2013 (7) TMI 578 - HC - Income Tax

Application of proviso to Section 44BB(1) - prospecting for, or extraction or production of, mineral oils - A.O. looked into those completed assessments for the accounting years, which stood closed prior to addition of Proviso - Held that - No justification for A.O. doing since proviso to applicable only after 1st April 2011 and not before that.

Summary

Issues:
1. Condonation of delay in preferring appeals.
2. Interpretation of Section 44BB of the Income-tax Act, 1961 and the proviso to sub-section (1) inserted with effect from 1st April, 2011.
3. Application of the proviso to closed assessments completed before 1st April, 2011.
4. Exercise of power under Section 148 of the Income-tax Act based on the proviso.

Condonation of Delay:
The judgment begins by addressing the sufficiency of reasons for the delay in preferring the appeals and allows the applications for condonation of delay. The delay is condoned by the court.

Interpretation of Section 44BB and Proviso:
The respondents, who are income-tax assessees, were allowed to benefit from Section 44BB of the Income-tax Act, 1961 when their assessments were closed. However, a proviso was inserted with effect from 1st April, 2011, stating that Section 44BB shall not apply in certain cases where other sections like 42, 44D, 44DA, 115A, or 293A are applicable for computing profits or gains. The proviso distinguishes between non-resident assessees providing services related to mineral oils and those providing other services or facilities.

Application of Proviso to Closed Assessments:
The Assessing Officer, relying on the proviso inserted in Section 44BB, sought to reopen completed assessments for accounting years before 1st April, 2011, using the power under Section 148 of the Income-tax Act. The court, in the judgment under appeal, noted that the distinction created by the proviso only applies from 1st April, 2011 onwards. Consequently, the court refused to admit the appeals and dismissed them.

In conclusion, the High Court of UTTARAKHAND addressed the issues of delay condonation, interpretation of Section 44BB and the proviso, application of the proviso to closed assessments, and the exercise of power under Section 148 of the Income-tax Act. The judgment clarified that the proviso's distinction applies only from 1st April, 2011, leading to the dismissal of the appeals.