Ensco Maritime Ltd., New Delhi V. DCIT, Dehradun

ITA 760/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5581 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K DHALL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE S H. R. K. PANDA , ACCOUNTANT M EMBER AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER ITA NO. 759 & 760 /DEL/2015 ASSESSMENT YEAR: 20 08 - 09 & 2009 - 10 ENSCO MARITIME LTD., C/O. NANGIA & C OMPANY C.A. S SUIT - 4A, PLAZA M - 6, JASOLA - 110025 PAN AABCE1178P VS DCIT CIRCLE 1 INTERNATIONAL TAXATION DEHRADUN (APPELLANT) (RESPONDENT) APPELLANT BY SHRI AMIT ARORA, CA SHRI VISHAL MISHRA, CA RESPONDENT BY S H . G. K. DHALL CIT DR DATE OF HEARING: 0 3 /0 5 /2018 DATE OF PRONOUNCEMENT: 22 / 0 5 /2018 ORDER PER R.K. PANDA, AM: THE ABOVE TWO APPEALS FILED BY THE ASSESSEE A RE DIRECTED AGAINST THE SEPARATE ORDER S OF THE ASSESSING OFFICER PASSED U/S. 143 (3)/144C (13) OF THE IT ACT FOR A SSESSMENT YEARS 2008 - 09 AND 2009 - 10 RESPECTIVELY . S INCE IDENTICAL GROUND S HAVE BEEN TAKEN BY THE ASSESSEE IN BOTH THE APPEALS, THEREFORE, TH E SE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 2. ITA NO. 754/DEL/2015 (A.Y. 2008 - 09) 2.1 THE ONLY EFFECTIVE G ROUND RAISED BY THE ASSESSEE READS AS UNDER. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, YOUR APPELLANT RESPECTFULLY SUBMITS THAT THE A.O., HON BLE DISPUTE RESOLUTION PANEL - I, NEW DELHI (DRP) HAS ERRED IN HOLDING THAT THE AMOUNT RECEIVED BY THE APPELLANT AGGREGATING TO A SUM OF RS.456,154,056/ - FROM THE BG EXPLORATION AND PRODUCTION INDIA LIMITED ON ACCOUNT OF STATUTORY RECEIPTS OF SERVICE TAX, ON BEHAL F OF THE GOVERNMENT OF INDIA ARE TO BE INCLUDED IN THE RECEIPTS FOR THE PURPOSE OF DETERMINING INCOME UNDER SECTION U/S 44B OF THE ACT. 2.2 FACTS OF THE CASE , IN BRIEF , ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.11.2008 DECLARING TOTAL INCOME OF RS. 54,72,22 , 079/ - . T HE ASSESSEE HAS LEASED RIG TO BG EXPLORATI ON & PRODUCTION INDIA (P) LTD AND HAS SHOWN TOTAL RECEIPT OF RS.5 , 98 , 51 , 69 , 888/ - . HOWEVER, IT HAS CLAIMED DEDUCTION OF RS.45,61,54,056/ - RECEIVED ON ACCOUNT OF SERVICE TAX FROM THE CONTRACT RECEIPTS FOR CALCULATION OF PROFIT U/S 44BB OF THE IT ACT . THE AS SESSING OFFICER , THEREFORE, ASKED THE ASSESSEE TO JUSTIFY SUCH DEDUCTIONS . R EJECTING THE VARIOUS EXPLANATION GIVEN BY THE ASSESSEE , T HE ASSESSING OFFICER INCLUDED THE RECEIPT ON ACCOUNT OF REIMBURSEMENT OF SERVICE TAX TO THE INCOME OF THE ASSESSEE TO BE CO MPUTE D U/S 44 BB OF THE IT ACT. THE ASSESSEE APPROACHED THE DRP BUT WITHOUT ANY SUCCESS . T HE ASSESSING OFFICER THEREAFTER INCLUDED THE AMOUNT OF RS.45 , 61 , 54 , 056/ - TO THE CONTRACT RECEIPT FOR THE PURPOSE OF PROFIT TAXABLE U/S.44 BB OF THE IT ACT. 2.3 AGGR IEVED WITH SUCH ORDER OF THE ASSESSING OFFICER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILE D A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A SSESSMENT YEAR 2010 - 11 AND 2011 - 12 AND SUBMITTED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE WHERE IN IT IS HELD THAT SERVICE TAX RECEIVED BY THE ASSESSEE COULD NOT FORM PART OF CONTRACT RECEIPT FOR THE PURPOSE OF DEEMED PROFIT U/S. 44 BB OF THE IT ACT. HE AL SO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF TRANS OCEAN OFFSHORE DEEPWATER DRILLING INC VS. ADDL. CIT VIDE ITA NO.2072/DEL/2016 ORDER DATED 30 .01.2018 FOR A. Y. 2011 - 12. HE ACCORDINGLY SUBMITTED THAT THIS BEING A COVERED MATTER IN FAVOUR OF TH E ASSESSEE , THE GROUND BY THE ASSESSEE SHOULD BE ALLOWED. 