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TMI Blog2016 (2) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... of credit note issued - Held that:- We are of the view that the assessee is not entitled to claim deduction of ₹ 11.65 crores from the gross amount of the contract, since it is a case of adjustment of payments receivable/payable between the parties. Though it is stated that the deduction has been claimed to the extent of ₹ 7.96 crores, we notice that the assessee has actually claimed deduction of ₹ 11.65 crores. The claim of the assessee may be admissible, if the income is computed u/s 28 to sec. 43 of the Act. Since the income is computed as per the provisions of sec. 44BB of the Act and since the said section provides a deeming fiction for computing the profits and gains of provisions, the claim of the assessee is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exploration of oil and gas. Another company named M/s Allseas Marine Contractors SA (hereinafter Allseas ) was awarded a contract by M/s Reliance Industries Ltd to undertake construction of offshore facilities for development of certain gas fields. M/s Allseas entered into a contract with the assessee for provision of certain services to it. The assessee filed its return of income for the year under consideration declaring total income at ₹ 5.66 crores as per the provisions of sec. 44BB of the Act, but the assessment was completed on a higher figure. 3. The first issue relates to the inclusion of demobilization revenue in gross receipts for the purpose of computing tax u/s 44BB of the Act. The AO noticed that receipts relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the same as reimbursement of freight charges and accordingly held that such kind of reimbursements are also includible in the Gross revenue and accordingly rejected the said claim. Before the Ld DRP, the assessee submitted that the above said claim is not a case of reimbursement, but the Ld DRP did not agree with the same. 6. The Ld A.R submitted that the assessee had agreed to provide services to M/s Allseas for operational day rate of GBP 52,050, which was arrived at by taking the fuel cost of GBP 350 per cubic meter. The fuel cost was to be borne by the assessee. The contract further provided that, if the fuel cost exceeded the rate of GBP 350 per cubic meter, the excess amount shall be billed separately by the assessee. The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard the parties on this issue. The assessee has computed the income u/s 44BB of the Act, which reads as under:- [Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. 44BB. (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 for, or extraction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer shall proceed to make an assessment of the total income or loss of the assessee under sub-section (3) of section 143 and determine the sum payable by, or refundable to, the assessee.] Explanation.-For the purposes of this section,- (i) plant includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business; (ii) mineral oil includes petroleum and natural gas. As per sec. 44BB(1), 10% of the aggregate amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax. The amounts referred to in sub. Sec. (1) shall be the amount paid or payable to the assessee or received or deemed to be received in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethodology specified in that section. Sec. 44BB of the Act does not provide for deduction of any of the expenditure. Hence, even though the cost of fuel supplied by M/s Allseas to the assessee herein constitutes an allowable expenditure, the same cannot be deducted from the gross receipts, since sec. 44BB of the Act does not provide for deduction of any of the expenditure. 10. The question of issuing credit note arises in this case, since the party receiving the (M/s Allseas) services has supplied the fuel to the assessee. If the assessee has purchased the fuel from an outside party, the question of issuing credit note does not arise at all. If the assessee had so purchased from a third party, it would not have claimed deduction of cost ..... X X X X Extracts X X X X X X X X Extracts X X X X
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