Saipem Portugal Commercio Maritimo SU LDA, Noida v. DCIT, Dehradun

ITA 3901/DEL/2016 | 2012-2013
Pronouncement Date: 31-05-2021 | Result: Dismissed

Appeal Details

RSA Number 390126014 RSA 2016
Assessee PAN AABCT6720C
Bench Dehradun
Appeal Number ITA 3901/DEL/2016
Duration Of Justice 4 year(s) 10 month(s) 26 day(s)
Appellant Saipem Portugal Commercio Maritimo SU LDA, Noida
Respondent DCIT, Dehradun
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2021
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-05-2021
Last Hearing Date 05-03-2021
First Hearing Date 05-03-2021
Assessment Year 2012-2013
Appeal Filed On 04-07-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIB UNAL DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE SHRI SUDHANSHU SRIVASTAVA JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI ACCOUNTANT MEMBER ITA NO.3903/DEL/2016 (ASSESSMENT YEAR 2012-13) TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC. C/O NANGIA & COMPANY A-109 SECTOR-136 NOIDA-201 301. PAN AABCT 6720C VS. DY.CIT (INTERNATIONAL TAXATION) CIRCLE-2 DEHRADUN. (APPELLANT) (RESPONDENT) APPELLANT BY SH. AMIT ARORA CA SH. ITESH DODHI CA RESPONDENT BY SH. THAKUR SINGH MAPWAL JCIT DATE OF HEARING 05.03.2021 DATE OF PRONOUNCEMENT 31.05.2021 ORDER PER SUDHANSHU SRIVASTAVA JM: THE CAPTIONED APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 29.04.2016 PASSED BY T HE LD. 2 ITA NO.3903/DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT COMMISSIONER OF INCOME TAX (APPEALS) -2 NOIDA {CIT (A)} FOR ASSESSMENT YEAR 2012-13. 2.0 THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE YOUR APPELLANT RESPECTFULLY SUBMITS THE FOLLOWING GROUND S: GROUND NO. 1 THAT THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN AFFIRMING THE ACTION OF THE AO IN HOLDING THAT THE RECEIPTS O N ACCOUNT OF REIMBURSEMENTS OF EXPENSES INCURRED ON SUPPLY OF MA TERIALS AMOUNTING TO INR 92 180 583/- WERE INCLUDIBLE IN TH E GROSS RECEIPTS FOR THE PURPOSE OF DETERMINATION OF INCOME UNDER SECTION 44BB OF THE INCOME TAX ACT 1961 (THE ACT) . GROUND NO. 2 THAT THE LD.CIT (A) HAS ERRED ON FACTS AND IN LAW I N AFFIRMING THE ACTION OF THE AO IN HOLDING THAT THE RECEIPTS O N ACCOUNT OF REIMBURSEMENTS OF EXPENSES INCURRED ON PROVISION OF FUEL AMOUNTING TO INR 1 035 445 193/- WERE INCLUDIBLE IN THE GROSS RECEIPTS FOR THE PURPOSE OF DETERMINATION OF INCOME UNDER SECTION 44BB OF THE ACT. GROUND NO. 3 THAT THE LD.CIT (A) HAS ERRED ON FACTS AND IN LAW I N AFFIRMING THE ACTION OF THE AO IN HOLDING THAT THE INTEREST I NCOME RECEIVED BY THE APPELLANT AMOUNTING TO INR 531 048 ON ACCOUN T OF REFUND 3 ITA NO.3903/DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT RECEIVED FROM INCOME-TAX DEPARTMENT IS TAXABLE AT M AXIMUM MARGINAL RATE OF 40 PER CENT. IN DOING SO THE LD. CIT (A)/AO FAILED TO APPRECIATE THAT THE APPELLANT BEING A TAX RESIDENT OF UNITED STATES OF AMERICA THE INTEREST INCOME IS OUGHT TO BE TAXED IN TERMS OF AR TICLE 11(2)(B) OF THE INDO-US DTAA. YOUR APPELLANT PRAYS THAT THE ERRONEOUS ORDER BE CA NCELLED 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 GROU NDS OF APPEAL OR ADD A NEW GROUND OR GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3.0 THE LD. AR FAIRLY CONCEDED THAT GROUND NOS. 1 AND 2 WERE COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF THE HONBLE UTTAR AKHAND HIGH COURT IN THE CASE OF CIT VS. HALLIBURTON OFFSHORE SERVICES INC. (2008) 300 ITR 265 (UTTARAKHAND) WHERE THE HONBLE UTTARAKHAND HIGH COURT HAD HELD THAT REIMBURSEMENT RECEIPTS WERE INCLUDIBLE IN THE REVEN UE TAXABLE U/S 44BB OF THE INCOME TAX ACT 1961 (HEREI NAFTER CALLED THE ACT). IT WAS FURTHER SUBMITTED BY THE LD. AR THAT 4 ITA NO.3903/DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT THIS ISSUE WAS ALSO COVERED AGAINST THE ASSESSEE AN D IN FAVOUR OF THE DEPARTMENT BY THE JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL INC. VS. CIT & ANOTHER 399 ITR 1 (SC) . 3.1 WITH RESPECT TO GROUND NO. 3 PERTAINING TO INTEREST RECEIVED ON INCOME TAX REFUND TAXED BY THE LOWER AUTHORITIES AT MAXIMUM MARGINAL RATE IT WAS SUBMIT TED THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT DELHI BENCH IN THE CASE OF CLOUGH ENGINEERI NG LTD. VS. ACIT (OSD) DEHRADUN IN ITA NO. 4771 AND 4896/DEL/2017 WHEREIN VIDE ORDER DATED 13.4.2017 T HE ITAT DELHI BENCH HAD HELD THAT INTEREST ON INCOME T AX REFUND IS NOT EFFECTIVELY CONNECTED WITH PERMANENT ESTABLISHMENT EITHER ON THE BASIS OF ASSETS TEST OR ACTIVITY TEST AND THEREFORE INTEREST ON INCOME TAX REFUND WAS HELD TO BE TAXABLE UNDER PARAGRAPH 2 OF ARTICLE 11 OF IN DO- AUSTRALIA DOUBLE AVOIDANCE AGREEMENT. 4.0 THE LD. SR. DR DID NOT NEGATE THE CONTENTIONS OF THE LD. AR WITH RESPECT OF GROUND NO S. 1 5 ITA NO.3903/DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT AND 2 AND SUBMITTED THAT THE ISSUES HAD BEEN RIGHTL Y POINTED OUT AS COVERED IN FAVOUR OF THE REVENUE. HO WEVER THE LD. SR. DR SUBMITTED THAT THE ISSUE OF TAXABILITY O F INTEREST ON INCOME TAX REFUND HAS NOW BEEN COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF THE HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF BJ SERVICES COMPANY MIDDLE EAST LIMITED IN ITA NO. 1 OF 2010 VIDE ORDER DATED 19-05-2015. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS. AS FAR A S GROUND NOS. 1 AND 2 PERTAINING TO REIMBURSEMENT RECEIPTS ARE CONCERNED THE SAME ARE HELD AS TAXABLE IN TERM S OF PROVISIONS OF SECTION 44BB OF THE ACT BY PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT VS. HALLIBURTON OFFSHORE SERVICES INC (SUPRA) AND ALSO BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING CO. LTD. VS. CIT & ANOTHER (SUPRA). HENCE GROUND NOS. 1 AND 2 ARE DISMISSED IN LIMINE . 5.2 GROUND NO. 3 PERTAINING TO THE ISSUE OF TAXING INTEREST INCOME ON INCOME TAX REFUND AT MAXI MUM 6 ITA NO.3903/DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT MARGINAL RATE WAS EARLIER BEING DECIDED IN FAVOUR O F THE ASSESSEES BY FOLLOWING THE ORDER OF THE ITAT IN CLO UGH ENGINEERING LTD. VS. ACIT (OSD) DEHRADUN IN ITA NOS . 4771 AND 4986/DEL/2007 WHEREIN THE DELHI BENCH OF THE IT AT HAD FOLLOWED THE ORDER OF THE SPECIAL BENCH DATED 29.02.2012 BY HOLDING IN PARA 11.4 AS UNDER:- '......HOWEVER WE MAY ADD THAT WE DO NOT VENTURE TO SAY THAT THE INTEREST INCOME HAS TO BE NECESSARILY BUSINESS INCOME IN THE NATURE FOR ESTABLISHING THE EFFECTIVE CONNECTION WITH THE PE BECAUSE THAT WOULD RENDER PROVISION CONTAINED IN PARAGRAPH 4 OF ARTICLE XI REDUNDANT. THUS THERE MAY BE CASES WHERE INTEREST MAY BE TAXABLE UNDER THE ACT UNDER THE RESIDUARY HEAD AND YET BE EFFECTIVELY CONNECTED WITH THE PE. THE BANK INTEREST IN THIS CASE IS AN EXAMPLE OF EFFECTIVE CONNECTION BETWEEN THE PE AND THE INCOME AS THE INDEBTEDNESS IS CLOSELY CONNECTED WITH THE FUNDS OF THE PE. HOWEVER THE SAME CANNOT BE SAID IN RESPECT OF INTEREST ON INCOME TAX REFUND. SUCH INTEREST IS NOT EFFECTIVELY CONNECTED WITH PE EITHER ON THE BASIS OF ASSET TEST OR ACTIVITY TEST. 7 ITA NO.3903/DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT ACCORDINGLY IT IS HELD THAT THIS PART OF INTEREST IS TAXABLE UNDER PARAGRAPH NO. 2 OF ARTICLE XI.' 5.3 HOWEVER AS RIGHTLY POINTED OUT BY THE LD. DR THE IMPUGNED ISSUE IS NOW COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BJ SERVICES COMPANY MIDDLE EAST LIMITED (SUPRA) WHEREIN IT HAS BEEN HELD THAT INTEREST ON INCOME-TA X REFUND IS TAXABLE @ 40%. THE RELEVANT PORTION OF THE ORDER OF HON'BLE HIGH COURT READS AS UNDER: '9. WE WOULD THINK THAT IN THIS ANALYSIS OF THE PROVISIONS OF THE CLAUSES OF THE TREATY THERE IS NO ERROR AS SUCH COMMITTED BY THE ASSESSING OFFICER AS CONFIRMED BY THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL AND THEREFORE THE QUESTION OF LAW AS FRAMED MUST NECESSARY BE ANSWERED AGAINST THE APPELLANT IN ALL THE CASES AND WE DO SO.' 5.4 THEREFORE IN VIEW OF THE ABOVE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT THIS ISSU E IS DECIDED AGAINST THE ASSESSEE. ACCORDINGLY GROUND NO. 3 OF THE APPEAL IS DISMISSED. 8 ITA NO.3903/DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT 6.0 IN THE FINAL RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 31/05/2021. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 31/05/2021 *DRAGON* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI (DEHRADUN CIRCUIT BENCH DEHRADUN)