS AGGREGATING T O RS. 78,703,923/- RECEIVED BY THE APPELLANT FROM ITS CUSTOMERS AS REI MBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE APPELLANT ON THEIR BEHALF IS TO BE INCLUDED IN THE GROSS RECEIPTS U/S 44BB OF THE INCOME TAX ACT, 1961 (THE ACT) ITA NO. 6477/DEL/2012 AY 2009-10 TRANSOCEAN OFFSHORE DISCOVERER VS. ADIT PAGE 2 OF 5 3. THAT THE LD. CIT(A) ERRED IN NOT ALLOWING ADMISSIO N OF ADDITIONAL GROUND OF APPEAL WHEREIN THE ISSUE OF INCLUSION OF SERVICE -TAX RECEIPTS OF INR 24,644,670 IN THE TAXABLE INCOME OF THE APPELLANT U NDER SECTION 44BB HAD BEEN CHALLENGED. THE LD. CIT(A) ERRED IN NOT AP PRECIATING THAT THE AMOUNT OF SERVICE-TAX RECEIPTS OF INR 24,644,670/- WERE ALREADY SUBJECT MATTER OF APPEAL BECAUSE THEY WERE ALREADY INCLUDED IN THE REIMBURSEMENT AMOUNT OF INR 78,703,923 (AS MENTIONE D IN GROUND NO. 2 ABOVE) AND THE SAME WAS EVIDENT FROM THE MATERIAL A VAILABLE ON RECORD IN THE FORM OF COMPUTATION OF INCOME AND THE WRITTE N SUBMISSIONS OF THE APPELLANT BEFORE THE ASSESSING OFFICER. 4. THAT WITHOUT PREJUDICE TO THE ABOVE, BASED ON THE F ACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE AO THAT RECEIPTS OF RS. 24,644,670 ON ACCOUNT O F SERVICE TAX WERE INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING INCOME UNDER SECTION 44BB OF THE INCOME-TAX ACT, 1961 ARE INCLUDIBLE IN THE RECEIPTS. 5. THAT BASED ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT ERRED IN NOT FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL INCOME TAX APPELLATE TRIBUNAL, DELHI G BENCH IN ITA NO. 5284/DEL/2011 IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING INC VS. ADDL. DIRECTOR OF INCOME-TAX WHEREIN IT WAS HELD THAT SERVICE-TAX RECEIPTS WERE NOT INCLUDI BLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING INCOME UNDE R SECTION 44BB OF THE INCOME-TAX ACT, 1961. 2. FACTS IN BRIEF TRANSOCEAN DISCOVERER 534 LLC (HEREINAFTER REFERRED TO AS ASSESSEE) IS A COMPANY INCORPORATE D UNDER THE LAWS OF DELAWARE, UNITED STATES OF AMERICA HAVING ITS INDIA PROJECT OFFICE SITUATED AT TRANSOCEAN HOUSE, LAKE BOULEVARD ROAD, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI - 400 076. THE ASSESSEE IS ENGAGED I N THE BUSINESS OF PROVIDING OFFSHORE DRILLING SERVICES IN CONNECTION WITH EXPLORATION, EXPLOITATION AND PRODUCTION OF MINERAL OIL IN INDIA . TRANSOCEAN DISCOVERER 534 LLC HAS BEEN FILING ITS RETURN OF INCOME WITH T HE DEHRADUN REVENUE AUTHORITIES SINCE THE PAST DECADE WHEREIN, IT HAS C ONSISTENTLY BEEN OFFERING ITS INCOME IN TERMS OF SECTION 44BB OF THE INCOME T AX ACT, 1961. DURING THE PREVIOUS YEAR 2009-10, THE ASSESSEE HAD FILED ITS INCOME OF ITA NO. 6477/DEL/2012 AY 2009-10 TRANSOCEAN OFFSHORE DISCOVERER VS. ADIT PAGE 3 OF 5 RETURN WITH THE DEPUTY/ASSISTANT DIRECTOR OF INCOME TAX, DEHRADUN DECLARING THE TOTAL INCOME OF 405,147,230 ON SEPTEM BER 29, 2009. