COMMISSIONER INCOME TAX AND ANOTHER vs. ONGC

ITA/120/2007HC UttarakhandUKHC01006576200708 April 2008Author: HON'BLE MR. JUSTICE PRAFULLA C. PANT5 pages
AI SummaryAllowed

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Dehradun, and the DCIT Circle I, Dehradun, against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had set aside an order of the Commissioner of Income Tax Appeals (CIT(A)), who had upheld the Assessing Officer's assessment. The assessee, M/s Atlas Copco Rotoflow Inc., USA (a non-resident company), represented by ONGC, provided services to ONGC for exploration, extraction, and production of mineral oils. For the assessment year 1998-99, the assessee was engaged for overhauling, inspection, and repair of expander compressors in an LPG recovery unit.

What did the High Court hold?

The High Court held that the CIT(A) and the Assessing Officer had not committed any error of law. The Court upheld their view that the assessee, as a technical service provider, was liable to pay tax at the rate of 15% under Section 44D read with Section 115A of the Income Tax Act, 1961, instead of the 10% chargeable under Section 44BB. The reasoning was based on the proviso to Section 44BB(1), which states that the section shall not apply where the provisions of Section 42, 44D, 115A, or 293A apply. The Court found that the services rendered by the assessee constituted technical services, falling under the purview of Section 44D and 115A, particularly considering the definition of 'fee for technical services' as provided in Explanation 2 to Section 9(1)(vii). The appeal was allowed, and the impugned order of the ITAT was set aside.

What were the issues?

1. Whether the tax on receipts for services rendered by the non-resident company (NRC) is chargeable under Section 44BB of the Income Tax Act, 1961, or under Section 115A read with Section 44D of the Act? Assessee's contention: The assessee argued that tax should be charged under Section 44BB of the Income Tax Act, 1961. Revenue's contention: The revenue contended that the assessee rendered technical services for which a fee was paid, and therefore, the case is covered under Section 115A read with Section 44D of the Act. The revenue relied on the explanation to Section 9(1)(vii) of the Act, defining 'fee for technical services'.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3),Section 44BB,Section 115A,Section 44D,Section 42,Section 293A,Section 9(1)(vii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL

Income Tax Appeal No. 120 of 2007

(1) Commissioner Income Tax, Dehradun. (2) DCIT Circle I, Aaykar Bhawan,

13A, Subhash Road, Dehradun.

……………………Appellants.

Versus

ONGC as representative assessee of M/s Atlas Copco Rotoflow Inc., USA, The DGM (F&A), Income Tax, Oil & Natural Gas Corporation Ltd., Income Tax Section, Tel Bhawan, Dehradun

……………….Respondent.

Sri Arvind Vashistha, learned counsel for the appellants. Sri Udyog Shukla, learned counsel for the respondent.

Hon’ble Prafulla C. Pant, J. Hon’ble Dharam Veer, J.

[Oral- Prafulla C. Pant, J.]

This appeal, preferred under Section 260A of the Income Tax Act, 1961, is directed against the judgment and order date 23.02.2007, passed by Income Tax Appellate Tribunal, Delhi Bench ‘C’ (hereinafter referred as ITAT), whereby the order dated 12.02.2004, passed by Commissioner of Income Tax Appeals (hereinafter referred as CIT (Appeals), Dehradun, is set aside. CIT (Appeals) dismissed the appeal of the assessee and affirmed the

assessment order passed by the assessing Officer under Section 143(3) of

The order continues below.

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