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2009 (1) TMI 533 - ITAT DELHITaxability of profit u/s 44BB - reimbursement of service tax - Non-residents - CIT (A) allowed the relief of 10 per cent on account of reimbursement of service tax included in the gross revenue for computing the income by applying provisions of section 44BB - assessee company is incorporated under the laws of The Netherlands - assessee submitted before AO that the assessee was engaged in the business of providing services and facilities in connection with the exploration/extraction and production of mineral oils in India and has offered its income u/s 44BB - receipts offered to tax were net of service tax. HELD THAT:- Section 44BB is a special provision for imposing the Income tax treating 10 per cent of the aggregate amount specified in sub-section (2) of section 44BB as deemed profits and gains of such non-resident assessee who is engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils. Thus, it is clear that the amount which is to be taken is the amount paid to the assessee whether in or out of India, payable to the assessee whether in or outside India on account of the provision or services and facilities in connection with, or supply of plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India and the amount received or deemed to be received in India by the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India. The Hon’ble jurisdictional High Court of Uttarakhand in the case of Sedco Forex International Inc.[2007 (9) TMI 196 - UTTARAKHAND HIGH COURT] held that it is the sum received by the assessee which is to be taken into account for the purpose of determining profit u/s 44BB and not the actual taxable income as contemplated u/ss 4 and 5 of the Act. It is not in dispute that the assessee company has realized service tax on account of providing services and facilities in connection with the exploration or extraction of mineral oils in India. The service tax so realized is a part of receipts received by the assessee from ONGC. The service tax realized by the assessee is in respect of services specified u/s 44BB and rendered by it to ONGC. Therefore, respectfully following the proposition laid down by the Hon’ble Jurisdictional Uttarakhand High Court, we are incline to hold that AO was justified in including the amount of service tax collected by the assessee in connection with the services or facilities or supply specified u/s 44BB, provided by the assessee to ONGC, in the total receipts for the purpose of determining presumptive profit of 10 per cent u/s 44BB. Thus, the order of CIT (A) is set aside and that of AO is restored on this issue. In result, the appeal filed by the revenue is allowed.
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