ABAN SINGAPORE PTE LTD,CHENNAI vs. DCIT INTL TAX 1(1), CHENNAI

ITTPA 29/CHNY/2026Status: DisposedITAT Chennai12 June 2026AY 2023-247 pages
AI SummaryAllowed

What were the facts?

The assessee, Aban Singapore Pte. Ltd. (ASPL), a non-resident company, is engaged in providing services for mineral oil and natural gas exploration in India through a Project Office. For Assessment Year 2023-24, ASPL declared income under Section 44BB(1) of the Income Tax Act, 1961. The Assessing Officer (AO) proposed a disallowance of Rs. 47,85,00,000/- under Section 40(a)(i) for failure to deduct tax at source on payments made to Aban 8 Pte. Ltd. (A8PL), another Singapore-based non-resident company, for a Bareboat Charter Agreement. The AO's draft assessment order was upheld by the Dispute Resolution Panel (DRP), leading to the final assessment order.

What did the Tribunal hold?

The Tribunal held that the disallowance of Rs. 47,85,00,000/- under Section 40(a)(i) of the Act is unsustainable. The Tribunal noted that the issue of whether payments made under the Bareboat Charter Agreement were chargeable to tax in India under Section 195 had been decided in favour of the assessee in its own cases for Assessment Years 2019-20 to 2022-23. In those decisions, the Coordinate Bench had examined the agreement and nature of payments, concluding they were not taxable in India, thus no obligation to deduct tax at source arose. Furthermore, the Tribunal reiterated its earlier finding that when income is computed under the presumptive provisions of Section 44BB, no separate disallowance under Section 40(a)(i) can be made. The revenue did not provide any material to show that the earlier orders were stayed, reversed, or modified. Therefore, following the principle of consistency and the binding precedent of the Coordinate Bench, the disallowance was directed to be deleted. The appeal was allowed.

What were the issues?

1. Whether the disallowance under Section 40(a)(i) of the Income Tax Act, 1961, is sustainable when the income is offered under the presumptive provisions of Section 44BB of the Act? 2. Whether the payments made by the assessee (ASPL) to A8PL, both non-resident companies, under a Bareboat Charter Agreement, where the agreement was entered into and payment was made outside India, are chargeable to tax in India, thereby necessitating deduction of tax at source under Section 195 of the Act? Assessee's Arguments: - The non-obstante clause in Section 44BB excludes the application of Section 40(a)(i). - Special provisions override general provisions. - Payments to A8PL are not chargeable to tax in India as both entities are non-residents, the agreement was outside India, and A8PL has no Permanent Establishment (PE) in India as per the India-Singapore DTAA. - Reliance on the Tribunal's own case for earlier Assessment Years (2019-20 to 2022-23) where similar issues were decided in favour of the assessee. Revenue's Arguments: - The Ld. DR supported the findings of the AO/DRP.

Which sections of the Income-tax Act were involved?

Section 40(a)(i),Section 143(3),Section 144C(13),Section 44BB(1),Section 143(2),Section 144C,Section 195,Section 44BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 11.06.2026Pronounced: 12.06.2026

PER GEORGE GEORGE, VICE PRESIDENT:

This appeal filed by the assessee is directed against the final assessment order dated 29.01.2026 passed u/s.143(3) r.w.s.144C(13) of the Income Tax Act, 1961 (hereinafter the ‘Act’). The relevant assessment year is 2023-24. IT(TP)A No.29/CHNY/2026 :- 2 -:

2.

The solitary issue that is argued is whether the TPO/DRP has erred in making disallow

The order continues below.

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