ADIT, Dehradun V. M/s. Saipem SPA, Dehradun

ITA 750/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3558 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 07-06-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 06-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Keywords: Period of limitation; Tax effect; Condonation of delay
• Section: 234B

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH G, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 750/DEL./2013 ASSESSMENT YEAR: 2004-05 ADIT (INTL. TAXATION), DEHRADUN. (APPELLANT) VS. SAIPEM SPA, C/O NANGIA & CO., 75/7, RAIPUR ROAD, DEHRADUN. PAN- AAFCS4471H (RESPONDENT) APPELLANT BY SHRI GAURAV DUDEJA, SR. DR RESPONDENT BY SHRI AMIT ARORA, C.A. ORDER PER L.P. SAHU, A.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, DEHRADUN DATED 05.11.2012 FOR THE ASSESSMENT YEAR 2 004-05 ON THE FOLLOWING GROUNDS : 1. WHETHER CIT(A) HAS ERRED IN HOLDING THAT RECEIP TS OF ASSESSEE AS A SUB- CONTRACTOR FOR RENTAL OF VESSELS IS NOT ROYALTY UND ER SECTION 9(L)(VI) OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE RECEIPTS ON ACCOUNT OF HI RE OF VESSEL TO A NON-PSC MEMBER FOR USE BY A THIRD PARTY ENGAGED IN ACTIVITI ES SPECIFIED IN 44BB WAS NOT IN THE NATURE OF ROYALTY UNDER SECTION 9(L) (VII) OF THE IT. ACT, 1961 AND ELIGIBLE FOR 44BB. DATE OF HEARING 30.11.2017 DATE OF PRONOUNCEMENT 01 .02.2018 [TYPE THE DOCUMENT TITLE] 2 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSEE WA S TAXABLE UNDER THE PROVISION OF SEC. 44BB EVEN THOUGH THE NATURE OF SE RVICES RENDERED BY THE ASSESSEE WERE PROVIDING JACK UP RIG ON HIRE AND HAS FAILED TO RECOGNIZED THAT THE A.O. HAS RESORTED TO THE DISTINCTION BETWE EN FIRST LEG AND SECOND LEG AND PSC VENDERS VS. NON PSC VENDORS. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN IGNORING THE DISTINCT SCHEME OF TAXATION O F FTS/ROYALTY AND HOLDING THAT THE INCOME OF THE ASSESSEE WAS TAXABLE UNDER THE PRESUMPTIVE PROVISIONS OF SEC 44BB DISREGARDING THE INSERTION OF PROVISO IN SECTION 44BB/44DA/115A AND THE RATIONALE BEHIND THE INTRODUCTION OF SAID CLARIFICATORY PROVISO'S IN THE FINANCE BILL 20 10. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN REFERRING TO THE DECISION OF THE IT AT IN TH E CASE OF M/S CGG VERITAS IN HOLDING THAT THE INCOME OF THE ASSESSEE COMPANY WAS COVERED UNDER THE PROVISIONS OF SECTION 44BB IGNORING THAT THE SAID DECISION OF THE ITAT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND A M A HAS BEEN FILED, WHILE APPEAL WAS NOT FILED PURELY ON ACCOUNT OF TAX EFFECT CONSIDERATION. 6. WHETHER THE CIT(A) HAS ERRED IN NOT APPRECIATIN G THAT PROVISO TO SECTION 44BB IS NOT INSERTED PER MAJOREM CAUTELAM' BUT EXPLAINS AND CLARIFIES THE MAIN PROVISION AS THE TERM SERVICES O R FACILITIES USED THEREIN ARE NOT DEFINED AND THE TWO TERMS USED ARE TOO GENE RAL IN NATURE AND THUS ONCE THE PAYMENTS ARE CHARACTERIZED AS ROYALTY U/S 9(L)(VII), THEY GO OUTSIDE THE PURVIEW OF SECTION 44BB AND HAVE TO BE TAXED AS ROYALTY. 7. WHETHER THE CIT(A), HAS ERRED IN NOT APPRECIATI NG THAT ASSESSEES RELIANCE ON JINDAL DRILLING IS MISPLACED SINCE 44DA BEING THE SPECIAL PROVISION FOR TAXATION OF INCOME IN THE NATURE OF R OYALTIES AND FTS WHERE THESE ARE EFFECTIVELY CONNECTED WITH A PE, THEN IF A SPECIAL PROVISION IS MADE RESPECTING A CERTAIN MATTER T HAT MATTER IS EX CLUDED FROM THE GENERAL PROVISION UNDER THE RULE OF 'GENERALLIA SPE CIALIBUS NON DEROGANT'. 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT PROVISO TO SECTION 44DA BROUGHT ABOUT BY THE FINANCE ACT 2011 WAS ONLY CLARIFICATOR Y IN NATURE AND ITS [TYPE THE DOCUMENT TITLE] 3 APPLICATION HAS TO BE READ INTO THE MAIN PROVISIONS WITH EFFECT FROM THE TIME THE MAIN PROVISION CAME IN TO EFFECT IN VIEW O F THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SEDCO FOREX IN TERNATIONAL DRILLING VS. CIT. 9. WHETHER THE FACTS AND CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS FAILED TO ADJUDICATE ON THIS ISSUE THAT INTEREST U/S 234B WAS NOT CHARGEABLE IN THIS CASE BY RELYING UPON THE DECISION OF HON'BLE U TTARAKHAND HIGH COURT IN THE CASE OF MAERSK (334 ITR 79) WHERE AS THE DEPA RTMENT HAS CONTESTED THE ISSUE AND HAS FILED SLP BEFORE THE APEX COURT A GAINST IN THE CASE OF JACOBS CIVIL INCORPORATED /MITSUBISHI INVOLVING SIM ILAR ISSUE. 2. THE REGISTRY HAS REPORTED THAT THIS APPEAL OF THE R EVENUE IS TIME BARRED BY TWO DAYS. THE DEFECT SO POINTED OUT APPEARS TO H AVE BEEN COMMUNICATED TO THE APPELLANT. WE, HOWEVER, FIND THAT THE REVENUE H AS NEITHER FILED ANY APPLICATION FOR CONDONATION OF DELAY NOR HAS ASSIGN ED ANY REASON FOR THIS NOMINAL DELAY DURING THE COURSE OF HEARING. WE ARE, THEREFORE, INCLINED TO DISMISS THIS APPEAL AS BARRED BY LIMITATION WITH LI BERTY TO THE DEPARTMENT TO GET THIS ORDER RECALLED, IF THE DEFECT, POINTED OUT ABOVE, IS REMOVED BY ASSIGNING THE REASON WHICH PREVENTED TO FILE THE AP PEAL WITHIN THE PERIOD OF LIMITATION. WE ORDER ACCORDINGLY. 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEBRUARY, 2018. SD/- SD/- (H.S. SIDHU) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01.02.2018 *AKS*