GX Technology Eame Ltd., Gurgaon V. DCIT (International Taxation), Dehradun

ITA 80/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5182 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-06-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 05-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T M SHIVAKUMAR
• Assessee Lawyers: PARAS SHARMA ARS; S P SINGH SHARAD GOYAL
• Keywords: Business income
• Section: 143(3); 28; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.80/DEL/2017 ASSESSMENT YEAR : 2013-14 GX TECHNOLOGY EAME LTD., C/O DELOITTE HASKINS & SELLS LLP, 7 TH FLOOR, BUILDING 10, TOWER B, DLF CYBER CITY COMPLEX, DLF CITY PHASE-II, GURGAON. PAN: AADCG5063H VS. DCIT (INTERNATIONAL TAXATION), CIRCLE-1, AAYAKAR BHAWAN, INCOME TAX OFFICE, 13A, SUBHASH ROAD, DEHRADUN. (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI S.P. SINGH, SHARAD GOYAL & PARAS SHARMA, ARS DEPARTMENT BY : SHRI T.M. SHIVA KUMAR, CIT, DR DATE OF HEARING : 16.08.2017 DATE OF PRONOUNCEMENT : 18 .08.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E FINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 15.11.2016 U/S 143(3) READ ITA NO.80/DEL/2017 2 WITH SECTION 144C(13) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEA R 2013-14. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE COMPUTATION OF TOTAL INCOME BY APPLYING THE PROVISIONS OF SECTION 28 TO 43C AS AGAINST SECTION 44BB CLAIMED BY THE ASSESSEE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, A COMPANY HAVING ITS REGISTERED OFFICE IN UNITED KINGDOM, FIL ED ITS RETURN DECLARING INCOME OF RS.20,77,826/-. IT RECEIVED REVENUE OF R S.63,23,850/- FROM CAIRN ENERGY INDIA PTY LTD. (HEREINAFTER ALSO CALLE D `CAIRN), A COMPANY REGISTERED IN AUSTRALIA, FOR PROVISION OF SERVICES IN THE NATURE OF 3D SEISMIC AZIMUTHAL REPROCESSING FOR MANGALA AREA IN BARMER BASIN OF RAJASTHAN. THE ASSESSEE COMPUTED ITS TAXABLE INCOM E AT THE RATE OF 10% OF THE GROSS REVENUE U/S 44BB AT RS.6,32,385/-. TH E ASSESSING OFFICER, AFTER CONSIDERING THE SCOPE OF WORK IN THE AGREEM ENT BETWEEN THE ASSESSEE AND CAIRN, CAME TO HOLD THAT THE NATURE O F RECEIPT BY THE ASSESSEE WAS FEES FOR TECHNICAL SERVICES. SINCE T HE ASSESSEE, A NON- RESIDENT, RECEIVED THE AMOUNT FROM ANOTHER NON-RESI DENT, IT WAS HELD THAT ITA NO.80/DEL/2017 3 THE PROVISIONS OF SECTION 115A OR SECTION 44DA OF T HE ACT WERE NOT APPLICABLE. HE, THEREFORE, COMPUTED BUSINESS INCO ME ON ESTIMATE BASIS AT A DEEMED PROFIT RATE OF 25% OF THE GROSS R ECEIPTS IN TERMS OF THE PROVISIONS OF SECTIONS 28 TO 43C BY TREATING THE RE CEIPT AS FEES FOR TECHNICAL SERVICES. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE ALSO RECEIVED PAYMENT FROM SEABIRD EXPLORATION FZ LLC (HEREINAFTER ALSO CALLED `SEABIR D) UNDER CONTRACT WITH ONGC. SUCH RECEIPT WAS NOT DECLARED BY THE ASS ESSEE. CONSIDERING RECEIPTS FROM CAIRN AND SEABIRD AT RS.6.50 CRORE AN D ODD, THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME IN THE DRAFT ORDE R AT RS.1,62,73,000/- BY APPLYING PROFIT RATE OF 25%. THE DISPUTE RESOLU TION PANEL (DRP) DID NOT CHANGE THE FORTUNE OF THE ASSESSEE. THAT IS HOW , THE ASSESSING OFFICER COMPUTED TOTAL INCOME AT RS.1,62,73,000/- I N HIS FINAL ORDER, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BE FORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS PERTINENT TO NOTE THAT T HE ASSESSEE IS A COMPANY INCORPORATED UNDER THE LAWS OF THE UNITED KINGDOM A ND IS ENGAGED IN ITA NO.80/DEL/2017 4 PROVIDING SEISMIC DATA PROCESSING SERVICES TO THE O IL AND GAS EXPLORATION INDUSTRY. IT ENTERED INTO AN AGREEMENT WITH CAIRN, A COMPANY ESTABLISHED IN AUSTRALIA, FOR PROVISION OF 3D SEISMIC AZIMUTHAL REPROCESSING FOR MANGALA AREA IN BARMER BASIN OF RAJASTHAN. A COPY O F THIS AGREEMENT HAS BEEN PLACED AT PAGES 61 ONWARDS OF THE PAPER BO OK. THE AGREEMENT IS FOR PROVISION OF 3D SEISMIC AZIMUTHAL REPROCESS ING SERVICES. CLAUSE (2) OF THE AGREEMENT PROVIDES THAT THE ASSES SEE AGREES TO PERFORM THE SERVICES AS PER SCHEDULE II, BEING THE SCOPE O F WORK. SCHEDULE II IS AVAILABLE AT PAGE 104 OF THE PAPER BOOK WHICH DE FINES SCOPE OF WORK, NAMELY, 3D SEISMIC AZIMUTHAL REPROCESSING FOR MANGALA AREA. PAGE 106 PROVIDES THAT THE `WORK PROGRAMME COMPRISES OF THE FOLLOWING :- PILOT REPROCESSING PROJECT FOR 20 SQ. KM. SUBSET FR OM MANGALA HD 3D SURVEY. REPROCESS FROM FIELD TAPES ANALYZE VECTORIZED (NON-SECTORED) AZIMUTHAL VELOCIT IES ITA NO.80/DEL/2017 5 DEPENDING ON THE SUCCESS OF THE PILOT PROJECT, THE SAME FLOW COULD BE EXTENDED FOR THE WHOLE SURVEY OF APPROX 120 SQ K M. AREA. 5. ON THE SAME PAGE, IT HAS BEEN MENTIONED THAT IN THE YEAR 2007, SOME 3D SEISMIC DATA WAS ACQUIRED IN MANGALA FIELD COVERING A TOTAL AREA OF 120 KM2 AND FULL FOLD COVERAGE OF 88 KM2. `THE SPATIAL SAMPLING OF WHICH WAS KEPT VERY DENSE (BIN SIZE 5M X 5M) WITH THE OBJECTIVES OF ENHANCING THE SIGNAL/NOISE RATIO, IMP ROVING RESOLUTION WITHIN THE RESERVOIR SECTION, REDUCING THE UNCERTAI NTY OF THE POSITION OF THE MAIN BOUNDING FAULTS AND BETTER DEFINITION OF S HALLOW FAULTING. THE SEISMIC DATA QUALITY VARIES FROM GOOD OVER THE FL ANKS OF THE STRUCTURE TO POOR TO VERY POOR ADJACENT TO THE MAIN BOUNDING F AULTS AT THE CREST OF THE FIELD. QUALITY IS THE POOREST AT THE CREST NEA R THE STEEPLY DIPPING WESTERN BOUNDING FAULT. LOW ANGLE FAULTING WITHIN THE DHARVI DUNGAR AND AT THE TOP OF THE BARMER HILL ALSO CONTRIBUTES TO THE LOSS OF REFLECTIVITY AT THIS LEVEL. EVEN THOUGH THE DATA Q UALITY OF THE MANGALA HD3D IS RELATIVELY BETTER IN COMPARISON TO THE MANG ALA-NR 3D IN TERMS OF FAULT POSITIONING AND REFLECTOR CONTINUITY, THE PSTM/PSDM PROCESSED ITA NO.80/DEL/2017 6 DATA STILL SUFFERS AT THE CREST OF THE FIELD DUE TO FAULT SHADOW EFFECT AND NEAR SURFACE HETEROGENEITY. PAGE 114 OF THE PAPER BOOK, WHICH IS A PART OF THE AGREEMENT, CONTAINS IMPORTANT NOTE, WHICH READS AS UNDER:- - DATA NEED TO BE PROCESSED IN ITS ORIGINAL BIN SIZE & ORIGINAL SAMPLE INTERVAL. CONTRACTOR SHOULD NOT DROP ANY TRACE OR CHANGE THE BIN SIZE OR RESAMPLE THE DATA WITHOUT PRIOR CONFIRMATIO N FROM CAIRN. - FOR ANY KIND OF INTERPOLATION, ONLY 3D FOURIER DOM AIN TRACE RECONSTRUCTION SHOULD BE CONSIDERED. - CONTRACTOR SHALL AT ALL TIMES HOLD CONFIDENTIAL AND SHALL NOT DIVULGE TO THIRD PARTIES OR USE IN ANY WAY THE TECHNICAL IN FORMATION DISCLOSED DIRECTLY OR INDIRECTLY TO CONTRACTOR BY C OMPANY IN REGARD TO THE WORK OR THE RESULTS THEREOF, WITHOUT COMPANY S WRITTEN APPROVAL IN ADVANCE. 6. ON GOING THROUGH THE ABOVE CLAUSES OF THE AGREEM ENT BETWEEN THE ASSESSEE AND CAIRN, IT BECOMES MANIFEST THAT THE AS SESSEE DID PROCESSING OF 3D SEISMIC AZIMUTHAL DATA FOR CAIRN. NOW, THE Q UESTION ARISES AS TO WHETHER OR NOT THE RECEIPTS FOR SUCH SERVICES FALL U/S 44BB. IT CAN BE ITA NO.80/DEL/2017 7 BETTER APPRECIATED BY CONSIDERING THE MANDATE OF SE CTION 44BB(1), AS UNDER :- SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS IN CONNECTION WITH THE BUSINESS OF EXPLORATION, ETC., OF MINERAL OILS. 44BB. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A, IN THE C ASE OF AN ASSESSEE, BEING A NON-RESIDENT, ENGAGED IN THE BUSINESS OF PR OVIDING SERVICES OR FACILITIES IN CONNECTION WITH, OR SUPPLYING PLANT A ND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXT RACTION OR PRODUCTION OF, MINERAL OILS, A SUM EQUAL TO TEN PER CENT OF TH E AGGREGATE OF THE AMOUNTS SPECIFIED IN SUB-SECTION (2) SHALL BE DEEME D TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TA X UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' : PROVIDED THAT THIS SUB-SECTION SHALL NOT APPLY IN A CASE WHERE THE PROVISIONS OF SECTION 42 OR SECTION 44D OR SECTION 44DA OR SECTION 115A OR SECTION 293A APPLY FOR THE PURPOSES OF COMP UTING PROFITS OR GAINS OR ANY OTHER INCOME REFERRED TO IN THOSE SECT IONS. 7. IT IS VIVID THAT SECTION 44BB IS A SPECIAL PROVI SION FOR COMPUTING PROFITS AND GAINS IN CONNECTION WITH THE BUSINESS O F EXPLORATION ETC. OF MINERAL OILS. SUB-SECTION (1) MAKES IT CLEAR THAT T HIS PROVISION IS INVOKED IN THE CASE OF AN ASSESSEE, WHO IS A NON-RESIDENT A ND IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES OR FACILITIES ETC. I N CONNECTION WITH PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MI NERAL OILS. THE ASSESSEE IS UNDOUBTEDLY A NON-RESIDENT. HENCE THE F IRST CONDITION IS ITA NO.80/DEL/2017 8 FULFILLED. NOW THE MOOT QUESTION IS WHETHER THE SER VICES RENDERED BY THE ASSESSEE FALL WITHIN THE AMBIT OF `SERVICES . IN CONNECTION WITH PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MI NERAL OILS.? 8. THE HON'BLE SUPREME COURT IN ONGC LTD. VS. CIT & ANR. (2015) 376 ITR 306 (SC) , HAD AN OCCASION TO DEAL WITH THE SCOPE OF SECTIO N 44BB. APPLYING THE DOCTRINE OF PITH AND SUBSTANCE , THE HONBLE SUMMIT COURT HELD THAT WHERE THE DOMINANT PURPOSE I S PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL ETC., THEN CERTAIN ANCILLARY WORKS CONNECTED THERE WOULD ALSO BE COVERED WITHIN THE PR OVISIONS OF SECTION 44BB. A LIST OF 44 WORKS HAS BEEN GIVEN IN THIS JU DGMENT, WHICH HAVE BEEN HELD TO BE COVERED U/S 44BB. ITEM AT SL. NO.1 0 IS: ASSESSMENT AND PROCESSING OF SEISMIC DATA ALONG WITH ENGINEERING A ND TECHNICAL SUPPORT IN IMPLEMENTATION OF CYCLIC STEAM STIMULATION. SI MILARLY, ITEM AT SL. NO.16 IS: GEOLOGICAL STUDY OF THE AREA AND ANALYSI S OF SEISMIC INFORMATION REPORT TO DESIGN 2 DIMENSIONAL SEISMIC SURVEYS. THESE TWO CLAUSES APTLY COVER PROCESSING OF 3D SEISMIC DATA, BEING THE WORK DONE BY THE ASSESSEE FOR CAIRN. THE LD. DR HARPED ON TH E LATER PART OF WORK AT ITA NO.80/DEL/2017 9 SL. NO.10, NAMELY: ALONG WITH ENGINEERING AND TE CHNICAL SUPPORT IN IMPLEMENTATION OF CYCLIC STEAM STIMULATION. IT WAS ARGUED THAT THOUGH THE ASSESSEE CARRIED OUT THE PROCESSING OF SEISMIC DATA, BUT, IT WAS NOT DONE ALONG WITH ENGINEERING AND TECHNICAL SUPPORT . WE ARE NOT CONVINCED WITH THE SUBMISSION ADVANCED ON BEHALF OF THE REVENUE. IT IS OBVIOUS THAT THE PROCESSING OF 3D SEISMIC DATA CANN OT BE HANDLED MANUALLY. IT HAS TO BE DONE WITH CERTAIN TECHNICAL SUPPORT. WHEN CONFRONTED, THE LD. DR CANDIDLY ADMITTED THAT THE P ROCESSING OF THE SEISMIC DATA WAS DONE WITH THE AID OF COMPUTER SOFT WARE. WHEN WE SEE THE NATURE OF ALL THE 44 WORKS INCLUDED BY THE HON BLE APEX COURT IN ONGC (SUPRA) AS COVERED UNDER SECTION 44BB, THERE REMAINS NO DOU BT WHATSOEVER THAT A HYPER TECHNICAL VIEW CANNOT BE TA KEN BY THE REVENUE TO DENY THE BENEFIT OF THE SPECIAL PROVISION. GOING BY THE DESCRIPTION OF THE NATURE OF WORK COVERED UNDER SL. NO. 28 (INSPEC TION OF GAS GENERATOR); SL. NO. 29 (INSPECTION OF RIGS); SL. NO. 30 (INSPECTION OF GENERATOR) AND SL. NO. 37 (TRAINING ON WELL CONTROL ) ETC., IT BECOMES PALPABLE THAT EVERY WORK CONNECTED, DIRECTLY OR IND IRECTLY, WITH THE PROSPECTING OR EXTRACTION OF OR PRODUCTION OF MINER AL OIL ETC. HAS BEEN ITA NO.80/DEL/2017 10 BROUGHT WITHIN THE AMBIT OF SECTION 44BB. IN SUCH CIRCUMSTANCES, IT IS DIFFICULT TO ACCEPT THE VIEW POINT OF THE REVENUE T HAT THE SEISMIC DATA PROCESSING SERVICES RENDERED BY THE ASSESSEE SHOULD NOT BE CONSIDERED AS COVERED U/S 44BB OF THE ACT. WE, ERGO, HOLD THAT TH E ASSESSEE IS ENGAGED IN RENDERING SERVICES IN CONNECTION WITH THE PROSPE CTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS. 9. SUB-SECTION (1) OF SECTION 44BB BEGINS WITH A NON-OBSTANTE CLAUSE, WHICH OVERRIDES THE PROVISIONS CONTAINED IN SECTION 28 TO 41. IT IMPLIES THAT ONCE AN ASSESSEE SATISFIES THE REQUISITE QUALI FYING CONDITIONS CONTAINED IN SUB-SECTION (1), THEN THE INCOME IS TO BE DEEMED AT 10% OF THE RECEIPTS IN TERMS OF THIS SECTION. IN SUCH A SC ENARIO, THE AO CANNOT COMPUTE INCOME UNDER CHAPTER IV-D BY APPLYING THE P ROVISIONS OF SECTIONS 30 TO 43D. 10. AT THIS STAGE, IT IS RELEVANT TO MENTION THAT SIMPLY BECAUSE AN ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING SE RVICES OR FACILITIES ETC. IN CONNECTION WITH PROSPECTING FOR OR EXTRACTION O R PRODUCTION OF ITA NO.80/DEL/2017 11 MINERAL OILS, IT DOES NOT BECOME ENTITLED TO THE PR EFERENTIAL INCOME COMPUTATION AT THE RATE OF 10% OF THE GROSS RECEIPT S. IT HAS TO CROSS ONE MORE HURDLE, WHICH IS ENSHRINED IN PROVISO TO SECTI ON 44BB(1). THE PROVISO PROVIDES THAT THIS SECTION SHALL NOT APPLY WHERE THE PROVISIONS OF SECTION 42, 44D OR 44DA OR SECTION 115A OR SECTI ON 293A APPLY. IT MEANS THAT ONLY WHEN AN ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES ETC. IN THE PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS AND IS NOT COVERED BY THE SECTIONS SET OUT IN THE PROVISO, THAT IT WILL BE ENTITLED TO THE BENEFIT OF SECTION 44BB(1). 11. SECTION 42 IS A SPECIAL PROVISION FOR DEDUCT IONS IN THE CASE OF BUSINESS FOR PROSPECTING ETC. FOR MINERAL OIL. SUB- SECTION (1) CLEARLY PROVIDES THAT IT APPLIES WHERE : `THE CENTRAL GOVER NMENT HAS ENTERED INTO AN AGREEMENT WITH ANY PERSON FOR THE ASSOCIATION . THIS SECTION HAS OBVIOUSLY NO APPLICATION TO THE FACTS OF THE INSTAN T CASE. SECTION 44D IS NOT RELEVANT IN RESPECT OF AN AGREEMENT MADE BY THE FOREIGN COMPANY WITH GOVERNMENT OR WITH THE INDIAN CONCERN AFTER 31 ST MARCH, 2003. SECTION 44DA IS A SPECIAL PROVISION FOR COMPUTING I NCOME BY WAY OF ITA NO.80/DEL/2017 12 ROYALTIES ETC. IN CASE OF NON-RESIDENTS. SUB-SECTIO N (1) PROVIDES THAT : `THE INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES RECEIVED FROM GOVERNMENT OR AN INDIAN CONCERN IN PURSUANCE O F AN AGREEMENT MADE BY A NON-RESIDENT (NOT BEING A COMPANY) OR A F OREIGN COMPANY WITH GOVERNMENT OR THE INDIAN CONCERN AFTER THE 31S T DAY OF MARCH, 2003 SHALL BE COMPUTED UNDER THE HEAD 'PROFITS AN D GAINS OF BUSINESS OR PROFESSION' IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. IT IS MANIFEST THAT THIS SECTION IS TRIGGERED WHEN NON-RE SIDENT RECEIVES INCOME BY WAY OF ROYALTY OR FTS FROM GOVERNMENT OF INDIA O R SOME INDIAN CONCERN. WE HAVE NOTICED ABOVE THAT BOTH THE PAYER AND PAYEE ARE NON- RESIDENT IN THE EXTANT CASE. AS SUCH, SECTION 44DA HAS NO APPLICATION. SECTION 115A(1) SETS OUT THE RATE OF TAX ON ROYALTY AND TECHNICAL SERVICES FEES. SUB-SECTION (1) PROVIDES THAT : `WHERE THE TO TAL INCOME OF A NON- RESIDENT (NOT BEING A COMPANY) OR A FOREIGN COMPANY , INCLUDES ANY INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERV ICES OTHER THAN INCOME REFERRED TO IN SUB-SECTION (1) OF SECTION 44 DA RECEIVED FROM GOVERNMENT OR AN INDIAN CONCERN ETC., THEN THE IN COME-TAX PAYABLE SHALL BE AT THE SPECIFIED RATES. THIS SECTION HAS A GAIN NO APPLICATION FOR ITA NO.80/DEL/2017 13 THE REASONS ADDUCED FOR THE NON-APPLICABILITY OF SE CTION 44DA. SECTION 293A COVERS POWER OF THE CENTRAL GOVERNMENT TO MAKE EXEMPTION, ETC., IN RELATION TO PARTICIPATION IN THE BUSINESS OF PRO SPECTING FOR, EXTRACTION, ETC. OF MINERAL OILS. THIS PROVISION AGAIN IS NOT A PPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION. 12. AN OVERVIEW OF THE PRESCRIPTION OF PROVISO TO SECTION 44BB(1) DEMONSTRATES THAT THE SAME IS NOT MAGNETIZED IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. THE ASSESSING OFFICER HAS RIGHTLY NOTED ON PAGE 3 OF HIS ORDER THAT: THE TRANSACTIO N IN THIS CASE IS BETWEEN AN NRC AND NRC, THEREFORE, PROVISION OF SECTION 115 A OR SECTION 44DA OF I.T. ACT ARE NOT APPLICABLE FOR COMPUTING TAX LI ABILITY IN RESPECT OF FTS RECEIPTS OF ASSESSEE. TO THIS EXTENT, WE AGRE E WITH THE AO. HOWEVER, HIS LATER ACTION IN APPLYING THE PROVISION S OF CHAPTER IV-D CANNOT BE COUNTENANCED AS SECTION 44BB IS FULLY ATT RACTED AND THIS SECTION OPENS WITH A NON-OBSTANTE CLAUSE. WE, THERE FORE, HOLD THAT THE ASSESSEE WAS RIGHT IN OFFERING RECEIPTS FROM CAIRN UNDER SECTION 44BB OF THE ACT. ITA NO.80/DEL/2017 14 13. WHILE NARRATING THE FACTUAL ASPECTS OF THIS ISS UE, WE NOTED THAT THE ASSESSEE, APART FROM EARNING REVENUE FROM CAIRN, AL SO EARNED REVENUE FROM SEABIRD, WHICH WAS NOT DISCLOSED IN THE RETUR N OF INCOME. IT WAS ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH AT THE ASSESSING OFFICER NOTICED SUCH FAILURE ON THE PART OF THE ASS ESSEE TO OFFER SUCH INCOME AND TAXED IT IN THE SAME MANNER AS THE REVEN UE FROM CAIRN. IT IS NOT DISPUTED THAT THE NATURE OF SERVICES PROVIDED B Y THE ASSESSEE TO SEABIRD IS SIMILAR TO THOSE RENDERED TO CAIRN. EX CONSEQUENTI, REVENUE FROM SEABIRD ALSO NEEDS TO BE TREATED IN THE SAME W AY AS THAT FROM CAIRN. IT IS HELD THAT THE REVENUE FROM SEABIRD IS ALSO COVERED U/S 44BB OF THE ACT. 14. THE LD. AR WAS FAIR ENOUGH NOT TO PRESS THE GROUND CHALLENGING INCLUSION OF REVENUE FROM SEABIRD IN THE COMPUTATIO N OF TOTAL INCOME SUBJECT TO THE APPLICABILITY OF SECTION 44BB OF THE ACT. IN THE GIVEN CIRCUMSTANCES, WE HOLD THAT THE `BUSINESS INCOME O F THE ASSESSEE IN RESPECT OF REVENUE FROM CAIRN AND SEABIRD SHOULD BE COMPUTED AT THE RATE OF 10% IN TERMS OF SECTION 44BB OF THE ACT. ITA NO.80/DEL/2017 15 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.201 7. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 18 TH AUGUST, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.