DCIT (International Taxation), Delhi v. Saipem (Portugal) Comercio Maritimo SU LDA, Mumbai

ITA 5782/DEL/2016 | 2013-2014
Pronouncement Date: 31-05-2021 | Result: Dismissed

Appeal Details

RSA Number 578226014 RSA 2016
Assessee PAN AAICS0784N
Bench Dehradun
Appeal Number ITA 5782/DEL/2016
Duration Of Justice 4 year(s) 6 month(s) 21 day(s)
Appellant DCIT (International Taxation), Delhi
Respondent Saipem (Portugal) Comercio Maritimo SU LDA, Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2021
Appeal Filed By Department
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 2013-2014
Appeal Filed On 09-11-2016
Judgment Text
PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE SHRI SUDHANSHU SRIVASTAVA JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI ACCOUNTANT MEMBER ITA NO. 5782/DEL/2016 (ASSESSMENT YEAR: 2013 - 14) DCIT(INTERNATIONAL TAXATION) AAYAKAR BHAWAN 13A SUBHASH ROAD DELHI VS. SAIPEM (PO R TUGAL) COMERCIO MARITIME SU LDA 709/710 MIDAS SAHAR PLAZA COMPLEX MV ROAD JB NAGAR ANDHERI (EAS) MUMBAI PAN: AAICS0784N (APPELLANT (RESPONDENT) REVENUE BY: SHRI THAKUR SINGH MAPWAL JCIT DR ASSESSEE BY : SHRI AMIT ARORA CA SHRI ITESH DODHEI CA DATE OF HEARING 05/03/2021 DATE OF PRONOUNCEMENT 3 1 / 0 5 / 2 0 2 1 O R D E R PER PRASHANT MAHARISHI A. M. 1. THIS APPEAL IS FILED BY DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2) (INTERNATIONAL TAXATION) DEHRADUN AGAINST THE ORDER OF THE LD CIT(A) - 2 NOIDA (THE LEARNED CIT A) DATED 08.07.2016 FOR THE ASSESSMENT YEAR 2013 - 14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN HOLDING THAT RECEIPTS ON ACCOUNT OF SERVICE TAX ARE NOT INCLUDIBLE IN GROSS REVENUE OF THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF PROFITS UNDER THE PRESUMPTIVE PROVISIONS OF .U/S 44BB OF THE I.T. ACT 1961. 2. WHETHER THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE PROVISION OF SECTION 44BB OF THE ACT ARE A SELF - CONTAINED CODE PROVIDING FOR COMPUTATION OF PROFIT AT A FIXED PERCENTAGE OF GROSS RECEIPTS OF THE ASSESSEE AND ALL THE DEDUCTIONS AND EXCLUSIONS FROM INCOME ARE DE EMED TO HAVE BEEN ALLOWED TO THE ASSESSEE. PAGE | 2 3. WHETHER THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ONCE THE RECEIPTS ARE OFFERED TO TAX U/S 44BB OF THE ACT WHICH PROVIDES FOR COMPUTATION OF PROFITS ON GROSS BASIS THERE IS NO SCOPE FOR COMPUTI NG OR RE - COMPUTING THE PROFITS BY EXCLUDING ANY ELEMENT OF THE RECEIPTS FROM THE TOTAL TURNOVER AS THE SAME WOULD AMOUNT TO DEFEATING THE VERY PURPOSE OF PROVIDING FOR A SCHEME OF SIMPLE MODE OF COMPUTATION OF PROFITS U/S 44BB OF THE ACT AND OBVIATING THE NEED FOR ACCOUNTING FOR INDIVIDUAL RECEIPTS AND PAYMENTS ETC. 4. WHETHER THE CIT(A) HAS ERRED IN IGNORING THE RATION OF THE JUDGMENT IN THE CASE OF M/S CHOWRINGHEE SALES BUREAU (P) LTD. (82 ITR 542 SC) WHEREIN THE HONBLE APEX COURT HAS HELD THAT - THE SA LES TAX COLLECTED BY AN ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS FORMS PART OF ITS BUSINESS RECEIPTS. OWING TO THE INHERENT SIMILARITY ON THE NATURE OF THE SALES TAX AND SERVICE TAX THE RATIO OF THE JUDGMENT IN THE SAID CASE IS DIRECTLY APPLICABLE IN THE FACTS OF THE INSTANT CASE. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DIRECTING THE AO TO NOT LEVY INTEREST U/S 234B OF THE INCOME TAX ACT WHEN THE DECISION OF THE HONBLE DELHI HIGH COURT IN GE PACKAGED POWER HAS NOT ATTAINED FINALITY AS IN THE REVIEW APPLICATION FILED BY THE DEPARTMENT THE HONBLE APEX COURT HAS RECALLED ITS EARLIER ORDER OF DISMISSING THE SLP AGAINST THE DECISION OF THE HONBLE HIGH COURT. 3. FACTS NOTED FROM THE ORDERS OF THE LOWER AUTHORITIES SHOWS THAT ASSESSEE IS A NON - RESIDENT NONDOMESTIC COMPANY ENGAGED IN THE BUSINESS OF PROVIDING SERVICES AND FACILITIES IN CONNECTION WITH EXPL ORATION EXPLOITATION AND PRODUCTION OF MINERAL OIL. IT IS A TAX RESIDENT OF PORTUGUESE REPUBL IC. 4. FOR ASSESSMENT YEAR 2013 14 ASSESSEE FILED ITS RETURN OF INCOME ON 27 SEPTEMBER 2013 DECLARING A TOTAL INCOME OF 77 749 686. THE ASSESSEE COMPUTED ITS RETURN INCOME STATING THAT BUSINESS INCOME IN TERMS OF PRESUMPTIVE TAXATION SCHEME U/S 44 BB OF THE INCOME TAX AND THAT THE INTEREST INCOME WAS CLAIMED TO BE EXEMPT UNDER ARTICLE 11 (3) (A) OF THE INDO PORTUGAL DOUBLE TAXATION AVOIDANCE AGREEMENT . 