M/S. BJ SERVICES COMPANY MIDDLE EAST LIMITED,NEW DELHI vs. ADDL.DIT, DEHRADUN

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ITA 5947/DEL/2014Status: DisposedITAT Delhi21 November 2017AY 2011-122 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that reimbursement of expenses is to be included in gross receipts for the computation of deemed profit under Section 44BB, following a Supreme Court decision.

What were the facts?

The assessee received Rs. 62,205,120/- from customers as reimbursement of expenses. The AO and CIT(A) included this amount in gross receipts for determining profits under Section 44BB.

What were the issues?

Whether reimbursement of expenses incurred on behalf of customers should be included in gross receipts for the purpose of computing deemed profits under Section 44BB of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 44BB

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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI

Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI

For Appellant: Shri Amit Arora, CA
For Respondent: Smt. Aparna Karan, CIT DR
Hearing: 20/11/2017Pronounced: 21/11/2017

O R D E R PER PRASHANT MAHARISHI, A. M.

1.

This is an appeal filed by the assessee against the order of the LD CIT (A)-II, New Delhi dated 26.08.2014 for the Assessment Year 2011-12. The assessee has raised the following grounds of appeal:- “The ld CIT (A) has erred on facts and in law by affirming to the action of the AO and holding that the amounts aggregating to Rs. 62205120/- received by the appellant from its customers as reimbursement of expenses incurred on behalf of such customers, is to be included in gross receipts for determination of profits u/s 44BB of the Income Tax Act, 1961 (the Act).

2. The solitary issue in this appeal is whether Rs. 62205120/- received by the appellant from its customers as reimbursement of expenses is to be included in gross receipt for determination of profits u/s 44BB of the Income Tax Act, 1961.

3. The LD AO in its order dated 15.05.2014 has included the above sum. The LD CIT (A) has also confirmed the above action of the LD AO. Both the lower authorities were of the view that reimbursement forms part of the gross receipt for computing income u/s 44BB of the Act.

4. The LD AR fairly conceded that this issue is covered now against the assessee by e decision of the Hon'ble Supreme Court in case of Sedco Forex International Incorporation vs. CIT 87 Taxmann.com 29. The ld DR also submitted that the issue is now covered against the assessee. 5. We have carefully considered the rival contentions. The Hon'ble Supreme Court in that above decision of Sedco Forex International Ltd ( supra) has held that reimbursement of expenses is required to be included for the purpose of computation of deemed profit chargeable to tax u/s 44BB of the Act. In the result we find no infirmity in the order of the lower authorities. Hence, the appeal of the assessee is dismissed. Order pronounced in the open court on 21 /11/2017.

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