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TMI Blog2009 (1) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... h, or supplying plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils. Thus, it is clear that the amount which is to be taken is the amount paid to the assessee whether in or out of India, payable to the assessee whether in or outside India on account of the provision or services and facilities in connection with, or supply of plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India and the amount received or deemed to be received in India by the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India. The Hon ble jurisdictional High Court of Uttarakhand in the case of Sedco Forex International Inc.[ 2007 (9) TMI 196 - UTTARAKHAND HIGH COURT] held that it is the sum received by the assessee which is to be taken into account for the purpose of determining profit u/s 44BB and not the actual taxable income as contemplated u/ss 4 and 5 of the Act. It is not in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars Amount 1.South East Asia Marine Engineering Construction Limited Rs.5,43,61,301 2.Hal Offshore Limited Rs. 73,72,665 Total Rs. ... Rs. 6,17,33,966 2.2 The assessee submitted before the Assessing Officer that the assessee was engaged in the business of providing services and facilities in connection with the exploration/extraction and production of mineral oils in India and has offered its income under section 44BB of the Act. It was pointed out by the assessee that the receipts offered to tax were net of service tax. In this connection, the assessee submitted a note to the computation of income as under : "The invoices raised by TOCBV are inclusive of service tax. The levy of service tax is as per specific statute. The amounts collected from the customers are paid to the Government Treasury. It is respectfully submitted that section 44BB of the Act envisages to cover only contractual revenues and not revenues arising because of a specific statute. Accordingly, for the purposes of arriving at the gross revenues, the invoice amount net of service tax has been considered." 2.3 In support of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voices produced in the appellate proceedings. The appellant has charged service tax collections are collections made on behalf of the Central Government and that service tax represent the money collected from the consumer of service and thereafter remitted to the Central Government. The amount is in the nature of reimbursement and there is no element of profit embedded in the service tax. The Assessing Officer was, therefore, not right in including service tax as part of the gross receipts for working out income under section 44BB of the Income-tax Act. The Assessing Officer is directed to compute the income by excluding the receipts on account of service tax." 2.8 Hence, the department is in appeal. 3. The learned DR submitted that the amount of service tax collected by the assessee towards services provided by the assessee to ONGC is includible in the total receipts for the purpose of determining the presumptive profit within the meaning of section 44BB of the Act. In support of this contention, the learned DR relied upon the following decisions of the jurisdictional Uttarakhand High Court : ( i ) CIT v. Halliburton Offshore Services Inc. [2008] 300 ITR 265 . ( i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India, which is clear from the perusal of section 44BB of the Act, which is reproduced as under : "44BB. Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. (1) Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in the case of an assessee being a non-resident, engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting extraction for, or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession : Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in section 44BB of the Act, the jurisdictional High Court of Uttarakhand in the case of Sedco Forex International Inc. ( supra ) has held and observed as under : "We very respectfully submit that in the judgment Ishikawajima-Harima Heavy Industries Ltd. v. Director of Income-tax reported in [2007] 288 ITR 408; [2007] 3 SCC 481, the Hon ble Supreme Court has dealt with the assessment of a non-resident company on its income as per the provisions of section 5 and section 9 of the Income-tax Act. Here in the present case, provisions of section 5 and section 9 are not attracted. Section 4 is a charging section and section 5 contains the scope of total income, which provides that subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income as described under this section and section 9 provides the incomes deemed to accrue or arise in India in the contingencies described under this section. Therefore, section 5 and section 9 both are aimed at the income for the taxability under section 4 of the Act, while section 44BB does not take into account the income for calculating the aggregate amount to calculate 10 per c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee from ONGC. The service tax realized by the assessee is in respect of services specified under section 44BB and rendered by it to ONGC. The Hon ble jurisdictional High Court of Uttarakhand has held that it is the sum received by the assessee which is to be taken into account for the purpose of determining profit under section 44BB of the Act and not the actual taxable income as contemplated under sections 4 and 5 of the Act. 5.7 The decision of the ITAT, Chennai Bench "C" in the case of Real Image Media Technologies (P.) Ltd. ( supra ) relied upon by the learned counsel for the assessee is, in our considered view, gives no assistance to the assessee s case as we very respectfully submit that in the said decision, the Tribunal has dealt with the issue as to whether the rigour of the provision of section 43B of the Act in respect of the service tax collected by the assessee would be attracted or not. The issue before the Tribunal was with regard to the allowability of deduction within the meaning of section 43B of the Act. This decision was rendered in the context quite different to the context involved in the present case. In the present case, we are concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng through the medium of the assessee. The payments in question are absolutely not on account of provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction of production of, mineral oils in India. In other words, the reimbursements themselves are not in connection with the specification of services mentioned in section 44BB of the Act. We, therefore, direct the Assessing Officer to exclude that part of the customs duty from being a part of the receipt for the purpose of determining the profits and gains under section 44BB of the Act. . . ." 5.9 In the said case of Transocean Offshore Deep Water Drilling Inc. ( supra ) the assessee contended before the Tribunal that the reimbursement of expenditure relating to custom duty was not in connection with services and facilities or supply of raw material to be used in the prospecting for, or extraction or production of, mineral oil in India as spelt in section 44BB(2) of the Act. Though, on the other hand, it is an admitted position that a service tax collected by the assessee is directly in connection with services and facilities as spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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