Transocean Offshore Deepwater Drilling Inc., New Delhi v. DDIT (International Taxation), Dehradun

ITA 812/DEL/2016 | 2010-2011
Pronouncement Date: 31-05-2021 | Result: Allowed

Appeal Details

RSA Number 81226014 RSA 2016
Assessee PAN AABCT6720C
Bench Dehradun
Appeal Number ITA 812/DEL/2016
Duration Of Justice 5 year(s) 3 month(s) 13 day(s)
Appellant Transocean Offshore Deepwater Drilling Inc., New Delhi
Respondent DDIT (International Taxation), Dehradun
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 31-05-2021
Last Hearing Date 05-03-2021
First Hearing Date 05-03-2021
Assessment Year 2010-2011
Appeal Filed On 16-02-2016
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.811/DEL/2016 (ASSESSMENT YEAR 2009-10) ITA NO.812/DEL/2016 (ASSESSMENT YEAR 2010-11) TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC. (AS ALLEGED MEMBER OF ALLEGED ASSOCIATION OF PERSONS OF SCHLUMBERGER ASIA SERVICES LIMITED AND TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC.) C/O NANGIA & COMPANY SUITE 4A PLAZA M-6 JASOLA NEW DELHI-110 025. PAN AABCT 6720C VS. DY.CIT (INTERNATIONAL TAXATION) 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 2 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT ORDER PER SUDHANSHU SRIVASTAVA JM: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE CHAL LENGING SEPARATE ORDERS EVEN DATED 15.12.2015 IN APPEAL NOS . 32- 35/CIT(A)-2/2014-15 FOR ASSESSMENT YEARS 2009-10 & 2010-11 RESPECTIVELY PASSED BY THE LD. COMMISSIONER OF INCO ME TAX (APPEALS)-2 NOIDA (IN SHORT LD. CIT(A)) ON THE FOLLOWING COMMON GROUNDS: GROUND NO.1 THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LAW I N HOLDING THAT APPEAL FILED BY TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC.(HEREIN AFTER REFERRED TO AS TODDI OR THE AP PELLANT) IS NOT MAINTAINABLE SINCE THE IMPUGNED ORDER IS PASSED BY ASSESSING OFFICER (AO) ON THE ALLEGED ASSOCIATION OF PERSON S (AOP) OF SCHLUMBERGER ASIA SERVICES LIMITED (SASL) AND TOD DI AND NOT AGAINST THE APPELLANT (I.E TODDI). THE LEARNED CIT (A) HAS NOT APPRECIATED THAT THE APPELLANT IS AN AGGRIEVED PART Y AS A RESULT OF THE IMPUGNED ORDER. GROUND NO.2 THE LEARNED CIT (A) HAS ERRED ON FACTS AND IN LAW I N DISMISSING THE SAID APPEAL ON THE GROUND THAT IT IS COVERED BY THE ORDER PASSED IN CASE OF APPEAL FILED BY THE ALLEGED AOP O F SASL AND 3 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT TODDI ISSUED ON AUGUST 25 2014. THE LEARNED CIT(A) HAS ERRED IN NOT ALLOWING THE SAID APPEAL AS RELIEF HAS ALREA DY BEEN GRANTED IN THE AOP ORDER. GROUND NO.3 THE LEARNED CIT (A) FAILED TO DEAL WITH ANY OF THE GROUNDS OF APPEAL RAISED IN THE APPEAL MEMORANDUM WHICH MAY KI NDLY BE CONSIDERED AS SET OUT HEREIN THE SAME ARE NOT BEIN G REPEATED HEREIN FOR THE SAKE OF BREVITY INCLUDING GROUNDS 1 TO 5 THEREIN. 1.1 SINCE THE ASSESSEE FACTS AND ISSUES INVOLVE D IN THESE APPEALS ARE COMMON BOTH THE APPEALS WERE HEAR D TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE AND BREVITY. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A NON-RESIDENT COMPANY INCORPORATED UNDER THE LAWS OF UNITED STATES OF AMERICA AND HAS BEEN ENGAGED IN THE BUSINESS OF PROVIDING CHARTER HIRE OF DRILLING UNITS ALONG WITH THE INTEGR ATED SERVICES IN CONNECTION WITH EXPLORATION EXPLOITATION AND PRODUC TION OF MINERAL OILS IN INDIA. SCHLUMBERGER ASIA SERVICES LIMITED ( SASL) IS A COMPANY INCORPORATED UNDER THE LAWS OF HONG KONG AND IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES AND FACILITIE S IN CONNECTION 4 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT WITH EXPLORATION EXPLOITATION AND PRODUCTION OF MIN ERAL OILS IN INDIA. FOR THE PURPOSE OF SUBMITTING A TENDER TO ON GC BOTH THESE COMPANIES FORMED A CONSORTIUM VIDE AGREEMENT DATED 04-05-2003 AND ENTERED INTO A MEMORANDUM OF UNDERSTANDING DATE D 28.05.2003. SUBSEQUENTLY ONGC AWARDED THE TENDER TO THE CONSORTIUM. 2.1 THE ASSESSEE IN INDIVIDUAL CAPACITY HAD FI LED ITS INCOME TAX RETURN OFFERING THE REVENUE RECEIVED BY IT FROM THIS CONTRACT UNDER SECTION 44BB OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER (AO) PASSED THE ASSESSMENT OR DER AND PROPOSED TO COMPLETE THE ASSESSMENT HOLDING THAT TH E CONSORTIUM BETWEEN TODDI AND SASL (ASSESSEE) CONSTITUTED AN AS SOCIATION OF PERSON UNDER THE PROVISIONS OF THE ACT AND ASSESSED THE CONTRACTUAL REVENUE ON PROTECTIVE BASIS IN THE HANDS OF THE ASS ESSEE. IN APPEAL THE LD. CIT (A) HELD THAT THE CONSORTIUM OF ASSESSE E AND TODDI DID NOT CONSTITUTE AN ASSOCIATION OF PERSONS AND THE AS SESSMENT OF INCOME OF ASSESSEE SHOULD BE DONE ON SUBSTANTIVE BA SIS ONLY. 5 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT 2.2 THEREAFTER NOTICE U/S. 148 OF THE ACT WAS ISSUED ON THE AOP OF ASSESSEE AND TODDI AND SENT TO BOTH THE AOP MEMBERS I.E. M/S SASL AND M/S TODDI RESPECTIVELY TO ENSURE COMPLIANCE. NOTICE U/S. 148 OF THE ACT WERE ISSUED DATED 21.10.2013 TO THE ASSESSEE I.E. AOP AND SENT ON THE ADDRESS OF BOTH THE INDIVIDUAL ENTITIES FORMING THE AOP M/S SASL WHI CH WERE RECEIVED BACK UN-SERVED. SUBSEQUENTLY NOTICES WERE AGAIN ISSUED ON 14.11.2013 AND THEN ON 13.02.2014 WHICH WERE FINA LLY SERVED TO THE ASSESSEE. IN RESPONSE TO THE SAME THE ASSESSEE FILED ITS REPLY DATED 11.3.2014 DENYING THE EXISTENCE OF AOP AND RE QUESTED FOR PROVIDING OF REASONS FOR INVOKING THE PROVISIONS OF SECTION 147 OF THE ACT BY REFERRING THE JUDGMENT OF THE HONBLE SU PREME COURT DECISION IN THE CASE OF GKN DRIVE SHAFTS (INDIA) LTD. VS. ITO (259 ITR 19) . THE REASONS WERE THEN PROVIDED BY THE AO BUT THE ASSESSEE DID NOT FILE THE RETURN OF INCOME. SUBSEQUENTLY TH E REASONS WERE PROVIDED TO THE ASSESSEE ON 21.3.2014 AND ASSESSEE S OBJECTIONS WERE INVITED. IN RESPONSE TO THE SAME THE ASSESSEE FILED THE OBJECTIONS AND THE AO DISPOSED OFF THE OBJECTIONS F ILED BY THE ASSESSEE AND SERVED A NOTICE U/S. 142(1) OF THE ACT DIRECTING THE 6 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT AOP TO FILE ITS RETURN OF INCOME AND EXPLAIN WHY INC OME FROM THE CONSORTIUM CONTRACT BE NOT TAXED IN THE HANDS OF TH E ALLEGED AOP. IN RESPONSE TO THE SAME THE ASSESSEE FILED ITS REP LY REITERATING THEREIN THAT THE CONSORTIUM DID NOT CONSTITUTE AN A OP. ON QUERY BY THE AO THE ASSESSEE SUBMITTED THAT BASED ON THE SA ME FACTS AND CIRCUMSTANCES AS IN THE ASSESSMENT YEAR UNDER CONSI DERATION THE LD. CIT (A)-II DEHRADUN HAD HELD IN APPEAL NOS. 12 1/CIT(A)- II/2013-14 AND 118/CIT(A)- II/2013-14 FOR ASSESSMEN T YEARS 2007- 08 AND AY 2008-09 RESPECTIVELY THAT THE CONSORTIUM OF ASSESSEE AND SASL DID NOT CONSTITUTE AN ASSOCIATION OF PERSO NS (AOP). THEREAFTER THE AO COMPLETED THE ASSESSMENT VIDE OR DER DATED 25.7.2014 PASSED U/S. 143(3)/147/144 