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Income Tax Appellate Tribunal, DELHI BENCHES: ‘C’, NEW DELHI
Before: SHRI RS SYAL & SMT. BEENA A PILLAI
ORDER PER BEENA A PILLAI, JUDICIAL MEMBER
Present appeal has been filed by revenue against order dated 19/05/14 passed by Ld. CIT (A)-2, Dehradun for assessment year 2011-12. 2. Brief facts of the case are as under: Assessee for the year under consideration filed its return of income declaring total income of Rs.10,83,04,365/-under section 44 BB on total receipts of Rs. 122,79,09,521/-. The case was processed under section 143 (1) and notices under section 143 (2) was issued to assessee along with the questionnaire under section 142 (1) of the Act. In response to the notices issued representatives of the assessee appeared before Ld. AO and filed necessary details as called for.
Ld. AO completed the assessment at Rs.21,94,29,740/-by including the reimbursement of service tax expenses incurred by assessee in the gross receipts and treating the royalty received from another non-resident as income of assessee thereby estimating 25% of the Gross revenue towards the same.
Aggrieved by the order of Ld.AO assessee preferred appeal before Ld.CIT (A) who deleted additions made by Ld.AO.
5. Aggrieved by the order of Ld.CIT (A) the revenue is in appeal before us now.
6. In a nutshell the issues that requires to be considered is: Whether the income of assessee shall be taxed as per the provisions of section 44AB; Whether the service tax forms part of the receipts as per provisions of section 44B of the act; 6.1. Both parties admit that issues raised by assessee in the present appeal is covered in favour of assessee by decision of coordinate bench of this Tribunal in for assessment year 2010-11 vide order dated 29/01/18. This Tribunal has decided the issue as under:
“4. Heard arguments of both sides and perused the material on record. Learned AR submitted that the issue relates to the treatment of income from PSC and non PSC contracts for taxeability as per provisions of Section 44BB of the Act had come up for consideration before a coordinate bench of this Tribunal in 419/De1/2012 and 6391/De1/2013 for the Asstt. Years 2007-08, 2008-09 and 2009-10 respectively wherein it has been held that the income on account of provision of equipment and services earned by the assessee company shall be taxable as per the provisions of Section 44BB of the Act. He further submitted that the appeal preferred by the revenue against the said order was dismissed by the Hon'ble Uttarakhand High Court. At the very threshold, he further submitted that the Hon'ble Apex Court in the case of ONGC vs. CIT. 376 ITR 306 held that the services in connection with exploration and production of mineral oil shall fall within the purview of S.44 BB and outside the purview of fees for technical services as defined in Section 9(1)(vii) of the Act. He also brought it to our notice that in the assessment order for the Asstt. Year 2014-15, learned AO had accepted the taxability of revenue as per provisions of Section 44BB. Learned OR placed reliance on the assessment order.
We have perused the order dated 11.7.2014 by a coordinate bench of this Tribunal in ITA No.5282 of 2012 and batch wherein the assessee is also a party in ITA No.5290/0el/2010. Vide paragraph 227 of this order, the Bench while dealing with the addition qua equipment rental, service charges and sale of consumables and services rendered by assessee in connection with exploration/prospecting/extraction of mineral oil held that the income arising on account of royalty/FTS, letting out of equipment etc. was to be taxed u/s 44BB. Appeal preferred against this order by the revenue in and Income-tax Appeal No.27/15 was dismissed by the Hon'ble Uttarakhand High Court by order dated 6.8.15 and vide para No.6(i), the Hon'ble High Court decided the issue against the revenue. Since the issue of assessment of the revenue from PSC and non PSC contracts was substantially involved in ITA No.5282/2012 and batch and decided by the Tribunal and also by the Hon'ble High Court in favour of the assessee, while respectfully following the same, we answer this issue that the income on account of provision of equipment and services earned by the assessee company shall be taxable as per the provisions of Section 44BB of the Act.
Now, coming to the second issue relating to the service tax, learned AR placed reliance on the decision of the Hon'ble Jurisdiction High Court in the case of CIT vs Mitchell Drilling International P. Ltd. 380 ITR 130 in support of his contention that the service-tax being statutory levy, should not form part of gross receipts as per provision of Section 44BB of the Act. He further placed reliance on the decision of the coordinate bench in the case of DDIT vs Sundowner Offshore International (Bermuda) Ltd. ITA 1067/De1/2016 for a similar principle. We find that the principle laid down in the above decision squarely applies to the facts of this case also, as such, while respectfully following the same, we answer the issue that the service-tax does not form part of the gross receipts for computation u/s 44BB of the Act.”
Respectfully following the same, we do not find any infirmity in the observations of Ld. CIT (A) and the same is upheld.
Accordingly ground raised by revenue stands dismissed.
In the result appeal filed by revenue stands dismissed. Order pronounced in the open court on 31.05.2018.