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TMI Blog2014 (1) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... id not offer for tax the reimbursement of expenses as well as receipt on account of mobilisation/ demobilisation of rigs attributable to voyage undertaken outside Indian territorial waters - Following Sedco Forex International Inc. v. CIT [2007 (9) TMI 196 - UTTARAKHAND HIGH COURT] - the mobilisation charges paid to the assessee by ONGC had no nexus with the actual amount incurred by the assessee for transportation of drilling units of rigs to the specified drilling locations in India - the mobilisation charges were not reimbursement of expenditure - ONGC was liable to pay a fixed sum as stipulated in the contract regardless of the actual expenditure which might be incurred by the assessee for the purpose – thus, the Assessing Officer was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the action of the Assessing Officer in holding that the sum of Rs. 21,88,55,420 received by the appellant towards fee for mobilisation/demobilisation of the rig to/from India attributable to the voyage undertaken outside Indian territorial waters is to be included in the gross receipts under section 44BB of the Act without appreciating that the said amount does not accrue or arise to the appellant in India in terms of section 5(2) read with section 9 of the Act. 2. That the learned Commissioner of Income-tax (Appeals) has erred on facts and in law in affirming the action of the Assessing Officer in holding that the amount aggregating to Rs. 48,55,78,662 received by the appellant from Oil and Natural Gas Corporation Ltd. as reimbursemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/Del/91 wherein it was held that expression "reimbursement" means to repay or pay an equivalent amount for the loss of expenses incurred. Therefore, it was contended that reimbursement of actual cost of such supplies along with expenses for freight, insurance, etc., cannot be included in the amount of contract for the purpose of section 44BB of the Act. The Assessing Officer, however, did not agree with the contentions of the assessee and made the impugned additions. Dissatisfied with the order, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals) and submitted various submissions. However, the learned Commissioner of Income-tax (Appeals) did not agree with the contentions of the assessee. The learned Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itated against inclusion of gross receipts of an amount of Rs. 21,88,55,420 arising from mobilisation/demobilisation of vessels attributable to voyage undertaken outside Indian territorial water. This ground of appeal is covered against the assessee by the hon'ble Uttarakhand High Court in Sedco Forex International Inc. v. CIT reported in [2008] 299 ITR 238 (Uttarakhand) which has been followed in the assessee's own case for the assessment years 2007-08 and 2008-09. The relevant para of the hon'ble Uttarakhand High Court as recorded in the assessee's own case for the assessment year 2007-08 is reproduced below (headnote of 299 ITR) : "Held, dismissing the appeal, that the payment made to the assessee was outside India and the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court is reproduced in the order of the Tribunal as under (headnote) : "Section 44BB of the Income-tax Act, 1961, is a complete code in itself. It provides by a legal fiction the profits and gains of a non-resident assessee engaged in the business of oil exploration at 10 percent of the aggregate amount specified in sub-section (2). Clause (a) of sub-section (2) refers to the amounts, (a) paid to the assessee (whether in or out of India) on account of the 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 or production of, mineral oils in India, and (b) payable to the assessee (whether in or out of India) on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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