9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (3) TMI 147 - AT - Income TaxApplicability of provisions of section 44BB - income arising to the appellant from rendering of marine logistic services - DRP/AO assessing the income earned by the appellant as fees for technical services/royalty as per the provisions of section 9(1)(vii) - Held that - The judgment of the Hon ble Madras High Court in Poompuhar Shipping Corporation Ltd. vs. ITO 2013 (10) TMI 936 - MADRAS HIGH COURT relied by revenue is not applicable since the said decision does not deal with the applicability or otherwise of section 44BB. The revenue s reliance on section 9(1)(vi) to categorize the assessee s income for hire of vessels as royalty is also not correct since clause (iva) of section 9(1)(vi) excludes amounts referred to in section 44BB. The other arguments, decisions relied on by the learned DR including the one on Base erosion profit shifting are also not relevant in the factual matrix of the present case and considering what we have already held. In view of the above, we hold that the income of the assessee for the year under consideration is to be computed in accordance with section 44BB of the Act.- Decided in favour of assessee. TDS credit - Held that - We direct the AO to verify this aspect and to decide about the allow-ability of the above TDS credit in accordance with law. - Decided in favour of assessee for statistical purposes. Levy of interest u/s 234B - Held that - The proviso inserted into the provisions of section 209 enables the revenue to levy interest in a case where the payer has not deducted tax at source when he makes payment to a non- resident recipient. However, the proviso was introduced vide Finance Act, 2012 with effect from AY 2012-13 onwards and, thus not applicable in the present case. Consequently, interest cannot be levied under section 234B - Decided in fvaour of assessee.
Issues Involved:
1. Applicability of Section 44BB for computing income from marine logistic services. 2. Classification of income as fees for technical services/royalty under Section 9(1)(vii). 3. Treatment of reimbursements as royalty. 4. Credit for TDS. 5. Levy of interest under Section 234B. 6. Levy of interest under Section 220. 7. Levy of interest under Section 234C. Issue-wise Detailed Analysis: 1. Applicability of Section 44BB for computing income from marine logistic services: The assessee, a non-resident company, argued that its income from providing offshore supply and allied vessels on hire should be computed under Section 44BB of the Income Tax Act, 1961. The assessing officer (AO) and the Dispute Resolution Panel (DRP) disagreed, stating that Section 44BB applies only to entities directly involved in prospecting, extraction, or production of mineral oils. The Tribunal examined the contracts and found that the assessee not only provided vessels on hire but also offered services such as carrying personnel and materials, standby and rescue operations, and routine surveillance, all in connection with offshore drilling operations. The Tribunal concluded that these activities satisfy the requirements of Section 44BB, which covers services or facilities in connection with prospecting for or extraction or production of mineral oils. 2. Classification of income as fees for technical services/royalty under Section 9(1)(vii): The AO treated the revenue from hire charges, additional income, and reimbursement of fuel charges as 'royalty' taxable at 10% under Section 115A. The Tribunal held that the assessee's activities fall under Section 44BB and not Section 115A, as the services provided were directly connected to the prospecting or extraction or production of mineral oils. The Tribunal also noted that the hirers were non-residents, making Section 44DA and Section 115A inapplicable. 3. Treatment of reimbursements as royalty: The assessee had voluntarily offered the reimbursement of expenses to tax under Section 44BB. The Tribunal agreed that these reimbursements should be included in the computation of income under Section 44BB, thus rejecting the AO's classification of reimbursements as royalty. 4. Credit for TDS: The assessee contended that the AO erred in not granting credit for TDS amounting to Rs. 5,17,866/-. The Tribunal directed the AO to verify this aspect and decide on the allowability of the TDS credit in accordance with the law. 5. Levy of interest under Section 234B: The AO levied interest under Section 234B, arguing that the assessee did not pay advance tax at the correct rate. The Tribunal referred to the Delhi High Court's decision in DIT v. Jacobs Civil Incorporated, which held that a non-resident whose entire income is subject to TDS is not liable to pay advance tax. Since the Transocean entities deducted tax at source based on Section 44BB, the Tribunal concluded that interest under Section 234B could not be levied. 6. Levy of interest under Section 220: This issue was treated as consequential to the allowability of TDS credit by the AO. The Tribunal allowed this ground for statistical purposes. 7. Levy of interest under Section 234C: Similar to the issue under Section 220, this ground was also treated as consequential to the allowability of TDS credit by the AO and was allowed for statistical purposes. Conclusion: The Tribunal ruled in favor of the assessee on most grounds, holding that the income should be computed under Section 44BB, and not as royalty under Section 115A. The Tribunal also directed the AO to verify the TDS credit and ruled that interest under Sections 234B, 220, and 234C could not be levied. The appeal was thus partly allowed.
|
