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TMI Blog2019 (5) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, your appellant respectfully submits the following grounds. Ground No. 1 That the Ld.CIT(A) has erred on facts and in law in affirming the action of the AO in holding that the receipts on account of reimbursements of expenses were includible in the gross receipts for the purposes of determination of income under section 44BB of the Income Tax Act 1961 ('the Act'). Ground No. 2 That the Ld.CIT(A) has erred on facts and in law in affirming the action of the AO in holding that the income on account of towing Jet Drilling (S) Pte Limited's rig - Energy Driller, from Kakinada to Singapore was taxable as royalty payments as opposed to the claim of the appellant that the receipts are explicitly qualified for determinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the decision of Apex Court in case of Sedco Forex International Inc. (supra) as well as the Assessment order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. The Hon'ble Apex Court in case of Sedco Forex International Inc. (supra) held as under: 47) Section 44BB starts with non-obstante clause, and the formula contained therein for computation of income is to be applied irrespective of the provisions of Sections 28 to 41 and Sections 43 and 43Aof the Act. It is not in dispute that assessees were assessed under the said provision which is applicable in the instant case. For assessment under this provision, a sum equal to 10% of the aggregate of the amounts sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the clauses, amount paid under the aforesaid contracts as mobilisation fee on account of provision of services and facilities in connection with the extraction etc. of mineral oil in India and against the supply of plant and machinery on hire used for such extraction, clause (a) stands attracted. Thus, this provision contained in Section 44BB has to be read in conjunction with Sections 5and 9 of the Act and Sections 5 and 9 of the Act cannot be read in isolation. The aforesaid amount paid to the assessees as mobilisation fee is treated as profits and gains of business and, therefore, it would be "income" as per Section 5. This provision also treats this income as earned in India, fictionally, thereby satisfying the test of Section 9 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same as income), a concessional flat rate of 10% is charged to tax. In these circumstances, the AO is supposed to apply the provisions of Section 44BB of the Act, in order to find out as to whether a particular amount is deemed income or not. When it is found that the amount paid or payable (whether in or out of India), or amount received or deemed to be received in India is covered by sub-section (2) of Section 44BB of the Act, by fiction created under Section 44BB of the Act, it becomes 'income' under Sections 5 and 9 of the Act as well. 50) It is stated at the cost of repetition that, in the instant case, the amount which is paid to the assessees is towards mobilisation fee. It does not mention that the same is for reimbursement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 44BB of the Act has been decided in favour of the assessee in assessee's own case for A.Y. 2011-12 being ITA No. 6166/Del/2014 order dated 31.10.2017. 9. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 10. We have heard both the parties and perused all the relevant material available on record. The Tribunal in A.Y. 2011-12 held as under: "6. Further, on the issue of operation of the amendment to section 44BB and 44DDA, the Ld. CIT-(A) has observed that considering the interpretation contained in the case of OTIM Ltd., reported in 352 ITR 406 (Del), the position of the case would not change specially when the services are squarely covered in consonance with what is envisaged under section 44BB of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of expenses aggregating to INR 6,482,115 are includible in the gross receipts for the purpose of determination of income under section 44BB of the Act. Your appellant prays that the erroneous order be cancelled and appropriate relief may be granted to the appellant. Your appellant craves leave to add to, alter, amend, vary, omit, substitute or delete any of the aforementioned grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal." 12. The Draft Assessment Order under Section 143(3)/144C(1) of the Act for the Assessment Year 2013-14 was passed on 18.01.2016 at a total income of Rs. 2,43,34,390/- as against income of Rs. 1,72,99,395/- shown in the revised return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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