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2013 (12) TMI 246

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..... h in possession of the First appellate order and the very reasons for reopening the assessment did not survive by virtue of the findings of the First appellate authorities which were binding upon the AO - Decided in favour of assessee. - I.T.A. No. 8073/Mum/2010 - - - Dated:- 4-12-2013 - Shri B. R. Mittal, JM And Shri N. K. Billaiya, AM,JJ. For the Appellant : Shri Nitesh Joshi For the Respondent : Shri Ajay Shrivastava ORDER Per N. K. Billaiya, AM: This appeal by the assessee is directed against the order passed by DDIT(IT) following the directions issued by Dispute Resolution Panel u/s. 143(3) r.w. Sec. 147 and 144C of the Act. 2. The assessee has raised following grounds of appeal: "The appellant company objects to the order dated 27 September 2010 passed by the Deputy Director of Income Tax (International taxation), Range-1(1), Mumbai ('DDIT') following the direction issued by Dispute Resolution Panel (DRP') under section 143(3) r.w.s 147 144C(13) of the Income Tax Act, 1961 ('ITA') on the following grounds: Reassessment proceedings under Section 147 1. The learned DDIT erred in initiating reassessment proceedings under Section 148 of the ITA in .....

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..... he payments made by NPCIL to Atomstroyexport in pursuance of these agreements during the previous years are as under: Sr. No. Name of contract Total cost of the contract (in US $ Remittances made (in INR) 1 Offshore service contract 122,000,000 75,59,14,784 2 Contract for deputation of specialists 40,000,000 13,36,54,610 3 Offshore training contract 15,000,000 21,03,64,760 Total 109,99,32,154 5. The total payments received by the assessee so far in respect of service contracts from the A.Y. 2003-04 to A.Y. 2008-09 (till October 2007) are as under: Sr. No. Name of contract Total cost of the contract (in US $ Total of payments made so far (in INR) a) Offshore service contract 122,000,000 4,252,390,506 b) Contract for deputation of specialists 40,000,000 1,163,156,803 c) Offshore training contract 15,000,000 617,868,640 d) Detailed project report 36,21,52,430 Total .....

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..... he course of assessment proceedings for A.Y. 2005-06, on going through the various definitions as stated in the Agreements for the construction or commissioning or erection, it was found that the assessee Company is involved in providing services for the construction, erection and commissioning in India. The actual business of construction and erection of KKNPP is being carried out by the following contractors on behalf of NPCIL: (a) Civil construction in the Reactor building, Reactor Auxiliary building and Dykes are done by Hindustan Construction Co. Ltd. (b) Civil construction at the Turbine building and other areas are done by Simplex Industries Ltd. (c) Machinery erection in the Reactor building is done by Larsen Toubro Ltd. (d) Machinery erection for the Turbine section is done by Bharat Heavy Electricals Ltd. (e) Desalination plant is exclusively built by Tata Projects Ltd. Thus, ASE provides technical services and supervision at various stages but is not involved by itself in the businesses covered by Section 44BBB. Hence, it was determined that the payments received by ASE are not eligible to be assessed under Section 44BBB of the I.T. Act. Thereafter, for the .....

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..... pening of the assessment was that : "processing charges received by the assessee for the job work done for others out of the profit for allowing deduction u/s. 80IA/80IB has not been excluded while finalizing the assessment." It was brought to the notice of the Hon'ble Court that in assessee's own case for A.Y. 1996-97, the Tribunal has held that the processing charges received by the assessee are liable to be included for the purposes of deduction u/s. 80IA/80IB of the Act. The decision of the Tribunal was very much before the AO. However, the AO did not referred/followed the said decision. On these facts, the Hon'ble High Court held that: "this conduct of the AO in refusing to follow the binding decision of the ITAT is highly deplorable therefore reopening of the assessment on account of processing charges is also unsustainable.". The Ld. Counsel submitted that the facts of the present case are identical to the facts of the case of German Remedies (supra). It is the say of the Ld. Counsel that in the present case also the decision of the Ld. CIT(A) for A.Y. 2005-06 was very much available before the AO. The Ld. Counsel also relied upon another decision of the Jurisdiction .....

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..... easons for the same. Since the AO has complied with the basic condition, the reopening is very much as per law. 11. Referring to the decisions cited by the Ld. Counsel, the DR submitted that the facts are distinguishable from the facts of the present case. Particularly referring to the decision of the Hon'ble Supreme Court relied upon by the Ld. Counsel, the DR submitted that the decision was rendered with reference to the Central Excise and Salt Act where the reopening /reassessment proceedings may be different from the Income Tax Act. The DR concluded that there is no error/infirmity in the reassessment proceedings and the reassessment orders deserves to be upheld. 12. We have considered the rival submissions, carefully perused the orders of the lower authorities and the relevant material evidences brought on record. It is an undisputed fact that the reopening of the assessment is totally based upon the reasons discussed in the assessment order for A.Y. 2005-06, wherein it has been held that receipts in pursuance of offshore services contract are in the nature of royalties and in pursuance to the contract for deputation of specialists and offshore training contract are in the .....

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