4. LD. DR RELIED ON THE OTHER HAND HEAVILY RELIED ON THE ORDER THE ASSESSING OFFICER/ DRP. 5. WE HAVE CON SIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE ONLY DISPUTE TO BE DECIDED IN THE IMPUGNED GROUND IS REGARDING THE IN CL USION OF AMOUNT RECEIVED TOWARDS SERVICE TAX BY THE ASSESSEE FROM BG EXPLORATION AND PRODUCTION INDIA LTD. TO THE TOTAL CONTRACT RECEIPT FOR THE PURPOSE OF DETERMINING INCOM E U/.S 44 BB OF THE IT ACT. 5.1 WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A. Y. 2010 - 11. WE FIND THE TRIBUNAL VIDE ITA NO. 5452/DEL.2013 ORDER DATED 05.09.2014 H AS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY O BSERVING AS UNDER : - 9. WITH REGARD TO GROUND NO. 3 REGARDING SERVICE TAX CHARGED AMOUNTING TO RS. 155,062,604/ - IS CONCERNED, LD. COUNSEL OF THE ASSESSEE DURING THE HEARING HAS FILED A COPY OF THE DECISION OF THE ITAT, BENCH 'G', NEW DELHI PASSED IN IT A NO. 4 5284/DEL/2011 (A.Y. 2008 - 0 9) IN THE CASE OF M/S SEDCO FOREX INTERNATIONAL DRILLING INC. VS. ADDITIONAL DIT (INTT. TAXATION), DEHRADUN VIDE ORDER DATED 29.6.2012 AND SUBMITTED THAT THE ISSUE IN THE PRESENT CASE IS SQUARELY COVERED BY THE AFORESAID DE CISION IN FAVOR OF THE ASSESSEE. WE FIND THAT TH E THIS DECISION HAS ALSO BEEN FOLLOWED EARLIER BY THE TRIBUNAL IN ITA NO. 504/DEL/2013 (A.Y. 2009 - 10) IN THE CASE OF THE SAME ASSESSEE VIDE WHICH THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOR OF THE ASSESSEE V IDE ITS ORDER DATED 02.8.2013. THE RELEVANT PARAS 3 TO 4 ARE REPRODUCED HEREUNDER '3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN ASSESSEE' S OWN CASE FOR AY 2008 - 09 DATED 29 TH JUNE, 2012 VIDE ITA NO.5284/DEL/2011, WHEREIN THE ITAT HELD AS UNDER: - 'THE SERVICE TAX IS A STATUTORY LIABILITY LIKE CUSTOM DUTY. HON'BLE UTTARAKHAND HIGH COURT IN THEIR DECISION IN SCHLUMBERGER ASIA SERVICES LTD. (SUP RA) CONCLUDED THAT REIMBURSEMENT OF CUSTOM DUTY PAID BY THE ASSESSEE COULD NOT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED PROFITS U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. FOLLOWING THE VIEW IN THIS DECISION, MUMBAI BENCH IN THEI R DECISION IN ISLAMIC REPUBLIC OF IRAN SHIPPING LINES (SUPRA) HELD THAT SERVICE TAX BEING A STATUTORY LIABILITY, WOULD NOT INVOLVE ANY ELEMENT OF PROFIT AND ACCORDINGLY, THE SAME COULD NOT BE INCLUDED IN THE TOTAL RECEIPTS FOR DETERMINING THE PRESUMPTIVE I NCOME. IN THE LIGHT OF VIEW TAKEN BY THE MUMBAI BENCH, ESPECIALLY WHEN THE ID. DR DID NOT PLACE ANY MATERIAL BEFORE US CONTROVERTING THE AFORESAID FINDINGS OF THE ID.CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER NOR BROUGHT TO OUR NOTICE ANY CONTRARY DECISION, WE ARE OF THE OPINION THAT SERVICE TAX PAID BY THE ASSESSEE COULD NOT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED PROFITS U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. THEREFORE, GRO UND NO.3 IN THE APPEAL IS AL LOWED.' 5 4. FROM THE ABOVE, IT IS EVIDENT THAT THE IT AT DECIDED THE ABOVE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) AND ANOTHER VS. SCHLUMBERGE R ASIA SERVICES LTD. - [2009] 317 ITR 156 (UTTARAKHAND). NO CONTRARY DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN POINTED OUT. IN VIEW OF THE ABOVE, WE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AND ALSO T HE DECISION OF IT AT IN ASSESSEE'S OWN CASE CITED SUPRA, DIRECT THE ASSESSING OFFICER TO EXCLUDE SERVICE TAX FROM THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINING THE INCOME UNDER SECTION 44BB OF THE INCOME - TAX ACT, 1961. ACCORDINGLY, GROUND NOS.L & 2 OF THE ASSESSEE'S APPEAL ARE ALLOWED.' 