TMI Blog2016 (7) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... See DIT Vs. Schlumberger Asia Services Ltd [2009 (7) TMI 51 - UTTARAKHAND HIGH COURT ] Amount received on account of reimbursement of freight and transportation charges - amount actually incurred in respect of equipment was not includible while computing its income under section 44BB - Held that:- It was not in dispute that the amount had been received by the assessee. Therefore, the Assessing Officer correctly added the said amount which was received by the non-resident company rendering services under the provisions of section 44BB to the ONGC and imposed the income-tax thereon. He was justified in doing so - ITA No.6585/Del/2014, Cross Objection No.231/Del/2016 - - - Dated:- 8-7-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Revenue : Smt. Anupama Anand, CIT-DR. For The Assessee : Shri Amit Arora, CA. ORDER PER G.D. AGRAWAL, VP :- ITA No.6585/Del/2014 Revenue s appeal :- This appeal by the Revenue for the assessment year 2011-12 is directed against the order of learned CIT(A)-II, Dehradun dated 4th September, 2014. 2. Ground No.1 of the Revenue s appeal reads as under:- 1. Whether on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant and machinery on hire should have directly entered into a contract or agreement with the person actually engaged in prospecting for or extraction or production of, mineral oils, one cannot curtail the scope or applicability of section 44BB to second leg contractors whose contracts or agreements are with first leg contractors but whose services or facilities or plant and machinery are used in connection with prospecting for or extraction or production of, mineral oils as required under section 44BB. The Hon'ble Supreme Court in ICDS Ltd v CIT [2013] 350 ITR 527 = 2013 TIOL-06-Hon'ble Supreme Court-IT held that the assessee leasing the vehicles to others who use the said vehicles in their business of running them on hire is entitled for higher rate of depreciation on the vehicles given on lease. It was held by the Hon'ble Supreme Court that the lessor need not himself use the vehicles in the business of running them on hire. The rationale of the aforesaid decision of the Supreme court may be applied in the context of section 44BB in as much as section 44BB does not mandate that the assessee should directly enter into contract with the person engaged in the business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 44BB/44DA/115A and the rationale behind the introduction of said amendment in the Finance Bill 2010 in holding that the income of the assessee company from equipment rental and technical services from Non-PSC Partners was covered under the presumptive provisions of section 44BB. 2(b) The ld.CIT(A) has erred in not appreciating the fact that even in terms of ratio of the judgment in the said of OHM Ltd [352, ITR 406 (Delhi)] cited by him, the provisions of section 44BB are not applicable where the scope of the services/facilities provided by an assessee is general in nature falling under section 44DA(1) of the Act. 2(c) The Ld.CIT(A) has erred in mechanically following the decision in the case of M/s OHM Ltd without first adjudicating upon the issue as to whether and how the scope of the services/facilities rendered under the contracts is not general in nature and therefore, does not qualify as Royalty/FTS u/s 9(1)(vi)/9(1)(vii) of the Act taxable under section 44DA. 3. Whether on the facts and in the circumstances of the case, the ld.CIT(A) has erred in holding that the income earned by the assessee for imparting of services was eligible for treatment u/s 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for technical services as mentioned in Section 44D would have the same meaning as in Explanation 2 to Clause (vii) of Section 9(1). The said explanation as quoted above defines fees for technical services to mean consideration for rendering of any managerial, technical or consultancy services. However, the later part of the explanation excludes from consideration for the purposes of the expression i.e. fees for technical services any payment received for construction, assembly, mining or like project undertaken by the recipient or consideration which would be chargeable under the head salaries . Fees for technical services, therefore, by virtue of the aforesaid explanation will not include payments made in connection with a mining project. The Income Tax Act does not define the expressions mines or minerals . The said expressions are found defined and explained in the Mines Act, 1952 and the Oil Fields (Development and Regulation) Act 1948. While construing the somewhat pari materia expressions appearing in the Mines and Minerals (Development and Regulation) Act 1957 regard must be had to the provisions of Entries 53 and 54 of List I and Entry 22 of List II of the 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have no hesitation in holding that the payments made by ONGC and received by the non-resident assessees or foreign companies under the said contracts is more appropriately assessable under the provisions of Section 44BB and not Section 44D of the Act. On the basis of the said conclusion reached by us, we allow the appeals under consideration by setting aside the orders of the High Court passed in each of the cases before it and restoring the view taken by the learned Appellate Commissioner as affirmed by the learned Tribunal. 7. It was also pointed out that while deciding the issue against the assessee, the Assessing Officer has relied upon the decision of Hon ble High Court of Uttarakhand in the case of ONGC which has been reversed by Hon ble Apex Court in the case of ONGC (supra). Since the issue is squarely covered in favour of the assessee by the decision of Hon ble Apex Court, we, respectfully following the same, uphold the order of learned CIT(A) on this point and reject ground Nos.2 to 5 of the Revenue s appeal. 8. Ground No.6 of the Revenue s appeal reads as under:- 6. Without prejudice to the generality of the ground relating to taxation of entire receipts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BB of the Act, the service tax collected by the assessee on the amount paid by it for rendering services is not to be included in the gross receipts in terms of Section 44 BB(2) read with Section 44 BB(1). The service tax is not an amount paid or payable, or received or deemed to be received by the assessee for the services rendered by it. The assessee is only collecting the service tax for passing it on to the government. 10. From the above, it is evident that while deciding the above issue, Hon'ble Delhi High Court has concurred with the decision of Hon ble High Court of Uttarakhand in the case of DIT Vs. Schlumberger Asia Services Ltd. [2009] 317 ITR 156. No contrary decision has been brought to our knowledge. We, therefore, respectfully following the above decision of Hon'ble Delhi High Court concur with the learned CIT(A) that service tax collected by the assessee will not form part of receipt for the purpose of computing income u/s 44BB of the Act. Ground No.6 of the Revenue s appeal is accordingly rejected. 11. Ground No.7 of the Revenue s appeal reads as under:- 7. Whether on the facts and in the circumstances of the case and in law, the ld.CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that reimbursements were to be included in the receipts for the purpose of determination of income under section 44BB of the Act. 15. At the time of hearing before us, it was fairly conceded by the learned counsel that this issue is covered against the assessee by the decision of Hon'ble Jurisdictional High Court in the case of CIT and Another Vs. Halliburton Offshore Services Inc. [2008] 300 ITR 265 (Uttarakhand). In the above mentioned case, the assessee rendered services to the ONGC. For the assessment year 1991-92, it claimed that the amount of ₹ 6,16,989 received on account of reimbursement of freight and transportation charges actually incurred in respect of equipment was not includible while computing its income under section 44BB. The Assessing Officer rejected the claim but the Commissioner of Income-tax (Appeals) and the Tribunal accepted it. On appeal to the High Court, it was held as under :- Held, allowing the appeal, that it was not in dispute that the amount had been received by the assessee. Therefore, the Assessing Officer added the said amount which was received by the non-resident company rendering services under the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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