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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI
Order : 24.10.2018 ORDER PER K.NARASIMHA CHARY, J.M. These appeals are filed by the Assessee challenging the separate Orders both dated 15.12.2015 in Appeal No. 33- 34/CIT(A)-2/2014-15 for assessment years 2009-10 & 2010-11 respectively passed by the Ld. Commissioner of Income Tax (Appeals)-2, Noida (in Short “Ld. CIT(A)”), on the following common grounds:
Ground No.1 1. The learned CIT(A) has erred on facts and in law in holding that appeal filed by SASL is not maintainable since the impugned order is passed by Assessing Officer (‘AO’) on the alleged Association of Persons (‘AoP’) of SASL and Transocean Offshore Deepwater Drilling Inc. (‘TODDI’) and not against the Appellant (ie SASL). The learned CIT(A) has not appreciated that the Appellant is an aggrieved party as a result of the impugned order. Ground No.2 2. The learned CIT(A) has erred on facts and in law in dismissing the said appeal on the ground that it is covered by the order passed in case of appeal filed by the alleged AoP of SASL and TODDI issued on August 25, 2014. The learned CIT(A) has erred in not allowing the said appeal as relief has already been granted in the AoP order. Ground No.3 3. The learned CIT(A) failed to deal with any of the grounds of appeal raised in the Appeal memorandum which may kindly be considered as set out herein, the same are not being repeated herein for the sake of brevity, including grounds 1 to 5 therein.
2. Since the assessee, facts and issue involved in these appeals are common and therefore, the appeal were heard together and disposed of by this common order for the sake of convenience and brevity.
3. Brief facts of the case are that the assessee is a non- resident company incorporated under the laws of Hong Kong and has been engaged in the business of providing services and facilities in connection with exploration, exploitation and production of mineral oils. One Transocean Offshore Deepwater Drilling Inc. (TODDI) is a company incorporated under the laws of United States of America with its project office at Mumbai. For the purpose of submitting a ender to 2 ONGC, both these companies formed a consortium and entered into a Memorandum of Understanding dated 28.05.2003. Subsequently ONGC awarded the tender to the consortium.
4. Assessee had filed its income tax return offering the revenue received by it from this contract under section 44BB of the Income Tax Act, 1961 (in Short “Act”). The case of the assessee was selected for scrutiny and the AO passed the assessment order and proposed to complete the assessment holding that the consortium between TODDI and SASL (Assessee) constitute an Association of Person under the provisions of the Act and assessed the contractual revenue on protective basis in the hands of the assessee. In appeal Ld. CIT(A) held that the consortium of assessee and TODDI did not constitute an association of Persons and the assessment of income of assessee should be done on substantive basis only.
5. Accordingly, the Assessee filed return offering the revenues from the contract u/s 44BB of the Act, but the ld. AO again issued a draft assessment order proposing to complete the assessment holding that the consortium between the assessee and TODDI constitutes an Association of Person. Assessee filed objections before the Dispute Resolution Panel (in Short “DRP) against the draft assessment order and the DRP upheld the action of the AO that the consortium of DODDI & SASAL (assessee) constituted an AOP.
6. Later on, TODDI had filed its income tax return offering the revenue received by it from this contract under section 44BB of the Income Tax Act, 1961 (in Short “Act”). The case was selected for scrutiny and the AO passed the assessment order and proposed to complete the assessment holding that the consortium between TODDI and SASL (Assessee) constitute an Association of Person under the provisions of the Act and assessed the contractual revenue on protective basis in the hands of TODDI. In appeal, Ld. CIT(A) held that the consortium of TODDI and SASL did not constitute an Association of Persons and further held that the assessment of TODDI should be done on substantive basis only.
7. Thereafter, notice u/s. 148 of the Act was issued on the AOP of assessee and TODDI and sent to both the AOP members i.e. M/s SASL and M/s TODDI respectively to ensure compliance. Notice u/s. 148 of the Act were issued dated 21.10.2013 to the assessee i.e. AOP and sent on the address of both the individual entities forming the AOP M/s SASL. However, these notices were received back unserved. Subsequently, notices were again issued on 14.11.2013 and then on 13.2.2014 which were finally served to the assessee. In response to the same, the assessee filed its reply dated 11.3.2014 denied the existence of AOP and requested for providing of reasons for invoking the provisions of section 147 of the Act by referring the decision of the Hon’ble Supreme Court decision in the case of GKN Drive Shafts (India) Ltd. vs. ITO (259 ITR 19). The reasons were then provided by the AO, but the assessee did not file the return of income. Subsequently, the reasons were provided to the 4 assessee on 21.3.2014 and assessee’s objections were invited. In response to the same, assessee filed the objections. Ld. AO diposed off the objections filed by the assessee and served a notice u/s. 142(1) of the Act directing the AOP to file its return of income show cause why income from the consortium contract be not taxes in the hands of the alleged AOP. In response to the same, assessee filed its reply reiterating therein that the consortium does not constitute an AOP. On query by the AO, the assessee submitted that based on the same facts and circumstances as for the assessment year under consideration, the Ld. CIT(A)-II, Dehradun had held in appeal Nos. 121/CIT(A)-II/2013-14 and 118/CIT(A)- II/2013-14 for assessment year 2007-08 and AY 2008-09 respectively that the consortium of assessee and TODDI did not constitute an Association of Persons (AOP).
Thereafter, the AO completed the assessment vide order dated 25.7.2015 passed u/s. 143(3)/147/144 of the Act by holding that the consortium of assessee and TODDI constituted an AOP and the income from the contract was estimated by applying an ad hoc profit rate of 25% on the aggregate of the receipts of assessee and TODDI from the ONGC contract and this amount was held to be taxable as business income in the hands of the alleged AOP. Further, the credit of taxes deducted at source by ONGC was not allowed while computing the taxes payable by the alleged AOP and interest u/s. 234A and 234B was levied as well as penalty u/s. 271(1)(c) was initiated.
Aggrieved by the order of the AO, the Assessee appealed before the Ld. CIT(A), who vide his impugned order dated 15.12.2015 has held by observing that following the orders of his predecessors CIT(A) in appeal filed for AYs 2007- 08 and 2008-09, this appeal is not maintainable, since there is no impugned order against this appellant and accordingly none of the grounds were adjudicated and appeal of the assessee was dismissed for statistical purposes. Against the impugned order, the Assessee is in appeal before the Tribunal.
Ld. AR for the assessee submitted that Ld. CIT(A) had not disposed of the appeal on merits, but on the other hand held that the appeal by the assessee is not maintainable since there is no impugned order against the assessee. 11. Per contra, Ld. DR placed the reliance on the order of the Ld. CIT(A). 12. We have carefully gone through the record and duly considered the submissions on either side. We find that Ld. CIT(A) in his impugned order has held as under:- “6.1 It is noted that predecessor CIT(A) while deciding the case of AOP of Schlumberger Asia Services Limited and Transocean Offshore Deepwater Drilling Inc. in Appeal No.96/CIT(A)-II/201.4-15 and the case of Transocean Offshore Drilling Inc. in Appeal No.289/CIT(A)-II/2011-12, vide Order dated 25.08.2014 and 07.03,2013 respectively, has held that there was no AOP of Schlumberger Asia Services Limited and Transocean Offshore Deepwater Drilling Inc. during the year under consideration. This issue has also been decided in Appeal no. 121 /CIT(A)-II/2013- 14 and 118/CIT(A)-II/2013-14 for the AY 2007-08 and 2008-09 by the predecessor CIT(A) holding that there was no AOP of Schlumberger Asia Services Limited and 6
Transocean Offshore Deepwater Drilling Inc. in those years as well. 6.2 A perusal of the grounds of Appeal and statement of facts filed along with the Form of Appeal in the present case before me would show that Assessment Order has been passed in the case of AOP of Schlumberger Asia Services Ltd. and Transocean Offshore Deepwater Drilling Inc. and not in the name of M/s Schlumberger Asia Services Ltd. as alleged member of Alleged Association of Persons of Schlumberger Asia Services Limited and Transocean Offshore Deepwater Drilling Inc. which is the Appellant in the present case. The Ld. ARs, in course of proceedings, have orally submitted that Appeals were filed by AOP as well as by its alleged members, namely, Schlumberger Asia Services Ltd. and Transocean Offshore Deepwater Drilling Inc. in individual capacity. This has been done by way of abundant precaution.
7. Considering the facts above, following the orders of my predecessor CIT(A) in the Appeals filed for AYs 2007-08, I hold that this appeal is not maintainable since there is no impugned order against this appellant. Accordingly, none of the grounds are adjudicated.”
13. There is no dispute on facts that there is no order against the assessee to challenge in the appeal. However, it is brought to our notice by the Ld. AR that the issue is no longer res integra, and the question whether or not the consortium Agreement dated 04/05/03 between Slumberger Asia Services Ltd and Transocean Offshore Deep water Drilling Pvt. Ltd., constitutes an AOP has been considered by the coordinate Bench of this Tribunal in in and 105/Del/2012 for A. Y. 2008-09 and was answered in the negative ie., in favour of the assessee. Further it is submitted that following the same, in assessee’s own case in ITA No 4467 and 4468/DEL/2014 a coordinate Bench of this Tribunal on identical grounds as are raised in these appeals, accepted the contentions of the assessee and allowed the appeals of the assessee.
A copy of the above order dt. 24.5.2018 in and 4468/DEL/2014 is produced before us and relevant portions read as follows: 3. In assessee’s appeal the common grievance reads as under :- Based on the facts and circumstances of the case, Schlumberger Asia Services Limited (hereinafter referred to as ‘SASL’ or the ‘Appellant’) respectfully craves leave to prefer an appeal against the order dated 30 May 2014 passed by the Commissioner of Income Tax (Appeals) - II [hereinafter referred to as the ‘learned CIT(A)’] under section 250(6) of the Income-tax Act, 1961 (hereinafter referred to as the ‘A t’) (received by the Appellant on June 14, 2014) on the following grounds:
Appeal not maintainableAppeal not maintainable
1. The learned CIT(A) has erred on facts and in law in holding that appeal filed by SASL is not maintainable since the impugned order is passed by Assessing Officer (‘AO’) on the alleged Association of Persons (‘AoP’) of SASL and Transocean Offshore Deepwater Drilling Inc. (‘TODDI’) and not against the Appellant (ie SASL). The learned CIT(A) has not appreciated that the Appellant is an aggrieved party as a result of the impugned order.
2. The learned CIT(A) has erred on facts and in law in dismissing the said appeal on the ground that it is covered by the order passed in case of appeal filed by the alleged AoP of SASL and TODDI issued on 20 May 2013. The learned CIT(A) has erred in not allowing the said appeal as relief has already been granted in the AoP order.
3. The learned CIT(A) failed to deal with any of the grounds of appeal raised in the Appeal memorandum which may kindly be considered as set out herein, the 8 same are not being repeated herein for the sake of brevity, including grounds 1 to 5 therein.
At the very outset the counsel for the assessee pointed out that impugned issue stand decided in favour of the assessee and against the revenue by the order of the bench in assessee’s own case in and 105/Del/2012 for A. Y. 2008-09.
We find force in the contention of the counsel the relevant finding of the coordinate bench reads as under :- “4.5. Thus respectfully following the decision of Hon’ble Delhi High Court in the case of Linde AG Linde Engineering Division vs. DDI (supra) we hold that Consortium Agreement dated 04/05/03 between Slumberger Asia Services Ltd and Transocean Offshore Deep water Drilling Pvt. Ltd., do not constitute an AOP. 4.6 From the assessment order it is observed that Ld.AO has taxed the revenue under section 115 A at 10%. Section 1 ISA presupposes the rendering of technical services by assessee and now with the decision of Hon’ble Supreme Court in the case of ONGC Ltd (supra) the issue stands settled as on date, regarding prospecting for or extraction or production of mineral oil is not to be treated as technical services for the purposes of Explanation 2 to section 9 (1) (vii) and would rather be covered by section 44 BB of the Act. 4.7 Thus in our considered opinion Transocean Offshore Deepwater Drilling Inc. being consortium member has rightly offered to tax the receipts u/s 44BB in the return of income.”
And in the case of the assessee the coordinate bench held as under :- “10. ITA No.4655, 4656, 3044 /Del/2013 (ASSESSMENT YEAR 2007-08 and 2008-09 & 2009-10) (Revenue’s appeal) Co. no. 60 & 66, 61 & 67/Del/2014 (Asst. Yr. 2007-08 & 2008-09) Both the parties reiterated identical arguments that have been advanced in the case of appeals filed by Transocean Offshore Deepwater Driling Pvt. Ltd.
10.1 Issues raised regarding consortium being an AOP or has been decided in favour of assessee and against revenue hereinabove. Accordingly these appeals by Revenue stands dismissed.”
Respectfully following the decision of the coordinate bench in assessee’s own case both the appeals filed by the assessee are allowed.
It is, therefore, clear from the above that the grounds of this appeal are substantially the same as are involved in and 105/Del/2012 and ITA No 4467 and 4468/DEL/2014 finally earlier assessment year and the Tribunal has been taking a consistent review that the Consortium agreement between the assessee and Transocean Offshore Deepwater Drilling Private Limited do not constitute an AOP and the Transocean Offshore Deepwater Drilling Inc being consortium member has rightly offered to tax the receipts under section 44BB in the return of income.
On the face of this consistent view taken by the Tribunal over a period of time, there’s no reason for us now to take a different view since no change of circumstances to affect the applicability of this consistent view for the years under consideration in these two appeals. No material is produced before us by revenue to take a different view and the one that was taken in the earlier years. In the circumstances where of the considered opinion that a view that was taken consistently in assessee’s own case file their earlier years shall not slightly be disturbed. We therefore while respectfully following the decisions of the coordinate bench is of this tribunal in assessee’s own case, allow the grounds of appeal in these two appeals also. 10