9 . 1 FROM THE ABOVE, IT IS EVIDENT THAT THE ITAT DECIDED THE ABOVE ISSUE IN FAVOR OF THE ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXAT ION) AND ANOTHER VS. SCHLUMBERGER ASIA SERVICES LTD. [2009] 317 ITR 156 (UTTARAKHAND). NO CONTRARY DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN POINTED BY THE LD. DR. IN VIEW OF THE ABOVE, WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE H ON'BLE HIGH COURT OF UTTARAKHAND AND ALSO THE DECISION OF THE ITAT DECIDE THE ISSUE IN FAVOR OF THE ASSESSEE. 5.2 WE FIND FOLLOWING THE ABOVE DECISION THE TRIBUNAL AGAIN IN ASSESSEE S OWN CASE FOR A. Y. 2011 - 12 VIDE ITA NO. 5624/DEL.2014 ORDER DATED 02.0 8.2017 H AS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : - 8. NOW COMING TO GROUNDS NO. 3 & 4 WHICH ARE INTERRELATED, LD. AR PLACES RELIANCE ON THE ABOVE DECISION IN ASSESSEE S OWN CASE AND VIDE PARAGRAPH NO. 9 A COORDINATE BENCH OF THIS TRIBUNAL WHILE RELYING UPON THE DECISION OF THE HON BLE 6 UTTARAKHAND HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VS. SCHLUMBERGER ASIA SERVICES LTD. (2009) 317 ITR 156 (UTTARAKHAND) HELD THAT THE SERVICE TAX PAID BY THE AS SESSEE COULD NOT FORM PART OF AMOUNT FOR THE PURPOSE OF DEEMED PROFIT U/S 44BB UNLIKE THE OTHER AMOUNTS RECEIVED TOWARDS REIMBURSEMENT. RESPECTFULLY FOLLOWING THIS LINE OF JUDICIAL DECISIONS, WE DECIDE THIS GROUND IN FAVOUR OF THE ASSESSEE AND DIRECT THE A O TO DELETE A SUM OF RS. 5,16,47,646/ - . 5.3 SINCE THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH ES OF THE TRIBUNAL FOR A. Y. 2010 - 11 AND 2011 - 12, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL WE SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DIRECT HIM TO EXCLUDE THE AMOUNT OF RS. 45,61,54,056/ - RECEIVED FROM B G EXPLORATION INDIA LTD ON ACCOUNT OF STATUTORY RECEIPT OF SERVICE TAX FROM THE CONTRACT RECEIPTS FOR THE PUR POSE OF DETERMINING INCOME U/S 44 BB OF THE IT ACT. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 6. ITA NO. 760/DEL/2015 (A.Y. 2009 - 10) 6.1 THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER. BASED ON THE FACTS AND CIRCUMSTA NCES OF THE CASE, YOUR APPELLANT RESPECTFULLY SUBMITS THAT THE A.O. / HON'BLE DISPUTE RESOLUTION PANEL - 1, NEW DELHI (DRP) HAS ERRED IN HOLDING THAT THE AMOUNT RECEIVED BY THE APPELLANT AGGREGATING TO A SUM OF RS.49,65,65,642/ - FROM THE BG EXPLORATION AND P RODUCTION INDIA LIMITED ON ACCOUNT OF STATUTORY RECEIPTS OF SERVICE TAX, ON BEHALF OF THE GOVERNMENT OF INDIA ARE TO BE INCLUDED IN THE RECEIPTS FOR THE PURPOSE OF DETERMINING INCOME UNDER SECTION U/S 44BB OF THE ACT. 7 6.2 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUND IS IDENTICAL TO GROUND OF APPEAL IN ITA NO. IN 759/DEL/2015 FOR A. Y. 2008 - 09. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN ALLOWED. F OLLOWING SIMILAR REASONING THIS GROUND RAISED BY THE ASSESSEE I S ALLOWED. 6.3 IN THE RESULT BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 .0 5 .2018. SD/ - SD/ - (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMB ER *NEHA* DATE: - 22 .0 5 .2018 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 DATE 1. DRAFT DICTATED ON 03 .0 5 .2018 PS 2. DRAFT PLACED BEFORE AUTHOR 0 4 .0 5 .2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 21.05.2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BEN CH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 9