TMI Blog2014 (1) TMI 1580X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee at the rate of 10% - Section 44BB provides by a legal fiction to be the profits and gains of the non-resident assessee engaged in the business of exploration at the rate of 10% of the aggregate amount specified in sub section (2) - The Assessing Officer added the said amount which was received by the non resident company rendering services as per provisions of sec. 44BB to the ONGC - Decided against assessee. Reimbursement of service tax - Held that:- Relying upon the decision in M/s Sedco Forex International Drilling Inc C/o Nangia & Company Versus Assistant Director of Income Tax, International Taxation [2014 (1) TMI 1322 - ITAT DELHI] - service tax being a statutory liability cannot form part of gross receipts for the purpose of deemed profit u/s 44BB - Decided in favour of assessee. - I.T.A. No.5405/Del/2012 - - - Dated:- 24-1-2014 - Smt. Diva Singh And Shri T. S. Kapoor,JJ. For the Appellant : Shri Vidur Puri, FCA. For the Respondent : Shri Sanjeev Sharma, CIT-DR. ORDER Per TS Kapoor, AM:- This is an appeal filed by the assessee against the order of Assessing Officer dated 11th September, 2012 passed u/s 143(3)/144C of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The Ld AR submitted that first issue of mobilization fees was decided in favour of assessee. However, the matter traveled up to the Hon'ble High Court and Hon'ble High Court has decided the matter against the assessee and therefore he fairly conceded that first issue is covered against the assessee. However, he submitted that the assessee had invoked provisions of Double Taxation Avoidance Agreement and Assessing Officer had ignored the beneficial provisions of section 90(2) of the Act. Therefore, in view of the above treaty provision, the Ld AR submitted that assessee should have been given benefit of provisions of treaty. 4. Regarding ground No. 2 3 with respect to reimbursement of communication charges and cost of repair charges, the Ld AR submitted that the issue was decided in favour of assessee in assessment year 2002-03 and our attention was invited to paper book page 238 where a copy of order in the case of assessee itself for assessment year 2002-03 was placed. 5. As regards ground No.4, regarding reimbursement of service tax, it was argued that the issue was covered in favour of assessee vide judgment of Sedco Forex International Drilling Co. v. ADIT 139 ITD 188 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble High Court has relied upon the case law Sedco Forex Inc. v. CIT 299 ITR 238. The argument of Ld AR that the assessee should have been given benefit of Double Tax Avoidance Agreement does not hold any force as the issue has already been decided by the Hon'ble High Court. Therefore, the first ground of appeal is decided against the assessee and is dismissed. 8. Ground No.2 3 is against inclusion in the gross receipts amount received on account of communication charges and on account of repair/cost of equipment charges. The Ld AR had argued that the issues were covered in its favour by the order of Tribunal in its own case for assessment year 2002-03 placed at paper book page 238. We have gone through the findings of the orders and we observe that during this year the Hon'ble Tribunal had made a finding of fact vide para 20 of the order. The relevant findings are reproduced as under:- "No doubt, section 44BB is a code in itself and it starts with non obstante clause which excludes application of sec. 28 to 41 and section 43 and 43A but at the same time to assess any sum under that section, the activity must fall within the activity described in sub section (2) of sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of plant and machinery on hire used or to be used in the prospecting for or extraction or production of mineral oils outside India and (B) deemed to be received by the assessee in India on account of provision of services and facilities in connection with or supply of plant machinery on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils outside India. Thus it is clear from the perusal of sec. 44BB that all the amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive. This amount is the basis of determination of deemed profit and gains of the assessee at the rate of 10%. Therefore, in our view, the Tribunal fell into error in not appreciating the difference between the amount and the income. Amount paid or received refers to the total payment to the assessee or payable to the assessee or deemed to be received by the assessee, whereas income has been defined u/s 2(24) of the IT Act and sec. 5 and sec. 9 deal with the income and accrued income and deemed income. Sec. 4 is the charging section of the income tax act and definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production of, mineral oils in India, (b) payable to the assessee (whether in or out of India) 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 in India, (c) received by the assessee in India 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 and (d) deemed to be received by the assessee in India 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 service tax is a statutory liability like custom duty. Hon'ble Uttarakhand High Court in their decision in Schlumberger Asia Services Ltd.(supra) concluded that reimbursement of custom duty paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement. Fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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