VECO CANADA LTD.,DEHRADUN V. ADIT, DEHRADUN

ITA 1140/DEL/2012

AI Insights

Veco Canada Ltd. appealed against the order of the Commissioner of Income Tax (Appeals)-II, Dehradun, challenging the assessment under sections 143(3)/147/144C of the Income-tax Act, 1961 for the assessment year 2005-06. The primary contention was the applicability of section 44BB, which pertains to the presumptive taxation of non-resident taxpayers engaged in the business of providing services and facilities in connection with the exploration and exploitation of mineral oils. The Tribunal examined whether the assessee's activities, specifically the commissioning of a pipeline project, fell under the 'exploitation of mineral oils' as per the provisions of section 44BB.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473579 (ITAT-DEHRADUN)
• Duration Of Justice: 12 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-11-2024
• Assessment Year: 2005-2006
• Appeal Filed On: 06-03-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAYANK KUMAR
• Assessee Lawyers: SALIL KAPOOR
• Section: 148; 44BB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘DB’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.1140/Del/2012 Assessment Year: 2005-06 Veco Canada Ltd., C/o- Hemant Arora & Co., CA, 1 Tyagi Road, Dehradun Vs. ADIT, International Taxation, Dehradun PAN :AABCV9570G (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2005-06 is directed against the Commissioner of Income Tax (Appeals)-II [in short, the “CIT(A)”] Dehradun’s order dated 16.12.2021 passed in case no. 240/DDN/2010-11, involving proceedings under sections 143(3)/147/144C of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Assessee by Sh. Salil Kapoor, Advocate Sh. Chachra, Advocate Sh. Shivam Yadav, Advocate Department by Sh. Mayank Kumar, JCIT(DR) Date of hearing 19.11.2024 Date of pronouncement 27.11.2024 ITA No.1140/Del/2012 AY: 2005-06 2 | P a g e 2. Heard both the parties at length. Case file perused. 3. It emerges during the course of hearing that the assessee has raised as many as eleven substantive grounds in the instant appeal challenging validity of section 148 as well as those on merits. 4. Mr. Salil Kapoor submits at the outset that the assessee shall only pursue its sole substantive issue herein seeking to get itself assessed under section 44BB of the Act. We thus decline the assessee’s remaining pleadings as not pressed. 5. Coming next to the foregoing sole substantive issue of applicability of presumptive rate of tax under section 44BB in assessee’s case, there is hardly any dispute between the parties that the appellant-assessee herein had carried out work of commissioning of Vijaypur Kota Pipeline project for Gas Authority of India Limited (GAIL), inter alia, involving design and detail engineering purchase and transportation of all materials for the specified site, stores management and supervision of construction as well as project management and consultancy for the entire project etc. The Revenue’s case as per the CIT(A)’s impugned lower appellate discussion at page 26 para 5.7 is that such an activity, whether taken together or separately, involves construction of a ITA No.1140/Del/2012 AY: 2005-06 3 | P a g e pipeline for transporting the already mined natural gas to the consumers than that of “extraction or production” of mineral oils. 6. Learned departmental representative could hardly dispute the clinching fact that the CBDT Circular No. 495 of 1987 reported as [1987] 168 ITR (St) 87, 98 settled the instant issue as under: “New provisions for computing of taxable income from activities connected with exploration of mineral oils: 21.1 A number of complications are involved in the computation of taxable income of a taxpayer engaged in the business of providing services and facilities in connection with the supply of plant and machinery on hire, used or to be used in the exploration for and exploitation of mineral oils. With a view to simplifying the provisions, the Amending Act has inserted a new section 44BB which provides for the determining of the income of such taxpayers at 10 per cent., of the aggregate of certain amounts which have been specified, This amount will include the amounts received or due to be received in India on account of such services or facilities or supply of plant and machinery.\" 7. Needless to say, it has come on record that the CBDT foregoing circular has itself included the clinching expression “exploitation” of mineral oils as well for the purpose of granting benefit of presumptive rate of taxation at the rate of 10% to non- resident assessee engaged in the specified business. We thus conclude in these peculiar facts and circumstances that the assesee’s pipeline and other works carried out in the relevant ITA No.1140/Del/2012 AY: 2005-06 4 | P a g e previous year of construction of a pipeline for transporting “already mined natural gas to the consumer” as per the CIT(A)’s finding in para 5.7 duly qualifies its case to be covered under section 44BB of the Act as it falls in the latter category of “exploitation of minerals”. Accordingly, assessee succeeds in its instant sole substantive ground in very terms. Learned Assessing Officer is directed to frame his consequential computation in very terms. 8. This assessee’s appeal is partly allowed in above terms. Order pronounced in the open court on 27th November, 2024 Sd/- Sd/- (PRADIP KUMAR KEDIA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 27th November, 2024. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "