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2015 (6) TMI 493 - ITAT DELHI

2015 (6) TMI 493 - ITAT DELHI - [2015] 41 ITR (Trib) 71 (ITAT [Del]) - 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. Re .....

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JM Assessee has filed this Appeal against the impugned order dated 25.10.2012 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, .....

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not includible in the gross receipts for the purpose of determining income 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 .....

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tionnaire was issued by the AO. In pursuance to the various notices and 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 Establ .....

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of the Indian Income Tax Act. The assessee has claimed that the taxable 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 asse .....

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ing in India under section 5 of the Income Tax Act, 1961. Since the activity 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 .....

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sement of expenses, mobilization and demobilization charges and fees, handling 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 .....

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a total income of ₹ 10,21,08,763/- for which draft assessment order 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 th .....

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of the order dated 5.9.2015, as aforesaid. 6. On the other Ld. DR relied 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 fav .....

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A.Y. 2008-09) in the case of M/s Sedco Forex International Drilling Inc. 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 ord .....

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ra) 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. 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 p .....

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no.3 in the appeal is allowed. 4. From the above, it is evident that the 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 Ho .....

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