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TMI Blog2024 (12) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... ture specified in section 44BB, to the exclusion of specified sections. Therefore, the excluded provisions could not be resorted to for the purpose of computing business of exploration of mineral oil u/s 44BB. As in the case of CIT vs. Vantage International Management Co [ 2023 (11) TMI 90 - SC ORDER] confirmed the stand of Hon ble High Court holding that reimbursement of service tax ought not to be included in aggregate of amounts specified in clauses (a) and (b) of Sec. 44BB(2) since it was not an amount received by assessee on account of services provided by them in prospecting, extraction or production of mineral oils. In our opinion, services tax as well as GST bear same character of receipts. We also find that the assessment clearly accepts the income computed by the assessee u/s 44BB. Therefore, this plea does not render any assistance to the case of the revenue. For the aforesaid reasons, the impugned disallowance stands deleted. Decided in favour of assessee. - HON BLE SHRI V. DURGA RAO, JM AND HON BLE SHRI MANOJ KUMAR AGGARWAL, AM For the Appellant: Shri P. Murali Mohan Rao (CA)-Ld. AR For the Respondent: Shri Nilay Baran Som (CIT)- Ld. DR ORDER Manoj Kumar Aggarwal (Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to DDPL. The Ld. AO, in the draft assessment order, rendered a finding that DDPL remained in India for more than 183 days and therefore, it constitutes to have permanent establishment. The income of DDPL on hire charges would, therefore, would be taxable in India as business income. The Ld. DRP also noted the factual report submitted by Ld. AO that the argument of the assessee being assessable u/s 44BB(1) would be devoid on any merits because the assessee had chosen to maintain accounts u/s 44AA and the same were also audited u/s 44AB of the Act which is pre-condition for being assessed u/s 44BB(3). However, the provisions of Sec. 44BB (1) does not contain any such kind of condition. Finally, accepting the stand of Ld. AO, the objection of the assessee was rejected. Pursuant to same, an assessment was framed by Ld. AO u/s 143(3) r.w.s. 144C(13) on 29-09-2023 which is in further appeal before us. 3.3 Before Ld. AO, the assessee reiterated that DDPL was non resident company in India and bareboat agreement was signed outside India. The assessee as well as payee was non-resident entities and the transaction was between two non-resident entities. Therefore, no income accrued or deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any person on his behalf 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) the amount received or deemed to be received in India by or on behalf of the assessee 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 outside India. (3) Notwithstanding anything contained in sub-section (1), an assessee may claim lower profits and gains than the profits and gains specified in that subsection, if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB, and thereupon the Assessing 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 sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 28 to 41 and sections 43 and 43A of the Act. The aggregate amounts are quantified in sub-section (2) of section 4BB of the Act to be the amount paid or payable, received or deemed to be received etc. As per the sub-section (3) of section 44BB of the Act, the non-resident can claim a lower profit. It is for the purpose of claiming lower profits that the non-resident must file a return and prove the same with support of his regular books of accounts and other documents and by complying with other conditions specified therein ie., 44AA, 44AB and 143(3) of the Act. In this regard the assessee relied upon the following judicial precedent: i. Decision in case of Frontier Offshore Exploration (India) Ltd vs. DCIT Central Circle (1). Chennai vide ITA No 200/Mds/2009 where in it is held as 6. This is where the special provision of section 44BB comes into play. Where the statute has provided a special provision for dealing with a special type of income such a provision would exclude a general provision dealing with the income accruing or arising out of any business connection. Section 44BB is a special provision to the exclusion of all the contrary provisions provided in sections 28 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e citation [1999] 105 Taxmann 742 (SC) wherein held Section 195 of the Income-tax Act, 1961 - Deduction of tax at source - Other sums Whether scheme of tax deduction at source applies not only to amount paid which wholly bears income character such as salaries, dividends, interest of securities, etc., but also to gross sums, whole of which may not be income or profits of recipient, such as payment to contractors and subcontractors and payment of insurance commission -Held yes - Whether expression 'any other sum chargeable under the provisions of this Act would mean sum on which income-tax is leviable - Held yes- Whether expression any other sum chargeable under the provisions of this Act would include cases where any sum payable to the non-resident is a trading receipt which may or may not include 'pure income' - Held, yes Whether assessee who makes payments to non-residents under contract entered into is under obligation to deduct tax at source under section 195 and the obligation is limited only to appropriate proportion of income chargeable under Act -Held, yes. ii. Decision of Hon ble Supreme Court of India in case of GE India Technology Cen. (P) Ltd. vs. CIT, (2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gements, it is clearly established that the payment of bareboat charter by ASPL to DD8PL does not liable to tax India as per the Article 7 read with Article 5 of the India Singapore DTAA and ASPL is not liable to deduct any withholding tax under section 195 of the Act as income earned by DD8PL is not chargeable to tax in India. 8. Thus, the assessee has exercised the option available under section 44BB of the Act by maintaining regular books of accounts and got the book audited and thus, the payment done to DD8PL are bareboat charter are business receipts for the Singapore Company and the company does not have PE and not taxable in India as per the DTAA between India and Singapore, the assessee is not liable to deduct any tax in India under section 195 of the Act. Therefore, no disallowance for the expenditure under section 40(a)(1) of the Act is warranted. Under the above facts and circumstances, we set aside the orders of authorities below and delete the addition made by the Assessing Officer and confirmed by the ld. DRP. Thus, the appeal filed by the assessee is allowed. 9. In the result, the appeal filed by the assessee is allowed. We find that similar facts exist before us in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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