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TMI Blog2016 (8) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... torial waters is to be included in the gross receipts u/s 44BB of the Income Tax Act, 1961 as opposed to the claim of the appellant that the same does not constitute income chargeable to tax in India as per section 5 read with section 9 of the Income-tax Act, 1961." 3. The Appellant, ADIT, International Taxation, Dehradun (hereinafter referred to as 'the revenue') in ITA No.5927/Del/2013 by filing the present appeal sought to set aside the impugned order dated 26.08.2013 passed by the Commissioner of Income-tax (Appeals)-II, New Delhi qua the assessment year 2010-11 on the grounds inter alia that :- "1. Whether on the facts and circumstances of the case, the Ld CIT(A) has erred in holding that no distinction can be made between receipts from production Sharing Participants ('PSC Partners') and Non-Production Sharing Participants ('Non-PSC Partners') and between services rendered by first-leg and second-leg vendors, ignoring the fact that the receipts from non-PSC partners on account of supplies of plant & machinery on hire ('equipment rental') are in respect of contracts which are entered into with companies not directly engaged in Oil Production and Explorat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appearance and filed written replies. During the year under assessment, assessee offered gross revenue of Rs. 102,20,66,402/- and has computed the income by applying deemed profit rate at 10% u/s 44BB of the Act in respect of all the seven contracts entered into between the assessee and the other seven parties duly detailed in para 2 of the assessment order. Assessee offered an amount of Rs. 5,68,000/- on account of interest income u/s 244A of the Act. AO observed from the computation of income and details filed by the assessee along with return that mobilization charges amounting to Rs. 3,71,98,378/- has been reduced from the gross receipt for working out profit u/s 44BB of the Act. It is also observed from the detail filed in respect of query raised regarding mob-de-mob charges received that charges amounting to Rs. 4,12,04,800/- has been received under the work contract out of which assessee has only offered mob-demob charges amounting to Rs. 40,06,422/- and accordingly, assessee was called upon to explain. Finding the explanation furnished by the assessee not tenable, AO came to the conclusion that by taking the gross receipt, it means that what is to be brought to tax is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te amount received by the assessee for demobilization of vessels outside Indian territorial waters to be included in the gross receipts u/s 44BB of the Act is against the claim of the assessee that this income is not chargeable to tax in India as per section 5 read with section 9 of the Act. 9. However, at the very outset, the ld. AR for the assessee fairly conceded that this issue has already been decided by the Hon'ble High Court in case of Sedco Forex International Inc. vs. Commissioner of Income-tax [2008] 299 ITR 238 (Uttarakhand) against the assessee, so the ld. CIT (A) has rightly held that mobilization charges constitute part of the gross receipts of the assessee as per provisions contained u/s 44BB. Consequently, ground no.1 is determined against the assessee. ITA No.5927/Del/2013 (FILED BY THE REVENUE) GROUNDS NO.1 TO 5 10. Ld. AR for the assessee contended that the issue raised in this appeal is covered in assessee's own case cited as ADIT, Intl. Taxation vs. Tidewater Marine Intl.Inc. (ITA Nos.592, 746 & 1810/Del/2013 AYs 2004-05, 2009-10) and Tidewater Marine Intl.Inc. vs. ADIT, Intl. Taxation (ITA Nos.5289/Del/2010 AY 2007-08 and ITA Nos.5775/Del/2011 AY 2008-09) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or production of, mineral oils as canvassed by the revenue for the applicability of section 44BB. One may refer other provisions of the statue which insists on an agreement. For instance, section 42 deals with allowances allowable in computing the profits or gains of any business consisting of the prospecting for or extraction or production of mineral oils in relation which the Central Govt. has entered into an agreement. Section 80IA(4)(i)(b) provides that the enterprise carrying on the business of developing, operating and maintaining any infrastructure facility has to enter into an agreement with the Central Government of a State Govt. or a local authority etc. In the absence of any requirement in section 44BB that the person providing services, facilities or plant and machinery on hire should have directly entered into a contract or agreement with the person actually engaged in prospecting for or extraction or production of, mineral oils, one cannot curtail the scope or applicability of section 44BB to second leg contractors whose contracts or agreements are with first leg contractors but whose services or facilities or plant and machinery are used in connection with prospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The amendment is prospective in nature and would not apply to the cases in hand which is of the earlier assessment years." Hence we reject this argument of the revenue. 26. As we have already held that receipt of the assessee is chargeable tax pertaining to second leg contracts also u/s 44BB of the Income tax act, consequently we reject the argument of the revenue that it is „equipment royalty‟ chargeable u/s 9(1)(vi) of the and consequently liable to tax @ 25 % on gross basis u/s 115A of the Income tax Act. In view of above ground no (1) to (v) of appeal of revenue are dismissed." 14. Since the issue racked up by the revenue in the present appeal treating the receipts from non-PSC Partners on account of supplies of plant and machinery on hire not eligible for treatment under presumptive provisions of section 44BB of the Act has already been determined in favour of the assessee in its own case qua AYs 2004-05, 2007-08, 2008-09 and 2009-10 (supra) in ITA Nos.592, 746 & 1810/Del/2013 and ITA Nos.5289/Del/2010 and 5775/Del/2011 (supra), we find no illegality or perversity in the findings returned by the ld. CIT (A) reversing the order passed by the AO as to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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