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2015 (5) TMI 816 - AT - Income TaxEligibility for benefit of section 44BB denied - AO treated the payment received by the assessee from leasing of oil drilling rig as royalty as per Article 12 of India- USA DTAT - Held that:- There is no dispute that the contract entered into by the assessee in India was effectively connected with that PE in India and the dispute as to whether letting out drilling rig, services and facilities by the assessee in connection with prospecting production and extraction of mineral oil under the contract with Pride Foramer as accepted by ONGC is a sub-contract and hence the assessee is not entitled to have benefit of taxability under sec. 44BB of the Act has been decided in favour of the assessee by the Co-ordinate Bench of the ITAT in the case of Louis Drefus Armateures SAS vs. ADIT (2015 (2) TMI 899 - ITAT DELHI). Since both the conditions as pointed out in the case of PGS Geophysical AS vs. ACIT (2014 (7) TMI 723 - DELHI HIGH COURT), i.e.the receipt of the assessee can be taxed under sec. 44BB only if the assessee has a PE in India during the relevant period and the contract entered into by the assessee in India was effectively connected with the PE in India have been fulfilled in the present case, we are of the view that the assessee is very much eligible for the benefit available under sec. 44BB of the Act towards the hire charges of the drilling rig by applying the deemed profit ratio of 10% under the said provisions. It is held accordingly with direction to the Assessing Officer to compute the tax as such by allowing the benefit of the provisions laid down under sec. 44B of the Act - Decided in favour of assesse. Chargeability of interest u/s 234B and 234C - Held that:- As when there was no obligation for advance tax as income received by the assessee was subject to tax deduction at source and tax was also deducted in accordance with order passed u/s 195 of the Act and further that the AO has erred in law by charging surcharge and education cess on income tax rate in excess of the maximum rate of tax prescribed under Article 12 of the India USA Double Tax Avoidance Treaty. These issues are consequential in nature to the issue raised in ground No. 1 adjudicated herein above. These grounds thus do not need independent adjudication - Decided in favour of assesse.
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