2018 (10) TMI 1988 - AT - Income Tax

Assessment of appellant on a protective basis - AOP - Assessee had filed its income tax return offering the revenue received by it from this contract under section 44BB - HELD THAT - There is no dispute on facts that there is no order against the assessee to challenge in the appeal. However it is brought to our notice by the Ld. AR that the issue is no longer res integra and the question whether or not the consortium Agreement dated 04/05/03 between Slumberger Asia Services Ltd and Transocean Offshore Deep water Drilling Pvt. Ltd. constitutes an AOP has been considered by the coordinate Bench of this Tribunal 2018 (3) TMI 1599 - ITAT NEW DELHI for A. Y. 2008-09 and was answered in the negative ie. in favour of the assessee. Further it is submitted that following the same in assessee s own case 2018 (5) TMI 2139 - ITAT DELHI a coordinate Bench of this Tribunal on identical grounds as are raised in these appeals accepted the contentions of the assessee and allowed the appeals of the assessee. Tribunal has been taking a consistent review that the Consortium agreement between the assessee and Transocean Offshore Deepwater Drilling Private Limited do not constitute an AOP and the Transocean Offshore Deepwater Drilling Inc being consortium member has rightly offered to tax the receipts under section 44BB in the return of income. On the face of this consistent view taken by the Tribunal over a period of time there s no reason for us now to take a different view since no change of circumstances to affect the applicability of this consistent view for the years under consideration in these two appeals. No material is produced before us by revenue to take a different view and the one that was taken in the earlier years. In the circumstances where of the considered opinion that a view that was taken consistently in assessee s own case file their earlier years shall not slightly be disturbed. We therefore while respectfully following the decisions of the coordinate bench is of this tribunal in assessee s own case allow the grounds of appeal in these two appeals also.

Summary

Issues Involved:
1. Maintainability of the appeal filed by the Assessee.
2. Determination of whether the consortium between the Assessee and Transocean Offshore Deepwater Drilling Inc. (TODDI) constitutes an Association of Persons (AOP).
3. Assessment of income under Section 44BB of the Income Tax Act, 1961.
4. Procedural compliance regarding notices issued under Section 148 of the Income Tax Act, 1961.
5. Credit of taxes deducted at source and imposition of interest and penalties.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal:
The Assessee challenged the orders dated 15.12.2015 passed by the Ld. Commissioner of Income Tax (Appeals)-2, Noida, on the grounds that the appeal filed by SASL was dismissed as not maintainable. The Ld. CIT(A) held that the impugned order was passed by the Assessing Officer (AO) on the alleged AOP of SASL and TODDI and not against the Appellant (SASL). The Assessee argued that it is an aggrieved party due to the impugned order and therefore, the appeal should be maintainable. The Tribunal noted that the Ld. CIT(A) did not dispose of the appeal on merits but dismissed it on the grounds of non-maintainability, which was incorrect as the Assessee is indeed an aggrieved party.

2. Determination of AOP:
The core issue was whether the consortium between the Assessee and TODDI constituted an AOP under the provisions of the Income Tax Act. The AO had held that the consortium constituted an AOP and assessed the income on a protective basis. However, the Ld. CIT(A) and the Tribunal in previous cases (ITA No. 5822/Del/2010 and 105/Del/2012 for AY 2008-09) consistently held that the consortium did not constitute an AOP. The Tribunal reiterated that the consortium agreement between the Assessee and TODDI does not form an AOP, and the income should be assessed individually under Section 44BB.

3. Assessment under Section 44BB:
The Assessee had filed its income tax return offering the revenue received from the contract under Section 44BB, which deals with the taxation of income from the business of providing services or facilities in connection with the exploration or production of mineral oils. The Tribunal upheld that the income from the consortium contract should be taxed under Section 44BB and not as an AOP, aligning with the consistent view taken in previous assessments.

4. Procedural Compliance (Section 148 Notices):
The AO issued notices under Section 148 to the alleged AOP members, which were initially unserved but later served. The Assessee denied the existence of an AOP and requested the reasons for invoking Section 147. The AO provided the reasons, and the Assessee filed objections, which were disposed of by the AO. The Tribunal found that the procedural compliance was in order but reiterated that the consortium did not constitute an AOP.

5. Credit of Taxes Deducted at Source and Penalties:
The AO did not allow the credit of taxes deducted at source by ONGC while computing the taxes payable by the alleged AOP and levied interest under Sections 234A and 234B, along with initiating penalty under Section 271(1)(c). Since the Tribunal held that the consortium does not constitute an AOP, the credit of taxes deducted at source should be allowed, and the imposition of interest and penalties was not justified.

Conclusion:
The Tribunal allowed the appeals of the Assessee, holding that the consortium between the Assessee and TODDI does not constitute an AOP, and the income should be assessed under Section 44BB. The appeal filed by the Assessee was maintainable, and the procedural compliance by the AO was noted. The Tribunal directed that the credit of taxes deducted at source should be allowed, and the imposition of interest and penalties was not warranted. The consistent view taken in previous assessments in favor of the Assessee was upheld.