KREUZ CHALLENGER PTE LTD,SINGAPURE vs. ACIT, INTERNATIONAL TAXATION CIRCLE2(1)(2), NEW DELHI

ITA 2373/DEL/2022Status: DisposedITAT Delhi09 December 2024AY 2019-2017 pages
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What did the Tribunal hold?

The Tribunal held that Section 44BB is a computation provision and does not override the beneficial provisions of the Double Taxation Avoidance Agreement (DTAA). Since the assessee did not have a Permanent Establishment (PE) in India, its business income from vessel hire is not taxable in India as per the India-Singapore DTAA.

What were the facts?

The assessee, a Singapore-based company, received hire charges for providing an offshore service vessel in India. The Assessing Officer (AO) treated this income as taxable under Section 44BB of the Income Tax Act, 1961, deeming it related to mineral oil extraction services. The AO also considered the income potentially as royalty under Section 9(1)(vi) or Article 12 of the tax treaty.

What were the issues?

Whether the income earned by a non-resident from providing offshore vessels is taxable in India under Section 44BB when the assessee does not have a Permanent Establishment (PE) in India, and whether the DTAA provisions would prevail.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 9(1)(vi),Section 115A,Section 44DA,Section 44BB,Section 197,Section 90(2),Section 234B,Section 234D,Section 270A

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Income Tax Appellate Tribunal, DELHI BENCHES : D : NEW DELHI

Before: SHRI M. BALAGANESH & SHRI ANUBHAV SHARMA

For Appellant: Shri Salil Kapoor, Advocate, Shri Anil Chachra, Advocate &, Shri Shivam Yadav, Advocate
For Respondent: Ms C. Chandra Kanta, CIT-DR
Hearing: 07.11.2024Pronounced: 09.12.2024

PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 28.07.2022 of the Asstt. Commissioner of Income Tax, Circle International Taxation-2(1)(2), New Delhi (hereinafter referred to as the Ld. AO) passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the assessment year 2019-20. 2. The assessee filed return of income which was selected for scrutiny and the AO examined the receipts of the assessee from M/s J Ray Mcdermott SA which was on account of the provision of S-89 uniform project time charter party for offshore service

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