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TMI Blog2021 (2) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... 44DA of the Act were not applicable. Applying the said parity of reasoning, we also hold that the provisions of section 44DA of the Act were not applicable to the facts of the case and the income of the assessee is to be computed u/s 44BB of the Act. Respectfully following the decision of the Tribunal in assessee s own case [ 2019 (1) TMI 1851 - ITAT DELHI] we hold that the provision of section 44DA of the Act is not applicable and income, if any, should be taxed u/s 44BB of the Act. Accordingly ground of appeal No. 1.1. by the assessee is dismissed whereas grounds of appeal No. 2 and 3 are decided in favour of the assessee. Non application of provisions of DTAA for interest income - HELD THAT:- Since the issue has been decided against the assessee by the Hon ble Jurisdictional High Court in the case of B.J Services Co. Vs. ACIT [ 2015 (5) TMI 1036 - UTTARAKHAND HIGH COURT] therefore, the ground of appeal No. 4 by the assessee is dismissed. Computation of tax on interest income - HELD THAT:- An application dated 13th October, 2020 for rectification u/s 154 of the Act wherein it was stated that the interest income was taxed twice as per Act at 40% and as per DTAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, AM This appeal filed by the assesssee is directed against the order dated 23.06.2020 passed u/s 143(3) r.w.s. 144C(13) of the I.T. Act 1961 for the assessment year 2017-18. 2. Facts of the case, in brief, are that the assessee is a group entity of BG Group of UK, a non-resident company and also an Associate Enterprise of M/s. BG Exploration Production India Limited (BGEPIL). The assesssee is engaged in providing support to BG Group entities including BGEPIL in India. BGIP owns and operates its own oil and gas assets. 2.1 The assessee filed its return of income on 29.11.2017 declaring total income of ₹ 4,42,10,598/-. Subsequently the assessee filed a revised return on 29.01.2018 on a total income of ₹ 4,42,10,598/-. During the course of assessment proceedings the AO noted that the assessee received the payments from BGEPIL, a company registered in the Cayman Islands. In the notes given with the statement of income it has been stated that BGIL has received the following payments totalling to ₹ 1,86,32,25,025/- said to be on account of services provided on cost-to-cost basis in terms of Article 3.1.4.b of the Production Sharing Contracts (Panna-Mukta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsed the time writing costs of BGIL personnel working on various projects of BGEPIL. The charging basis i.e time writing rate, is established by determining the overall total cost of the skill centre (full employee related costs as well as costs allocated to that skill centre) and determining the hourly rate with reference to the numbers of chargeable hours Other Reimbursements:- BGEPIL has reimbursed several expenses to BGIL on a costto- cost basis. These expenses pertain to cost of stock option plan exercised by BGEPIL employees, actual cost of reallocation of employees, third party expenses such as consultancy fees, professional subscription and license costs bank charges, travel expenses. Etc. 4. The AO asked the assessee to explain as to why the amounts totalling to ₹ 1,86,43,25,025/- under various heads as mentioned in the above table may not be treated as income for assessment year 2017-18. Rejecting the various explanations given by the assessee and following the order for the preceding year the AO held that the amount received by the assessee form BGEPIL is taxable and cannot be accepted to be reimbursement of expenses by BGEPIL to the assessee. The AO held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant for group entities in India and hence, cannot be regarded as income taxable under the Act as well as the Double Taxation Avoidance Agreement between India and United Kingdom ( DTAA ). Ground No. 2: Non-applicabilitv of Section 44DA of the Act 2.1 Without prejudice, the learned AO / DRP erred in law and in facts in following the directions of the DRP in AY 2012-13 to AY 2016-17 and concluding that the provisions of section 44DA are applicable to the appellant. Ground No. 3: Income, if any, should be taxable under section 44BB of the Act 3.1 Without prejudice, the learned AO / DRP erred in law and in facts in not applying the provisions of section 44BB of the Act, as the services rendered by the appellant were in relation to business of extraction or production of mineral oil. 3.2 The learned AO / DRP erred in not following the order of the Hon ble Tribunal in the appellant's own case for AYs 2007-08 to 2016-17, as pointed out by the appellant. 3.3 In rejecting the ground of objection with reference to section 44BB of the Act, the learned DRP erred in following the directions of the DRP in AY 2012-13 to AY 2016-17 wherein it was obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 the assessee has take an alternative ground according to which income, if any, should be taxable u/s 44BB of the Act. 8. Ld. Counsel for the assessee argued all the above three grounds together. So far as ground No. 1 regarding reimbursement of expenses is not income is concerned the Ld. Counsel for the assessee submitted that transaction of reimbursement of expenses to the non-resident does not result in any income in the hands of the recipient. Hence, such reimbursement is not chargeable to tax in India in the hands of the non-resident for want of any income element embedded therein. He submitted that the costs incurred by the assessee in providing this support/services is recharged to the beneficiary BG Group entities, including BGEPIL, on cost to cost basis, without any mark-up, based on uniform and consistent reasonable allocation. He submitted that the assessing officer computed the income on the ground that the appellant did not establish one to one nexus of the expenses with the services rendered. Referring to the order of the Tribunal he submitted that the Tribunal has dealt with this issue in favour of the assessee from assessment years 2003-04 to 2016-17 and