5. THE LEARNED ASSESSING OFFICER PASSED AN ASSESSMENT ORDER U/S 143 (3) READ WITH SECTION 144C (3) ( B ) OF THE INCOME TAX ACT ON 2 MARCH 2016 AT AN INCOME OF 128 520 930. THE LEARNED ASSESSING OFFICER HELD THAT RECEIPT OF 136 579 895 ON ACCOUNT OF SERVICE TAX IS I NCLUDI BLE IN THE GROSS REVENUE FOR THE PURPOSE OF DETERMINING INCOME U/S 44 BB OF THE INCOME TA X ACT. IT FURTHER HELD THAT A SUM OF 31 18 95 887/ PAID FOR THE ACTIVITIES CARRIED OUTSIDE INDIAN TERRITORIAL WATERS ARE INCLUD I BLE IN THE PAGE | 3 GROSS REVENUE FOR THE PURPOSE OF DETERMINING INCOME U/S 44 BB OF THE INCOME TAX ACT. HE FURTHER HELD THAT A SUM OF 8 508 958/ ON ACCOUNT OF REIMBURSEMENT OF ACTUAL EXPENDITURE ARE INCLUD I BLE IN THE GROSS REVENUE FOR THE PURPOSE OF DETERMINING INCOME U/S 44 BB OF THE INCOME TAX ACT . WITH RESPECT TO THE INTEREST INCOME AMOUNTING TO 4 372 764/ RECEIVED U/S 244A OF T HE ACT IS BROUGHT TO TAX AS BUSINESS INCOME CHARGEABLE TO TAX AT THE RATE APPLICABLE TO A NON - RESIDENT COMPANY. THUS HE PASSED AN ORDER ON 18/1/2016 TOTAL INCOME OF 1 285 202 930 AGAINST THE TOTAL INCOME DECLARED BY THE ASSESSEE OF 77 749 686. 6. AGGRIEV ED BY THE SAME THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT A WHO ALLOWED THE CLAIM OF THE ASSESSEE THAT SERVICE TAX COLLECTED ON BEHALF OF THE INDIAN GOVERNMENT AS PER STATUTORY PROVISIONS AMOUNTING TO 136 579 895/ IS NOT INCLUD I B LE IN THE REVENUE TAXABLE U/S 4 4BB OF THE ACT. ALL OTHER GROUNDS OF THE ASSESSEES APPEAL ARE DISMISSED. 7. THEREFORE THE LEARNED ASSESSING OFFICER AGGRIEVED WITH THE ORDER OF THE LEARNED CIT A IS IN APPEAL BEFORE US. THE SOLITARY GROUND IN THE APPEAL OF AO IS THAT THE RECEIPT ON ACCOUNT OF SERVICE TAX IS NOT INCLUD I BLE IN THE GROSS REVENUE OF THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF PROFITS U/S 44 BB OF THE INCOME TAX ACT AS HELD BY THE LEARNED CIT A IS ERRONEO US. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER. 9. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONOURABLE DEL HI HIGH COURT IN CASE OF DIRECTOR OF INCOME TAX VERSUS MICHELLE DRILLING INTERNATIONAL PRIVATE LIMITED 380 ITR 130 (DELHI). 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECIS ION OF THE FULL BENCH OF THE HONOURABLE JURISDICTIONAL HIGH COURT IN CASE OF DIRECTOR OF INCOME - TAX (INTERNATIONAL TAXATION) V SCHLUMBERGER ASIA SERVICES LTD [2019] 414 ITR 1 (UTTARAKHAND [FB]) THAT THE AMOUNT REIMBURSED BY THE CORPORATION TOWARDS THE SE RVICE TAX PAID BY THE ASSESSEE EARLIER TO THE GOVERNMENT WAS NOT AN AMOUNT PAID TO THE PAGE | 4 ASSESSEE TOWARDS THE SERVICES PROVIDED BY THE LATTER IN CONNECTION WITH THE PROSPECTING EXTRACTION OR PRODUCTION OF MINERAL OILS AND WAS NOT REQUIRED TO BE INCLUDED I N THE AMOUNTS SPECIFIED IN CLAUSES (A) AND (B) OF SECTION 44BB(2) OF THE INCOME TAX ACT. 11. IN VIEW OF THIS WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY THE LEARNED ASSESSING OFFICER. SO GROUND NUMBER 1 4 OF THE APPEAL OF THE LEARNED ASSESSI NG OFFICER IS DISMISSED. 12. THE LAST GROUND OF APPEAL IS WITH RESPECT TO THE CHARGEABILITY OF INTEREST U/S 234B OF THE INCOME TAX ACT. WE DO NOT FIND THAT SUCH GROUND IS EVER BEEN ENTERTAINED BY THE LEARNED CIT A OR HAS GIVEN ANY DIRECTION ON THIS POINT. IN VIEW OF THIS WE DO NOT FIND THIS GROUND TENABLE AT ALL HENCE DISMISSED. 13. IN THE RESULT THE APPEAL FILED BY THE LEARNED ASSESSING OFFICER IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 .05.2021. - S D / - - S D / - (SUDHANSHU SRIVASTAVA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 .05.2021 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 5 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER