TMI Blog2008 (10) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... sement of expenditure against supply of material, customs duty etc. included in the gross revenues are not taxable in the hands of the NRC assessee. 2. The assessee is a company incorporated in USA and is engaged in providing of services and in connection with exploration and extraction of mineral oils. In the return of income, it claimed reimbursement of expenditure of ₹ 19,24,398 incurred on catering, supply of material, customs duty etc, and were claimed to be exempt from tax. The AO did not accept the argument and included these amounts for the purpose of taxation u/s 44BB of the Act. Before the CIT(A), the ground so far as it relates to catering charges amounting to ₹ 6,04,529, the same was withdrawn before the CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bedded in the receipt i.e. proposed to be the subject matter of determination under the aforesaid section. 5. We have carefully considered the rival contentions and gone through the records. So far as the issue relating to the reimbursement of expenditure against the supply or raw material etc. included in the gross revenue, they are definitely taxable in the hands of the assessee in the light of the binding of the decision of the jurisdictional High Court. As regards customs duty, the plea of the assessee had to be accepted in the light of the provisions of section 44BB of the Act. We will reproduce section 44BB of the Act: 44BB. (1) Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nything contained in sub-section (1), an assessee may claim lower profits and gains than the profits and gains specified in that subsection, if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB, and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee under sub-section (3) of section 143 and determine the sum payable by, or refundable to, the assessee.] Explanation.-For the purposes of this section,- (i) plant includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other words, the re-imbursements themselves are not in connection with the specification of services mentioned in section 44BB of the Act. We, therefore, direct the AO to exclude that part of the customs duty from being a part of the receipt for the purpose of determining the profits and gains u/s 44BB of the Act. Having regard to the provisions of Rule 27 of the Appellate Tribunal Rules, 1963, the respondent though he may not have appealed may support the order appealed against. Although, the Commissioner was entirely with the assessee on all the issues, including customs duty. The order of the CIT(A) can be justified as the same is not forming part of the receipt spelt out in section 44BB of the Act. The appeal of the revenue is, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clearly applicable to the assessee. In an identical situation, the rule is in favour of the assessee in the case of Application No. P.17 of 1998, reported in 236 ITR 637 wherein the Authority for Advance Rulings has considered the DTAA between UK and India and held that the said identical interest to be taxable under the provisions of the said Article at 15%. It was stated before us that the provisions of DTAA with USA are identical to the DTAA between India and UK. 10. We have gone through the decision of the Authority for Advance Rulings wherein in an identical issue is involved and held that the said interest income received from I.T. Deptt. is liable to be taxed under Article 11 of the applicable treaty. The facts in this case are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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