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE HAS CLAIMED: REVENUE OF RS. 107,464,500 ON ACCOUNT OF MOBILIZATI ON OF VESSEL AS NOT CHARGEABLE TO TAX UNDER THE INCOME TA X ACT, 1961 FOR THE ACTIVITIES CARRIED OUTSIDE INDIAN TERR ITORIAL WATERS; REVENUE OF RS. 78,703,923 ON ACCOUNT OF REIMBURSEME NT OF MATERIAL RECHARGE AND CATERING RECHARGE AS NOT CHARGEABLE TO TAX UNDER THE INCOME TAX ACT, 1961; THE LD. ASSESSING OFFICER HAD COMPLETED THE ASSESS MENT IN CASE OF THE ASSESSEEE VIDE ORDER U/S 143(3)/144C(3)(B) OF THE I NCOME TAX ACT, 1961 DATED FEBRUARY 14, 2012 AT AN INCOME OF RS. 423,764 ,070/- WHEREIN THE FOLLOWING ADDITIONS HAS BEEN MADE: REVENUE OF RS. 107,464,500 ON ACCOUNT OF MOBILIZATI ON OF THE DRILLING RIG FOR ACTIVITIES CARRIED OUTSIDE IND IA HAS BEEN CHARGEABLE TO TAX UNDER SECTION 44BB OF THE INCOME TAX ACT, 1961; REVENUE OF RS.78,703,923 ON ACCOUNT OF REIMBURSEMEN T OF EXPENSES ON BEHALF OF THE RELIANCE INDUSTRIES LI MITED HAS BEEN HELD TO BE CHARGEABLE TO TAX UNDER SECTION 44BB OF THE INCOME TAX ACT, 1961: 3. THE FIRST APPELLATE AUTHORITY ALLOWED THE APP EAL OF THE ASSESSEE IN PART. 4. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE US. 5. WE HAVE HEARD SHRI AMIT ARORA, LD. COUNSEL F OR THE ASSESSEE AND SHRI VIVEK KUMAR, SR. D.R. ON BEHALF OF THE REVENUE. 6. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMS TANCES OF THE CASE, ON PERUSAL OF MATERIAL ON RECORD, ORDERS OF THE AU THORITIES BELOW, CASE LAWS ITA NO. 6477/DEL/2012 AY 2009-10 TRANSOCEAN OFFSHORE DISCOVERER VS. ADIT PAGE 4 OF 5 CITED, WE HOLD AS FOLLOWS :- 6.1 GROUND NO. 1 IS ADMITTEDLY COVERED AGAINST THE ASSESSEE BY THE FOLLOWING JUDGMENTS :- 1. SEDCO FOREX INTERNATIONAL INC. V CIT, 169 TAXMA N 138 (UTTARAKHAND) 2. CIT VS. TRANS OCEAN OFFSHORE INC. 170 TAXMAN 4 59 (UTTARAKHAND) 3. ASSTT, CIT VS. REAL IMAGE MEDIA TECHNOLOGIES (P.) LTD. TAXMAN 429 (UTTARAKHAND) 6.2. GROUND NO. 2 IS ADMITTEDLY COVERED AGAINST TH E ASSESSEE BY THE JUDGMENT IN THE CASE OF DIRECTOR OF INCOME-TAX VS. SCHLUMBERGER ASIA SERVICES LTD. (2009) 317 ITR 156 (UTR) 7. RESPECTFULLY FOLLOWING THE SAME WE DISMISS TH ESE TWO GROUNDS OF THE ASSESSEE. 8. GROUND NO. 3 IS ADMITTEDLY COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE F BENCH OF THE TRIBUNAL AND ITA NO. 5609/DEL/2012 ORDER DATED 28.6.2013, WHEREIN THE TRIBUNAL FOLLOWS THE O RDER IN THE CASE OF M/S. MITCHELL DRILLING INTERNATIONAL PTY. LTD. , ITA NO. 698/DEL/2012 ORDER DATED 31.8.2012 AND ADJUDICATED THE ISSUE IN FAVOUR OF TH E ASSESSEE. CONSISTENT WITH THE VIEW TAKEN THEREIN WE ALLOW GROUND NO. 3,4 AND 5. LD. DR RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DEPUTY DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION), DEHRADUN V. TECHNIP OFFSH ORE CONTRACTING BV ITA NO. 6477/DEL/2012 AY 2009-10 TRANSOCEAN OFFSHORE DISCOVERER VS. ADIT PAGE 5 OF 5 (2009) 29 SOT 33 (DELHI) AND ANOTHER DECISIONS, WHI CH TO OUR MIND ARE NOT APPLICABLE TO THE FACTS OF THE CASE. HENCE GROUND N O. 3,4 AND 5 ARE ALLOWED. IN THE RESULT APPEAL OF THE ASSESSEE IS AL LOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER, 2014. SD/- SD/- (I.C. SUHDIR) ( J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 15 TH OCTOBER, 2014 *VEENA COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR