Sedco Forex International Inc. V. The Deputy Commissioner of Income Tax, Circle-1, Dehradun

ITA/58/2008

AI Insights

This case involves M/s Sedco Forex International Inc., the appellant, contesting a decision by the Income Tax Appellate Tribunal regarding the taxability of mobilization/demobilization revenues for the Assessment Year 2000-01. The core issues revolved around the interpretation of Section 44BB of the Income Tax Act and the applicability of tax on revenues generated from activities partially conducted outside India. The High Court of Uttarakhand at Nainital, referencing a prior decision in a similar case, upheld the Tribunal's decision, confirming that the entire mobilization/demobilization revenue was chargeable to tax in India.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 795426 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 29-12-2008
• Assessment Year: misc
• Other Referred Cases: Sedco Forex International Inc. Vs. Commissioner of Income Tax and another
• Laws Referred To: Section 44BB of the Act, Section 5 of the Act, Section 9(1)(i) of the Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ARVIND VASHISTH
• Assessee Lawyers: S K POSTI
• Keywords: Income Tax; Reimbursement of expenses; Tax chargeability; Mobilization/Demobilization Revenue; International Operations
• Section: 44BB; 5; 9(1)(i)

Judgement Text

"IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL INCOME TAX APPEAL NO. 58 OF 2008 M/s Sedco Forex International Inc., C/o Nangia & Co. 75/7, Rajpur Road, Dehradun. ………………Appellant. Versus The Deputy Commissioner of Income Tax, Circle-1, Dehradun. …………….Respondent. Mr. S.K. Posti, learned counsel for the appellant. Mr. Arvind Vashisth, learned counsel for the respondent. Dated: 29th December, 2008 Coram: Hon’ble P.C. Verma, J. Hon’ble Sudhanshu Dhulia, J. This appeal has been preferred against the judgment and order dated 31.7.2008 passed by the Income Tax Appellate Tribunal in Income Tax Appeal No. 385/Del/2005 for Assessment Year 2000-01. 2. The following questions of law have been framed in the memo of appeal : “a. Whether on facts and in the circumstances of the case, the Ld. Tribunal erred in law in not appreciating the true construction of Section 44BB of the Act? b. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was legally correct in holding that the entire “mobilization/demobilization” revenue amounting to Rs. 8,11,31,410/- was chargeable to tax in India despite the fact that a portion of the said activity was carried out outside India? c. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was legally correct in holding that the entire amount of mobilization revenues rather than only such part as is attributable to the transportation of the rig in India is chargeable to tax in India? d. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was legally correct in impliedly concluding that the proportionate amount of mobilization revenues relating to activities carried outside India is chargeable to tax in India? e. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was legally correct in impliedly concluding the Section 44BB of the Act would override section 5 of the Act? f. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was legally correct in upholding the inclusion of mobilization charges while calculating the aggregate amount as referred to in sub-section (2) of section 44BB of the Act? g. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was legally correct in not holding that in terms of clause (a) of Explanation 1 to section 9(1) (i) in the case of a business of which all the operations are not carried out in India, the income of the business deemed to accrue or arise in India is only such part of the income as is reasonably attributable to the operations carried out in India? h. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was legally correct in holding that a sum of Rs 2,36,71,347 received by the appellant from its customers as reimbursement on account of actual expenses incurred by the appellant was to be included in calculating the aggregate amount referred to in sub- section (2) of section 44BB of the Act? i. Whether on the facts and in the circumstances of the case, the findings arrived at by the Ld. Tribunal are perverse in as much as no reasonable person correctly informed of the position of law would come to such conclusion?” 3. The facts of the present are similar to that of Income Tax Appeal No. 280 of 2001 (Old No. 99 of 1999) Sedco Forex International Inc. Vs. Commissioner of Income Tax and another, which was decided vide judgment dated 28th September, 2007. 4. Both the parties have agreed too that as present case is squarely covered by the judgment dated 28th September, 2007 passed in ITA No. 280 of 2001 (Old No. 99 of 1999) Sedco Forex International Inc. Vs. Commissioner of Income Tax, Meerut and another, present appeal may be decided in the same manner. 5. Accordingly, the appeal is disposed of. The questions are answered in favour of the Revenue. (S. Dhulia, J.) (P.C. Verma, J.) 29.12.2008 29.12.2008 Rathour "