MMA OFFSHORE ASIA VESSEL OPERATIONS PTE LTD.,SINGAPORE vs. CIT (INTERNATIONAL TAXATION)-3, MUMBAI

I.T.A. No. 2566/Mum/2024 & I.T.A. No. 2567/Mum/2024 are two separate appeals by the assessee preferred against two separate orders of the ld. CIT(IT)-3, Mumbai, (hereinafter ‘ld. CIT') dated 29/03/2024 & 31/03/2024 framed u/s 263 pertaining to AY 2019-20 & 2020-21, respectively.

Since the underlying facts in the impugned quarrel are similar, therefore, both these appeals were heard together and are disposed off by this common order for the sake of convenience and brevity.

The common grievance in both these appeals relate to the assumption of jurisdiction u/s 263 of the Act by which the ld. CIT treated the impugned assessment orders as not only erroneous but also prejudicial to the interest of the revenue.

Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules, 1963. 5. At the concession of the representatives, we have heard the appeals for AY 2019-20 and are considering the facts for AY 2019-20 as the facts for AY 2020-21 are mutatis mutandis the same.

The assessee filed its return of income on 26/09/2019 declaring total income of Rs. Nil. The return was selected for complete scrutiny through CASS with following reasons:- a) The assessee has claimed substantial refund out of TDS u/s 195. b) The assessee has claimed substantial amount of refund. c) The assessee has claimed large refund claimed out of overall TDS.

Statutory notices were issued and served upon the assessee and subsequently, after due verification of submissions made by the assessee and documents available, the income of the assessee was assessed at Nil and the exemption claimed as per DTAA amounting to Rs. 33,46,06,627/- was allowed.

Since the assessment order only refers to the submissions made by the assessee and documents considered thereon and there being no further

The first notice dated 31/03/2021 was followed by notice u/s 142(1) of the Act dated 07/07/2021 with the following questionnaire:- “1. Copy of ROI and certified copies of the following documents along with all its schedules. (i) Computation of total income with notes to accounts attached thereto. (ii) Annual report including Balance sheet, P&L & Audit report, if any. (iii) Form No. 3CEB, if applicable. (iv) Copy of 26AS and reconciliation.

Detailed and descriptive note on the nature of activity conducted during your operations in India along with a detailed note on the modus operandi.

Submit a detailed note on the nature of income and justify the exemption claimed if any in the return of income.

Details along with quantum of all income earned through your operations in India during the year under consideration, whether offered to tax or not.

Copy of approval /permission granted by the Reserve Bank of India / SEBI and other regulatory bodies to you to operate in India.

Copy of Tax Residency certificate.

Submit copy of all the contract agreements and other agreements signed with Indian parties with respect to your operations in India.

Reconciliation statement of the income returned with the income corresponding to credit of TDS claimed as per the return of income and in accordance with the AIR. You are also requested to submit copies of all TDS certificates for verification of the claim of credit and 26AS.

The complete details of inter-office adjustments showing the gross adjustments and the net adjustments.

Any other document on which you may wish to rely in support of Return of Income.

Recurring Issues: With reference to the additions/disallowances made in the earlier assessment orders and appeal status, please give details of similar claims liable for disallowances on similar grounds. In case the issues have been decided in your favor at any stage of appeal, relevant details may also be submitted. Please provide copies of the last three (03) assessment orders.”

The assessee replied as under:- [This space has been left blank intentionally. P.T.O] INCOME TAX APPELLATE TRIBUNAL & the impugned assessment orders as not only erroneous but also prejudicial to the interest of the revenue.

Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules, 1963. 5. At the concession of the representatives, we have heard the appeals for AY 2019-20 and are considering the facts for AY 2019-20 as the facts for AY 2020-21 are mutatis mutandis the same.

The assessee filed its return of income on 26/09/2019 declaring total income of Rs. Nil. The return was selected for complete scrutiny through CASS with following reasons:- a) The assessee has claimed substantial refund out of TDS u/s 195. b) The assessee has claimed substantial amount of refund. c) The assessee has claimed large refund claimed out of overall TDS.

Statutory notices were issued and served upon the assessee and subsequently, after due verification of submissions made by the assessee and documents available, the income of the assessee was assessed at Nil and the exemption claimed as per DTAA amounting to Rs. 33,46,06,627/- was allowed.

Since the assessment order only refers to the submissions made by the assessee and documents considered thereon and there being no further

The first notice dated 31/03/2021 was followed by notice u/s 142(1) of the Act dated 07/07/2021 with the following questionnaire:- INCOME TAX APPELLATE TRIBUNAL & “1. Copy of ROI and certified copies of the following documents along with all its schedules. (i) Computation of total income with notes to accounts attached thereto. (ii) Annual report including Balance sheet, P&L & Audit report, if any. (iii) Form No. 3CEB, if applicable. (iv) Copy of 26AS and reconciliation.

Detailed and descriptive note on the nature of activity conducted during your operations in India along with a detailed note on the modus operandi.

Submit a detailed note on the nature of income and justify the exemption claimed if any in the return of income.

Details along with quantum of all income earned through your operations in India during the year under consideration, whether offered to tax or not.

Copy of approval /permission granted by the Reserve Bank of India / SEBI and other regulatory bodies to you to operate in India.

Copy of Tax Residency certificate.

Submit copy of all the contract agreements and other agreements signed with Indian parties with respect to your operations in India.

Reconciliation statement of the income returned with the income corresponding to credit of TDS claimed as per the return of income and in accordance with the AIR. You are also requested to submit copies of all TDS certificates for verification of the claim of credit and 26AS.

The complete details of inter-office adjustments showing the gross adjustments and the net adjustments.

Any other document on which you may wish to rely in support of Return of Income.

Recurring Issues: With reference to the additions/disallowances made in the earlier assessment orders and appeal status, please give details of similar claims liable for disallowances on similar grounds. In case the issues have been decided in your favor at any stage of appeal, relevant details may also be submitted. Please provide copies of the last three (03) assessment orders.”

The assessee replied as under:- {This space has been left blank intentionally. P.T.O} INCOME TAX APPELLATE TRIBUNAL & EY Building a better working world Mumbai-400028, India 24 July 2021 The Deputy Commissioner of Income Tax International Tax Circle - 3(2)(2), 16th floor, Air India, Nariman Point. Mumbai - 400021. Dear Madam, Re: MMA Offshore Asia Vessel Operations Pte Ltd ('MMA') PAN: AACCJ8004E

Submit a detailed note on the nature of income and justify the exemption claimed if any in the return of income As stated in Point 2 above, MMASV has entered into time charter agreements with BGEPIL and McDermott. The details of income earned by MMASV from the both the contracts are forming part of Annexure 2. MMAV is a tax resident of Singapore for the period 1 April 2018 to 31 March 2019 (copy of Tax Residency Certificate covering year under consideration attached as Annexure 5), therefore, as per section 90(2) of the Act, it would be governed by the provisions of the India-Singapore tax treaty or the Act whichever is more beneficial. We have discussed below the taxability of revenues of MMAV under the Act as well as tax treaty: Taxability under the Act Section 44BB of the Act is a special provision for taxation of non-residents engaged in the business of providing services in the oil and gas sector. As the scope of work pursuant to the contract is integral to the prospecting and extraction of oil and gas, the taxability of the revenues should be governed under section 44BB of the Act. The relevant extract of the section is reproduced below: