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M/s SUNDOWNER OFFSHORE INTERNATIONAL (BERMUDA) LTD. Versus ASSTT. DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION, INCOME TAX OFFICE

2015 (6) TMI 493 - ITAT DELHI

Determination of income u/s 44BB - Receipts on account of service tax - whether includible in the gross receipts for the purpose of determining income under section 44BB - Held that:- Keeping in view the case of Ensco Maritime Limited vs. Asstt. Director of Income Tax (Int. Taxation) [2015 (1) TMI 355 - ITAT DELHI ] in which one of the Members was the party wherein the issue in dispute was decided in favor of the assessee. Respectfully, following the precedent of the Coordinate Bench as aforesai .....

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10.2012 passed by the Ld. CIT(A)-II, New Delhi relevant to assessment year 2009-10 on the following grounds:- Based on the facts and circumstances of the case, your appellant respectfully submits the following grounds which are without prejudice to each other: Ground No. 1 That based on the facts and circumstances of the case, the Ld. CIT(A)-II, Dehradun erred in upholding the order of the AO that receipts of ₹ 100,803,172/- on account of service tax wer includible in the gross receipts fo .....

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come under section 44BB of the Income Tax Act, 1961. Your appellant prays that the erroneous order be cancelled and appropriate relief may be granted to the appellant. Your appellant craves leave to add to, alter, amend, vary, omit, substitute or delete any of the aforementioned grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal. 2. The brief facts of the case are that Return of income was filed by the assessee, electronically on .....

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due opportunities of hearing, the authorize representative of the assessee attended the assessment proceedings from time to time and submitted the replies. After hearing the assessee and perusing the submissions of the assessee, AO was of the view that the address of the company is given in the return of income as 332, Ambaji Sadan, Nanda Patkar Road, Ville Parle (E), Mumbai which has been admitted to be the Permanent Establishment in India by the assessee NRC. During the previous year, the ass .....

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e income on the revenues during the year to be computed only in terms of section 44BB of the Income Tax Act, 1961 claiming to be engaged in the providing of services and on facilities, in connection with, or supply plant and machinery on hire used, or to be used in the prospecting for, or extraction or production of mineral oils. The copies of contract on which the aforesaid revenues were earned were with the AO. 2.1 The assessee has filed the return of income under section 44BB(1) and has compu .....

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ivity of assessee is first leg activity that pertains to the contract with consortium / PSCs, receipts from charter hire of Rig of the assessee is taxable in India under section 44 BB of the I.T. Act, 1961. The assessee has also received revenue in the form of reimbursements on account of service tax, as mentioned above, which have not been included by the assessee in its gross receipts. The assessee was accordingly asked to substantiate its claim of the said amounts vide questionnaire / show ca .....

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andling charges are to be included in the amounts specified in subsection (2) of section 44BB, to determine the deemed profit of the assessee. In view of the above, the receipts on account of reimbursement of expenses are taken into account to determine deemed profit of 10% of the gross receipts of the assessee during the year as per section 44BB of Income Tax Act, 1961. The reimbursement of service tax too, is to be included in the gross receipts and taken into account to determine deemed profi .....

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der is being prepared and issued as per the provisions of section 143(3) of the I.T. Act. Thereafter, the AO finalized the assessment at a total income of ₹ 10,21,08,763/- as per the provisions of section 143(3) rws 144C(3)(a) of the I.T. Act vide his order dated 06.1.2012. 3. Against the order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 25.10.2012 has dismissed the appeal of the assessee. 4. Aggrieved with the order of the Ld. CIT(A), Assessee is .....

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ed upon the orders passed by the revenue authorities. 7. We have heard both the parties and perused the records available with and especially the order dated 05.9.2015 passed by the ITAT, Delhi B Bench, New Delhi in ITA No. 5482/Del/2013 A.Y. 2010-11 in the case of Ensco Maritime Limited vs. Asstt. Director of Income Tax (International Taxation), we are of the view that the issue involved in dispute is squarely covered in favor of the assessee by the decision of the Coordinate Bench, ITAT, New D .....

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. vs. Additional DIT (Intt. Taxation), Dehradun vide order dated 29.6.2012 and submitted that the issue in the present case is squarely covered by the aforesaid decision in favor of the assessee. We find that the this decision has also been followed earlier by the Tribunal in ITA No. 504/Del/2013 (A.Y. 2009-10) in the case of the same assessee vide which the Tribunal has decided the issue in favor of the assessee vide its order dated 02.8.2013. The relevant paras 3 to 4 are reproduced hereunder: .....

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uld not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement. Following the view in this decision, Mumbai Bench in their decision in Islamic Republic of Iran Shipping Lines (supra) held that service tax being a statutory liability, would not involve any element of profit and accordingly, the same could not be included in the total receipts for determining the presumptive income. In the light of view taken by the Mumbai Bench, espe .....

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e ITAT decided the above issue in favour of the assessee following the decision of Hon'ble Jurisdictional High Court in the case of Director of Income Tax (International Taxation) and Another Vs. Schlumberger Asia Services Ltd. - [2009] 317 ITR 156 (Uttarakhand). No contrary decision of the Hon'ble Jurisdictional High Court has been pointed out. In view of the above, we, respectfully following the above decision of Hon'ble Jurisdictional High Court and also the decision of ITAT in as .....

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