2017 (9) TMI 1632 - AT - Income Tax

Applicability of the provisions of section 44 BBB - Held that - In the case of NPCIL (2016 (3) TMI 117 - ITAT MUMBAI) the Tribunal has held that provisions of section 44BBB would be applicable for the project executed by the assessee. We hold that the assessee cannot be taxed as per the provisions of section 9 of the Act, that it is covered by the section 44BBB of the Act. Confirming the order of the FAA we decide the effective Ground of appeal against the AO.

Summary

Issues involved:
1. Applicability of provisions of section 44BBB of the Act to payments received by the assessee from Nuclear Power Corporation of India Ltd. (NPCIL).

Analysis:
The judgment pertains to a case where the Assessing Officer (AO) challenged an order of the CIT(A) regarding the applicability of section 44BBB of the Act to payments received by the assessee from NPCIL. The assessee, a joint stock company under the Ministry of Atomic Energy, Russian Federation, was engaged in commissioning turnkey power projects. The AO determined the income of the assessee at a significantly higher amount than declared in the return of income. The AO argued that the assessee had business connections in India and its income was taxable in India. However, the FAA decided in favor of the assessee, stating that section 44BBB was not applicable.

In the appellate tribunal, the Departmental Representative (DR) acknowledged that the issue had been decided against the AO in previous assessments and in favor of the assessee. The Authorized Representative (AR) highlighted that similar claims by the assessee had been accepted in other assessment years. The AR argued that the income earned by the assessee from service contracts should be computed under section 44BBB. Referring to previous tribunal orders, the AR emphasized that the assessee's activities fell within the scope of section 44BBB. The tribunal, citing precedent and analyzing the nature of the contracts, ruled that the assessee could not be taxed under section 9 of the Act and was covered by section 44BBB. Consequently, the tribunal upheld the order of the FAA and dismissed the appeal filed by the AO.

Overall, the judgment revolves around the interpretation and application of section 44BBB of the Act to payments received by the assessee from NPCIL. The tribunal's decision was based on a detailed analysis of the contractual arrangements, previous tribunal orders, and legal provisions, ultimately concluding that the assessee's income should be computed under section 44BBB and not under section 9 of the Act.