OF THE ACT BY HOLDING THAT THE CONSORTIUM OF ASSESSEE AND TODDI CONSTITUTED AN AOP AND THE INCOME FROM THE CONTRACT WAS ESTIMATED BY APPLYING A N AD HOC PROFIT RATE OF 25% ON THE AGGREGATE OF THE RECEIPTS OF ASSESSEE AND TODDI FROM THE ONGC CONTRACT AND THIS AMOUNT WAS HEL D TO BE TAXABLE AS BUSINESS INCOME IN THE HANDS OF THE ALLE GED AOP. 2.3 AGGRIEVED BY THE ORDER OF THE AO THE ASSESS EE APPEALED BEFORE THE LD. CIT (A) WHO VIDE HIS IMPUGN ED ORDER DATED 7 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT 15.12.2015 HAS HELD BY OBSERVING THAT FOLLOWING THE ORDERS OF HIS PREDECESSORS CIT (A) IN APPEAL FILED FOR AYS 2007- 08 AND 2008-09 THE APPEAL IS NOT MAINTAINABLE SINCE THERE IS NO I MPUGNED ORDER AGAINST THIS APPELLANT AND ACCORDINGLY NONE OF THE GROUNDS WERE ADJUDICATED AND THE APPEAL OF THE ASSESSEE WAS DISMI SSED FOR STATISTICAL PURPOSES. AGAINST THE IMPUGNED ORDER T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3.0 THE LD. AR FOR THE ASSESSEE SUBMITTED THAT TH E LD. CIT (A) HAD NOT DISPOSED OF THE APPEAL ON MERITS B UT ON THE OTHER HAND HAD HELD THAT THE APPEAL BY THE ASSESSEE IS NO T MAINTAINABLE SINCE THERE IS NO IMPUGNED ORDER AGAINST THE ASSESS EE. 4.0 PER CONTRA THE LD. DR PLACED RELIANCE ON THE ORDER OF THE LD. CIT (A). 5.0 WE HAVE CAREFULLY GONE THROUGH THE RECORD AND DULY CONSIDERED THE SUBMISSIONS MADE BY THE EITHER SIDE. WE FIND THAT THE LD. CIT (A) IN HIS IMPUGNED ORDER HAS HELD AS U NDER:- 6.1 IT IS NOTED THAT PREDECESSOR CIT (A) WHILE DEC IDING THE CASE OF AOP OF SCHLUMBERGER ASIA SERVICES LIMITED AND TR ANSOCEAN OFFSHORE DEEPWATER DRILLING INC. IN APPEAL NO.96/CI T(A)- II/2014-15 AND THE CASE OF TRANSOCEAN OFFSHORE DRIL LING INC. IN 8 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT APPEAL NO.289/CIT(A)-II/2011-12 VIDE ORDER DATED 2 5.08.2014 AND 07.03 2013 RESPECTIVELY HAS HELD THAT THERE WA S NO AOP OF SCHLUMBERGER ASIA SERVICES LIMITED AND TRANSOCEAN O FFSHORE DEEPWATER DRILLING INC. DURING THE YEAR UNDER CONSI DERATION. THIS ISSUE HAS ALSO BEEN DECIDED IN APPEAL NO. 121 /CIT(A)- II/2013- 14 AND 118/CIT(A)-II/2013-14 FOR THE AY 20 07-08 AND 2008-09 BY THE PREDECESSOR CIT(A) HOLDING THAT THER E WAS NO AOP OF SCHLUMBERGER ASIA SERVICES LIMITED AND TRANS OCEAN OFFSHORE DEEPWATER DRILLING INC. IN THOSE YEARS AS WELL. 6.2 A PERUSAL OF THE GROUNDS OF APPEAL AND STATEMEN T OF FACTS FILED ALONG WITH THE FORM OF APPEAL IN THE PRESENT CASE BEFORE ME WOULD SHOW THAT ASSESSMENT ORDER HAS BEEN PASSED IN THE CASE OF AOP OF SCHLUMBERGER ASIA SERVICES LTD. AND TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC. AND NOT IN THE NAM E OF M/S SCHLUMBERGER ASIA SERVICES LTD. AS ALLEGED MEMBER O F ALLEGED ASSOCIATION OF PERSONS OF SCHLUMBERGER ASIA SERVICE S LIMITED AND TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC. WHI CH IS THE APPELLANT IN THE PRESENT CASE. THE LD. ARS IN COUR SE OF PROCEEDINGS HAVE ORALLY SUBMITTED THAT APPEALS WER E FILED BY AOP AS WELL AS BY ITS ALLEGED MEMBERS NAMELY SCHL UMBERGER ASIA SERVICES LTD. AND TRANSOCEAN OFFSHORE DEEPWATE R DRILLING INC. IN INDIVIDUAL CAPACITY. THIS HAS BEEN DONE BY WAY OF ABUNDANT PRECAUTION. 9 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT 7. CONSIDERING THE FACTS ABOVE FOLLOWING THE ORDER S OF MY PREDECESSOR CIT (A) IN THE APPEALS FILED FOR AYS 20 07-08 I HOLD THAT THIS APPEAL IS NOT MAINTAINABLE SINCE THERE IS NO IMPUGNED ORDER AGAINST THIS APPELLANT. ACCORDINGLY NONE OF THE GROUNDS ARE ADJUDICATED. 