2015 (2) TMI 396 - AT - Income Tax

Computation of income u/s 44BB - providing services of vessel management services in India - Held that - Hon'ble Delhi High Court in PGS Geophysical AS Versus Additioanal Director of Income Tax 2014 (7) TMI 723 - DELHI HIGH COURT vide para 20 has held that income of assessees engaged in such activities can be taxed u/s 44BB only if the two conditions are fulfilled. One of the conditions is existence of PE in India and second is regarding effective connection of such contract with the PE in India - Decided in favor of assessee. Interest u/s 234B - Held that - Not to charge interest u/s 234B in respect of all contracts entered into by the assessee with various organizations in India except with respect of the contracts entered into with HOEC and ONGC. As far as income taxable u/s 44BB in respect of various contracts are concerned, the assessee itself has accepted the liability from the very beginning and, therefore it cannot be inferred that assessee would have made any representation which would have influenced the deductor companies for not deducting the tax. However, as far as contract with HOEC and ONGC are concerned, as we have held that income arose in India, therefore, the interest u/s 234B is leviable. Therefore, following the above, we hold that interest was not chargeable u/s 234B of the Act. - Decided in favour of assessee.

Summary

Issues involved:
1. Tax calculation on gross receipts
2. Taxation under Article 13 of DTAA vs. Section 44BB
3. Chargeability of interest u/s 234B

Analysis:
1. Tax calculation on gross receipts:
- The appellant challenged the addition made by the Assessing Officer by calculating tax on gross receipts. The Ld. CIT(A) confirmed this addition. The Ld. A.R. cited various decisions of the Uttaranchal High Court against the appellant. The Tribunal decided this issue against the appellant, following the judgment of the Hon'ble Uttarakhand High Court.

2. Taxation under Article 13 of DTAA vs. Section 44BB:
- The appellant contested the addition made by the Assessing Officer under Article 13 of DTAA instead of taxing it u/s 44BB of the Income-tax Act, 1961. The Ld. CIT(A) upheld this addition. The issue was discussed in light of the judgment in the case of PGS Geophysical AS Vs ADIT by the Hon'ble Delhi High Court. The Tribunal directed the matter to be sent back to the Assessing Officer for examination based on specific conditions laid down by the High Court.

3. Chargeability of interest u/s 234B:
- The Revenue challenged the decision of the Ld. CIT(A) regarding the chargeability of interest u/s 234B. The Tribunal referred to its previous decision in the case of the same assessee and held that interest was not chargeable u/s 234B. The appeal filed by the Revenue was dismissed based on this finding.

In conclusion, the Tribunal partly allowed one appeal for statistical purposes, dismissed another appeal, and dismissed the Revenue's appeal. The judgments were based on detailed analysis of the legal provisions, interpretations, and precedents set by the higher courts. The issues were thoroughly examined, and decisions were made in accordance with the applicable laws and judicial precedents.