2018 (3) TMI 1083 - AT - Income Tax

Applicability of section 44BB - non-resident earning income from the business of exploration etc. of mineral oils - Held that - The assessee in the instant case has admittedly opted for the provisions of sub-section (3). In such a situation income under the head Profits and gains of business and profession is required to be computed with reference to the provisions contained in Chapter IV-D of the Act. It becomes eminent that all the revenue receipts of the assessee including the sum of 1.63 crore received from DDL on account of crew salary and related expenses of employees seconded and assigned to DDL were required to be considered in the computation of business income and then the deduction for actual expenses was to be allowed. Assessee did not include 1.63 crore in its total income and claimed benefit of TDS from such receipts. We cannot countenance this type of treatment when the assessee has opted to be governed by the mandate of section 44BB(3) of the Act but all the revenue receipts and related expenses are not reflected. We therefore set aside the impugned order and remit the matter to the file of AO for deciding this issue afresh. In such fresh proceedings the AO will inter alia take 1.63 crore as revenue receipt with corresponding deduction of actual expenses incurred by the assessee.- Decided in favour of revenue foe statistical purposes.

Issues:
1. Condonation of delay in presenting the appeal before the Tribunal.
2. Addition of income by the Assessing Officer (AO) due to non-inclusion of a sum received from DDL in the computation of income.
3. Dispute regarding the deletion of the addition by the ld. CIT(A).
4. Interpretation of provisions of section 44BB for computing profits and gains in connection with the business of exploration of mineral oils.
5. Assessment of total income under subsection 143(3) of the Act with reference to the books of account maintained by the assessee.
6. Requirement to consider all revenue receipts in the computation of business income when opting for provisions of sub-section (3) of section 44BB.

Analysis:
1. The appeal by the Revenue involved a delay of one day in presenting the appeal before the Tribunal, which was condoned as the ld. AR did not object to the condonation. Hence, the appeal was admitted for hearing.

2. The AO added a sum received from DDL to the assessee's total income as it was not included in the computation of income. The AO held that the assessee could claim credit of TDS only when the corresponding income was offered for taxation during the year. The ld. CIT(A) overturned this addition, leading to the Revenue's appeal against the deletion of the addition.

3. The ld. CIT(A) overturned the assessment order by observing that the addition was likely to be deleted. The Revenue was aggrieved against this deletion, leading to the appeal before the Tribunal.

4. The Tribunal analyzed the provisions of section 44BB, which provide a special provision for computing profits and gains in connection with the business of exploration of mineral oils for non-residents. It was noted that the assessee opted for the provisions of sub-section (3) of section 44BB, requiring the computation of income with reference to Chapter IV-D of the Act.

5. The Tribunal highlighted that under sub-section (3) of section 44BB, the assessee may claim lower profits if audited accounts are maintained. In such cases, the AO assesses the total income under subsection 143(3) of the Act based on the maintained books of account.

6. It was emphasized that when opting for the provisions of sub-section (3) of section 44BB, all revenue receipts, including the sum received from DDL, should be considered in the computation of business income. The Tribunal set aside the impugned order and remitted the matter to the AO for deciding the issue afresh, ensuring the inclusion of the received sum as a revenue receipt with corresponding deduction of actual expenses.

Conclusion:
The Tribunal allowed the appeal of the Revenue for statistical purposes, emphasizing the correct computation of business income under the provisions of section 44BB and the necessity to consider all revenue receipts when opting for the lower profits provision under sub-section (3). The matter was remitted to the AO for fresh proceedings to ensure proper inclusion and deduction of the relevant amounts.

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