5.1 THERE IS NO DISPUTE ON FACTS THAT THERE IS NO ORDER AGAINST THE ASSESSEE TO CHALLENGE IN THE APPE AL. HOWEVER IT IS BROUGHT TO OUR NOTICE BY THE LD. AR THAT THE ISSUE IS NO LONGER RES INTEGRA AND THE QUESTION WHETHER OR NOT THE CONSORTIUM AGR EEMENT DATED 04/05/03 BETWEEN SCHLUMBERGER ASIA SERVICES L TD AND TRANSOCEAN OFFSHORE DEEP WATER DRILLING PVT. LTD. CONSTITUTES AN AOP HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS. 5822/DEL/2010 AND 105/DEL/2012 FOR A.Y. 2008-09 AND WAS ANSWERED IN THE NEGATIVE I.E. IN FAVOUR OF THE ASSESSEE. FURTHER IT WAS SUBMITTED THAT FOLLOWING THE SAME IN ASSESSEES OWN CASE IN ITA NOS. 4465 AND 4466/DEL/2014 A COORDINAT E BENCH OF THIS TRIBUNAL ON IDENTICAL GROUNDS AS ARE RAISED I N THESE APPEALS ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND ALLOWE D THE APPEALS OF THE ASSESSEE. 10 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT 5.2 A COPY OF THE ABOVE ORDER DATED 07.05.2018 I N ITA NOS. 4465 AND 4466/DEL/2014 WAS PRODUCED BEFORE US AND RELEVANT PORTION READS AS FOLLOWS: 8. IN SO FAR AS THE APPEAL OF THE ASSESSEE IS CONC ERN THE SAME WILL HAVE CONSEQUENTIAL EFFECT IN LINE WITH THE ORD ER OF THE TRIBUNAL IN THE CASE OF THE AOP AND IN VIEW OF OUR FINDING GIVEN ABOVE FOR THE SAME ASSESSMENT YEARS 2007-08 AND 200 8-09. THUS APPEAL OF THE ASSESSEE AS WELL AS THE REVENUE IS PARTLY ALLOWED. 5.3 IT IS THEREFORE CLEAR FROM THE ABOVE THAT THE GROUNDS OF THIS APPEAL ARE SUBSTANTIALLY THE SAME A S ARE INVOLVED IN ITA NOS. 5822/DEL/2010 AND 105/DEL/2012 AND ITA NOS . 4465 AND 4466/DEL/2014. FINALLY IN EARLIER ASSESSMENT Y EARS THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW THAT THE CONSORTIUM AGREEMENT BETWEEN THE ASSESSEE AND TRANSOCEAN OFFSH ORE DEEPWATER DRILLING PRIVATE LIMITED DO NOT CONSTITUTE AN AOP AND THE TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC. BEIN G CONSORTIUM MEMBER HAS RIGHTLY OFFERED TO TAX THE RECEIPTS UNDE R SECTION 44BB OF THE ACT IN THE RETURN OF INCOME. 11 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT 5.4 ON THE FACE OF THIS CONSISTENT VIEW TAKEN BY THE TRIBUNAL OVER A PERIOD OF TIME THERE IS NO REA SON FOR US NOW TO TAKE A DIFFERENT VIEW SINCE THERE IS NO CHANGE OF C IRCUMSTANCES TO AFFECT THE APPLICABILITY OF THIS CONSISTENT VIEW FOR THE YEARS UNDER CONSIDERATION IN THESE TWO APPEALS. NO MATERIAL IS P RODUCED BEFORE US BY THE REVENUE TO TAKE A DIFFERENT VIEW AND THE O NE THAT WAS TAKEN IN THE EARLIER YEARS. IN THE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT A VIEW THAT WAS TAKEN CONSIST ENTLY IN ASSESSEES OWN CASES IN EARLIER YEARS SHOULD NOT BE DISTURBED. WE THEREFORE WHILE RESPECTFULLY FOLLOWING THE DECISIONS OF THE COORDINATE BENCHES OF THIS TRIBUNAL IN ASSESSEES O WN CASE ALLOW THE GROUNDS OF APPEAL IN THESE TWO APPEALS ALSO. 6.0 IN THE FINAL RESULT BOTH THE APPEALS OF TH E ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 31/05/2021. SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 31/05/2021 *DRAGON* 12 ITA NOS.811 & 812 /DEL/2016 TRANSOCEAN OFFSHORE DEEPWATER DRILLI NG INC. VS. ACIT COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI (DEHRADUN CIRCUIT BENCH DEHRADUN)