2018 (2) TMI 1346 - AT - Income Tax

Validity of reopening u/s. 147 - addition made by AO holding that provisions u/s. 44BBB are applicable to the payment received by the assessee from Nuclear Power Corporation of India Ltd. - Held that - Following the order of the Tribunal in assessee s own case, no infirmity in the order of CIT(A) for deleting the addition so made by the AO holding that provisions of Section 44BBB of the I.T. Act are not applicable to assessee. From the record, we found that during the year under consideration, reopening was on the basis of assessment framed in the A. Y. 2005-06 dated 13/01/2009. Similarly in the A. Y. 2006-07 also on the very same reasoning, assessment was reopened and in the reason so recorded for reopening, AO observed that receipts in pursuance of off-shore service contract are in nature of royalty and in pursuance of the contract for deputation of specialists and off-shore training contracts are in the nature of fees for technical services. Similar reasons have been recorded during the year under consideration. As the facts and circumstances during the year under consideration are parameteria, respectfully following the same, we do not find any merit for reopening of assessment u/s. 147 of the IT Act. - Decided against revenue.

Summary

Issues:
Cross appeals filed by assessee and revenue against order of CIT(A)-10, Mumbai for A. Y. 2004-05 under section 143(3) of the IT Act.

Analysis:

1. Applicability of Section 44BBB of the IT Act:
The case involved the applicability of Section 44BBB to payments received by the assessee from Nuclear Power Corporation of India Ltd. The Assessing Officer initially denied the application of Section 44BBB to offshore service contracts and taxed the entire payment at 10%. However, the CIT(A) accepted the assessee's claim, leading to cross appeals by both parties. The Tribunal referred to previous decisions and held that the assessee cannot be taxed under Section 9 but is covered by Section 44BBB. Citing precedents and contractual terms, it was established that income from offshore supply contracts, concluded outside India, does not accrue or arise in India, thus not chargeable to tax under Section 44BBB.

2. Validity of Reopening under Section 147:
The reopening of assessment under Section 147 was challenged by the assessee, arguing that all necessary information was provided in the return of income. The AR relied on previous Tribunal orders and High Court decisions to support the contention that the reopening was unjustified. The Tribunal noted that the basis for reopening the assessment was struck down in a previous assessment year, and the AO erred in not following the appellate authority's decision. Considering the facts and legal precedents, the Tribunal set aside the assessment under Section 147, emphasizing the importance of judicial discipline and adherence to higher appellate authorities' decisions.

3. Conclusion:
The Tribunal allowed the assessee's appeal and dismissed the Revenue's appeal. The decision was based on the non-applicability of Section 44BBB to the assessee's income and the unjustified reopening of assessment under Section 147. The judgment emphasized the significance of following legal precedents and appellate decisions in maintaining judicial discipline and ensuring fair treatment in tax assessments.

This detailed analysis of the judgment highlights the key legal issues, arguments presented, and the Tribunal's decision, providing a comprehensive understanding of the case's intricacies and implications.