2015 (1) TMI 8 - AT - Income Tax

Computation of profit u/s 44BB - Correction / modification in the ITR - AO took the positive figure and ignored the negative figure - extraction or production of mineral oils - Applicability of Goetze (India) Limited Versus Commissioner of Income-Tax 2006 (3) TMI 75 - SUPREME Court Held that - In Chicago Pneumatic India Ltd. Versus Deputy Commissioner of Income-tax, Special Range-45, Bombay 2007 (3) TMI 409 - ITAT MUMBAI applicability of the decision in Goetze (India) Limited Versus Commissioner of Income-Tax 2006 (3) TMI 75 - SUPREME Court wherein it has been held that it is the duty of the AO to determine the correct tax liability of the assessee - during the assessment proceedings the assessee did not make any new claim but only modified the figure of receipts from Cairn Energy and ONGC - The AO accepted the modification of the receipts from Cairn Energy which was upward revision but did not accept the modification of receipts from ONGC which was downward revision - the correct determination of receipts is a part of the duty of the AO and he cannot refuse to determine the correct receipts from ONGC - in Goetze (India) Ltd. V. CIT, deduction claimed by way of a letter before AO, was disallowed on the ground that there was no provision under the Act to make amendment in the return without filing a revised return - Appeal to the Supreme Court, as the decision was upheld by the Tribunal and the High Court, was dismissed making clear that the decision was limited to the power of assessing authority to entertain claim for deduction otherwise than by revised return, and did not impinge on the power of Tribunal. The assessee s correct receipts from the contract of Cairn Energy as well as ONGC needs to be determined and thereafter Section 44BB should be applied on the correct receipts - so far as the receipts from Cairn Energy is concerned, now there remains no dispute - The only dispute remains is with regard to the receipts from ONGC which was originally disclosed by the assessee as ₹ 153.13 crores which was sought to be reduced to ₹ 143.85 crores - AO rejected the assessee s claim on technical ground and did not go into the question that what was the correct receipts of the assessee from ONGC thus, the order of the authorities below is set aside on this limited point and direct the AO to determine the correct receipts from ONGC in the year under consideration and thereafter apply Section 44BB - the assessee is directed to produce necessary evidences with regard to correct receipts before the AO Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of delay in filing Cross Objection by the assessee.
2. Acceptance of revised computation of income for ONGC contract.
3. Correct determination of receipts from Cairn Energy and ONGC.
4. Application of Section 44BB of the Income Tax Act on the correct receipts.

Detailed Analysis:

1. Condonation of Delay in Filing Cross Objection:
The Cross Objection filed by the assessee was delayed by 67 days. The assessee, a foreign company with no office or representative in India, explained the delay due to the process of communication and obtaining signatures from its Director in the United States. The Tribunal, after considering the arguments and facts, found the delay to be due to sufficient cause and condoned it, admitting the Cross Objection for hearing on merits.

2. Acceptance of Revised Computation of Income for ONGC Contract:
The assessee requested a revision of the receipts from ONGC from Rs. 153.16 crores to Rs. 143.85 crores due to liquidated damages, while also increasing the receipts from Cairn Energy from Rs. 111.45 crores to Rs. 117.36 crores. The Assessing Officer (AO) accepted the increased receipts from Cairn Energy but not the reduced receipts from ONGC, citing the Supreme Court decision in Goetze (India) Ltd. v. CIT, which mandates filing a revised return for such claims.

3. Correct Determination of Receipts from Cairn Energy and ONGC:
The Tribunal emphasized the duty of the AO to determine the correct tax liability, referencing the ITAT Mumbai Bench's decision in Chicago Pneumatic India Ltd. v. DCIT and the CBDT Circular No. 14(XL-35) dated 11.04.1955. The Tribunal noted that the AO accepted the upward revision for Cairn Energy but rejected the downward revision for ONGC without verifying the correct receipts. The Tribunal highlighted that the correct determination of receipts is essential and cannot be refused based on procedural grounds.

4. Application of Section 44BB of the Income Tax Act on the Correct Receipts:
The Tribunal directed that Section 44BB should be applied to the correct receipts from both Cairn Energy and ONGC. The Tribunal set aside the orders of the lower authorities on this point and instructed the AO to determine the correct receipts from ONGC, allowing the assessee to provide necessary evidence. The AO was directed to provide adequate opportunity for the assessee to be heard and to produce the required documentation.

Conclusion:
The Tribunal allowed the Revenue's appeal and the assessee's Cross Objections for statistical purposes, emphasizing the necessity of determining the correct receipts from ONGC and applying Section 44BB accordingly. The Tribunal's decision underscores the importance of accurate tax computation and the AO's responsibility to ensure the correct determination of taxable income.