9911796707
|
Home
Issues Involved:
1. Taxability of income u/s 44BBA of the Income-tax Act, 1961. 2. Applicability of the more favorable section between 44BBA and 44BB. 3. Deductibility of remuneration paid to employees under the DTAA between India and Australia. Summary: Issue 1: Taxability of income u/s 44BBA The applicant contended that its income from activities in India should be taxed u/s 44BBA of the Income-tax Act, 1961, which pertains to the business of operation of aircraft. The term "aircraft" includes helicopters as per the definitions in various statutes and dictionaries. Despite the Department's argument that section 44BBA applies only to international traffic, the Authority concluded that the section's language does not exclude internal operations within India. However, the Authority ultimately held that section 44BBA is inappropriate for the applicant's case as the receipts do not fall under the categories specified in sub-section (2) of section 44BBA. Issue 2: Applicability of the more favorable section between 44BBA and 44BB The applicant argued that if both sections 44BBA and 44BB are applicable, it should be taxed under the more favorable section, i.e., section 44BBA. The Authority, however, concluded that section 44BB, which deals with the business of providing services or facilities in connection with the exploration or production of mineral oils, is more appropriate. The Authority reasoned that the applicant's contract with Command pertains to providing helicopter services for oil exploration, making section 44BB applicable. The Authority also noted that the consideration under the contract is not specifically for the carriage of passengers or goods but for a package of services, further supporting the applicability of section 44BB. Issue 3: Deductibility of remuneration paid to employees under the DTAA The applicant questioned whether the remuneration paid to its Australian employees satisfies sub-clause (c) of clause 2 of article 15 of the DTAA between India and Australia, implying it is not deductible in determining taxable profits of the permanent establishment in India. The Authority held that the concept of deductibility applies even under presumptive taxation sections like 44BB and 44BBA. The Authority emphasized that the statutory rate of profit includes an allowance for expenses like salaries, making them deductible in principle. Consequently, the remuneration paid to the employees is deductible, and thus taxable in India. Ruling: 1. The income of the applicant from activities carried on in India is not taxable u/s 44BBA. 2. The question of choosing between sections 44BBA and 44BB does not arise as only section 44BB is applicable. 3. The remuneration paid to employees is deductible in determining the taxable profits of the permanent establishment in India, making it taxable in India. The application is disposed of accordingly.
|
