Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (7) TMI 16 - AT - Income TaxExpenditure incurred on maintenance of rigs leased out - revenue or capital expenditure - assessee, engaged in the business of drilling, leased out four rigs to M/s Saipem, SPA, Italy, being used by the said Sapem, SPA, in Saudi Arabia for drilling - Held that:- It is not disputed that assessee was owning the four rigs, and payments were made to M/s Saipem, SPA, Italy, towards planned and extraordinary maintenance activities of those rigs. The fact that such rigs were old has also not been disputed by the Revenue. That old rigs require periodical overhauling for keeping them in working condition, is a fact which cannot be overlooked. Assessee’s concern that unless such extraordinary maintenance or planned maintenance or overhauling was done, life of the rigs and life of the workmen rendering services in such rigs, would be jeopardized, appears to be well justified. Assessee, being the owner of the asset, it was in its own interest, that the assets were maintained properly. Hence, the same is allowed as business expenditure. Dis-allowance u/s 40(a)(ia) on account of non deduction of tax at source - Held that:- Insofar as business of leasing of rigs was concerned, it was carried on by the assessee outside India. Income received by M/s Saipem, SPA, Italy from the assessee, even if a part thereof is considered as FTS, would not attract Section 9(1)(vii). Since M/s Saipem, SPA, Italy was not having any business connection in India, the business income earned by the said company will not fall within the ambit of Section 9(1)(i) also. There being no failure on the part of the assessee for not deducting tax at source, it could not be fastened with the rigours of Section 40(a)(i) - Decided in favor of assessee.
|