held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years 2003-04 to 2016-17 and held that income of the appellant to be assessed by invoking section 44BB of the Act Therefore, income received from services rendered in connection with providing services in relation to extraction and production of mineral oil should be taxable under section 44BB as opposed to section 44DA of the Act and the amendment to the aforesaid sections by the Finance Act, 2010 could not have the effect of altering or effacing the fundamental nature of both the provisions or their respective spheres of operation or to take away the separate identity of Section 44BB of the Act (DIT vs. OHM Ltd. 352 ITR 406; Del. HC) 10. Ld. DR on the other hand heavily relied on the order of the AO/DRP. 11. We have considered the rival arguments made by both the sides, perused the orders of the AO/DRP and the paper book filed on behalf of the assessee. We find identical issue had come up before the Tribunal in assessee s own case in the immediately preceding assessment year. We find the Tribunal has discussed the issue and decided the issue in favour of the assessee by observing as under :- 15. We have heard the rival contentions and perused the record. The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal vide its order dated 30.01.2019 while deciding the appeals for Assessment Year 2014-15 had reproduced the submissions of the Ld.CIT DR in para 7 at page 3 to 12 of the Tribunal's order. The Ld.CIT DR appearing before us has relied on the aforesaid decisions. The Tribunal in turn relying on the earlier decisions of the Tribunal in assessee's own case in earlier years held that the income of the assessee was to be assessed by invoking the provision of section 44AB of the Act as the assessee was providing services to BGEPIL, which was engaged in production of the mineral oil. The case of reimbursement of expenses by BGEPIL to the assessee was not accepted and the provisions of section 44BB of the Act were invoked to compute the income in the hands of the assessee. The findings of the Tribunal are in paras 8 to 10 at pages 12 to 15 of the said order. We are referring the same but not reproducing the same for the sake of brevity. 18. Now coming to the stand of the Revenue that the provision of section 44DA of the Act, wherein 2nd proviso was inserted w.e.f. 01.04.2011, were to be applied, in order to compute the income of the assessee. The Tribunal in Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee under the Act, he shall be entitled to receive, in addition to the said refund, simple interest thereon calculated in the prescribed manner. In other words, refund payable by the Revenue to the assessee is a debt payable by the Revenue and any interest payable on such refund is nothing but income from debt-claims The assessing officer held that the interest was earned on account of activities carried out by the assessee in India for which it has a PE in India; therefore, the interest is linked with business activities in India and accordingly taxable as business profits. He however, submitted that in all fairness, the matter is covered against the assessee by the decision of the High Court of Uttarakhand in the case of B. J. Services Co. Middle East Ltd. v. ACIT: 380 ITR 138. 13.2 Ld. DR on the other hand submitted that the issue has been decided against the assessee by the Jurisdictional High Court. 13.3. Since the issue has been decided against the assessee by the Hon ble Jurisdictional High Court in the case of B.J Services Co. Vs. ACIT (supra) therefore, the ground of appeal No. 4 by the assessee is dismissed. 14. Ground of appeal No. 5 relates to erroneous comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow section 209(1 )(d) of the Act, which would apply only in a scenario where person responsible for deducting tax has paid or credited such income without deduction of tax. Ld. AR submitted that in the present case since the income has been received by the assessee after deduction of tax at source, therefore, the aforesaid proviso is not applicable. Referring to the decision of the Tribunal he submitted that the Tribunal has also held that provisions of section 234B, r.w proviso to section 209(1 )(d) of the Act are not applicable since the default is not for payment of advance tax but amounts to default in deduction of tax at source 16. Ld. DR on the other hand relied on the order of the AO/DRP. 16.1 After hearing both the sides we find identical issue had come up before the Tribunal in assessee s own case in the preceding assessment year. We find the Tribunal vide ITA No. 62 60/DDN/2019 order dated 24th February, 2020 at page 73 and 74 of the order in para 32 has decided the issue and allowed the grounds raised by the assessee by observing as under :- 32. We have heard the rival contentions and perused the record. The AO while computing the income in the hands of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is still pending with the AO. In the said application it was specified that no short fall happened on account of the advance tax payment. He further submitted that interest u/s 234C is leviable only on the returned income and not on the assessed income. He accordingly submitted that the interest u/s 234C of the Act charged on the assessed income amounting to ₹ 235435/-is incorrect and deserves to be deleted. 19. Ld. DR on the other hand supported the order of the AO. 19.1 After hearing both the sides we find the assessee filed the return of income at ₹ 4,42,10,598/- for the year under consideration against which tax of ₹ 9,99,97,058/- were withheld. As per provisions of section 234C the interest on shortfall of advance tax is to be calculated on the returned income and not on the assessed income as held in various decisions. Further the rectification application filed by the assessee before the AO u/s 154 of the Act is still pending with him. Considering the totality of the facts of the case we restore this issue to the file of the AO with a direction to dispose of the said application at the earliest and decide the issue of levy of interest u/s 234C as per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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