TMI Blog2007 (9) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... ant-assessee by holding that the Assessing Officer as well as the Commissioner of Income-tax (Appeals) were right in adding the amount of Rs. 99,04,000 for the assessment year 1986-87 and amount worth Rs. 64,64,530 for the assessment year 1987-88 received by the assessee towards mobilization charges for the purpose of imposing income-tax. 2. It appears from the perusal of the prayer made in the memo of appeal that only one appeal has been filed to set aside the composite judgment dated March 23, 1999, passed by the Income-tax Appellate Tribunal for the two assessment years, i.e., 1986-87 and 1987-88. No number of another appeal was given by learned counsel for the appellant at the time of hearing. 3. The appellant is a non-resident company entered into agreement with the ONGC, India, for drilling contract between the ONGC and Sedco Forex, which is referred to in the contract as "operator" and the assessee referred to in the contract as "contractor". The assessee was assessed by the Assessing Officer for the assessment year 1986-87 on amount of Rs. 99,04,000 and for the assessment year 1987-88 on Rs. 64,64,530 under section 44BB of the Income-tax Act, which included the mob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provides that the aggregate of the amounts referred to in sub-section (2) of section 44BB will be adopted as the basis for calculating profits at 10 per cent., which shall be deemed to be the profits and gains of such business charge able to tax under the head 'Profits and gains of business or profession'. It does not provide that separate consideration mentioned in the agreement for transportation of the drilling unit /rig from their present location to the designated location in India will be excluded from the aggregate amount of gross receipts on which 10 per cent. profit rate is required to be applied. ONGC has made the entire payment including the mobilization fee, operating charges, daily hire on non-operating days, etc., for availing of the services and facilities and the supply of plant and machinery on hire agreed to be provided by the appellant-company to ONGC. The mobilization fee paid by ONGC to the appellant-company has no nexus with the actual amount incurred by the appellant-company for transportation of the drilling unit/rigs to the specified drilling location in India. Even if the actual expenditure incurred by the appellant-company would have been substantially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43 and 43A, in the case of an assessee, being a non-resident, engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten per cent. of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax 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 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. (2) The amounts referred to in sub-section (1) shall be the following namely (a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India ; and (b) the amount received or deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following authorities: (1) Saipem S. P. A. v. Deputy CIT (Assessment) [2004] 88 ITD 213 (Delhi) ; [2005] 276 ITR (AT) 55 (Delhi); (2) CIT v. Toshoku Ltd [2005] 125 ITR 525 (SC); (3) Carborandum Co. v. CIT [1977] 108 ITR 335 (SC); (4) CIT v. Tata Chemicals Ltd. [1974] 94 ITR 85 (Bom); (5) CIT v. Hukumchand Mills Ltd . [1968] 67 ITR 79 (SC); (6) Anglo-French Textile Co. Ltd. v. CIT [1954] 25 ITR 27 (SC); (7) Hukam Chand Mills Ltd. v. CIT [1976] 103 ITR 548 (SC); (8) CIT v. Avtar Singh Wadhwan [2001] 247 ITR 260 (Bom); (9) CBDT v. Chowgule and Co. Ltd. [1991] 192 ITR 40 (Karn) ; (10) V. M. Salgaocar and Brother Ltd. v. Deputy Controller [1991] 187 ITR 381 (Karn); (11) CIT v. Best and Co. P. Ltd . [1966] 60 ITR 11 (SC); (12) CIT v. Dunlop Rubber Co. Ltd . [1983] 142 ITR 493 (Cal); (13) CIT v. Industrial Engineering Projects P. Ltd . [1993] 202 ITR 1014 (Delhi); (14) CIT v. Tata Engineering and Locomotive Co. Ltd . [2000] 245 ITR 823 (Bom); (15) Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746 (SC); (16) CIT v. Tejaji Farasram Kharawalla Ltd . [1968] 67 ITR 95 (SC); (17) Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplies, to erect and construct storage tanks of 5 MMTPA capacity, with potential expansion to 10 MMTPA capacity at the specified temperatures, i.e., -200 degree celsius. The arrangement also was to include marine facilities (jetty and island breakwater) for transmission and supply of LNG to purchasers; to test and commission the facilities relating to receipt and unloading, storage and regasification of LNG and to send out regasified LNG by means of a turnkey fixed lump sum price time certain engineering procurement, construction and commission contract. The project was to be completed in 41 months. The contract indisputably involved : (i) offshore supply, (ii) offshore services, (iii) onshore supply, (iv) onshore services and (v) construction and erection. The price was payable for offshore supply and offshore services in US dollars, whereas that of onshore supply as also onshore services and construction and erection partly in US dollars and partly in Indian rupees. 13. While determining the tax liability of the appellant, the hon'ble apex court has taken into consideration section 5(2), section 9(1)(i) and section 9(1)(vii) of the Income-tax Act and considered the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in or outside India. The section is a complete code in itself. Thus, the reliance placed by Sri Porus Kaka, learned counsel for the assessee, is misplaced as we have observed that the amount referred in sub-section (2) of section 44BB are four types of amounts and all the four types of amounts are mutually inclusive and has to be taken into account either all of them or any of them and its clauses themselves provide that whether the payment is made inside India or outside India. (emphasis supplied) 17. In the present case, a finding has been recorded by the Income-tax Appellate Tribunal that it was not in dispute before the Tribunal that the payment was made to the appellant-company outside India and the mobilization fee as claimed by the assessee was paid to the appellant by ONGC has no nexus with the actual amount incurred by the appellant-company for transportation of drilling units of rigs to the specified drilling locations in India. Hence, the mobilization fee is not the reimburseme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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