IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: `C' : NEW DELHI
Before Sh. G. D. Agrawal, Vice President And Sh. H.S. Sidhu, JM
ITA No. 3348/Del/2013 : Asstt. Year : 2010-11
Asstt. Director of Income Tax, Vs M/s Global Geophysical
International Taxation, 13A- Services Ltd., C/o Shilpi
Subhash Road, Aayakar Bhawan Agarwal & Co., B-18, Lower
Dehradun-248001 Ground Floor, Express Green
Towers, Sector-44,
Noida-201304
(APPELLANT) (RESPONDENT)
CO No. 191/Del/2014 : Asstt. Year : 2010-11
M/s Global Geophysical Vs Deputy Director of Income Tax,
Services Ltd., C/o TASS International Taxation, 13A-
Advisors LLP, 62, Lower Subhash Road, Aayakar Bhawan
Ground Floor, Pocket-2, Jasola Dehradun-248001
New Delhi-25
(APPELLANT) (RESPONDENT)
PAN No. AACCG9211G
Assessee by : Sh. G. C. Srivastav, Adv. &
Sh. Saurabh Srivastav, FCA
Revenue by : Sh. Vikram Sahay, Sr. DR
Dt. of Hearing : 16.12.2014 Dt. of Pronouncement: 19.12.2014
ORDER
Per G. D. Agrawal, VP:
This appeal by the Revenue and Cross Objection by the assessee
are directed against the order of learned CIT(A)-II, Dehradun dated
20.03.2013 for the assessment year 2010-11.
ITA No.3348/Del/2013 & CO 191/Del/2014
2. The Cross Objection filed by the assessee is delayed by 67 days.
The assessee has filed the application for condonation of delay which is
supported by the affidavit of Richard C. White, Director of the assessee
company. In the delay condonation application, it is pointed out that the
assessee is a foreign company having its office in United States of
America. The assessee does not have any running contracts/projects in
India and therefore does not have any office or representative in India.
The notice of the appeal filed by the Revenue was served upon the
assessee's erstwhile consultants (M/s Shilpi Agarwal & Co., Chartered
Accountants) who forwarded the same to the assessee. Thereafter the
assessee directed him to draft the Cross Objection which was again sent
by him for signature of the Director of the assessee who is in United
States. In all this process there was a delay of 64 days which was
unintentional and therefore it may be dondoned. The ld. DR on the other
hand, objected to the condonation of delay.
3. After considering the arguments of both the sides and the facts of
the case we are of the opinion that delay of filing of the Cross Objection
was due to sufficient cause. We, therefore, condon the delay in filing of
Cross Objection and admit the Cross Objection for hearing on merits.
4. In this appeal of the Revenue following grounds are raised:
"1. Whether on the facts and circumstances of the case, the
CIT(A) has erred in ignoring the fact that the adoption of
negative value could have resulted in an income lower than the
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returned income, which is contrary to the view taken by Apex
Court in the case of M/s Goetze Reported in 284 ITR 323 (SC).
2. Whether on the facts and circumstances of the case, the
CIT(A) has erred in ignoring the fact that by giving benefit to
adjust negative figure to the extent of positive figure will allow
reducing the revenues actually receiving in Cairn Energy
Contract.
3. Whether on the facts and circumstances of the case, the
CIT(A) has erred in ignoring the facts that the assessee has
claimed TDS on the gross receipts declared by the assessee in
revised computation.
4. Whether on the facts and circumstances of the case, the
CIT(A) has erred in ignoring the specific finding of the AO that
gross receipts constitutes receipts from two contracts, i.e.,
Cairn Energy Contract & ONGC Contract, on which income is
computed by the AO and that the income has been computed as
per the provision of Sec. 44BB of the I.T. Act in which deemed
profit rate of 10% is adopted on gross contractual revenues and
thus gross revenues earned by NRC in respect of Cairn Energy
Contract cannot be reduced to allow negative effect as directed
by CIT(A).
5. The appellant prays for leave to add, amend, modify or alter
any grounds of appeal at the time or before the hearing of the
appeal."
5. While in the Cross Objection the grounds raised by the assessee
reads as under:
"1. On facts and circumstances of the case Honorable
Commissioner of Income tax(Appeals) (hereinafter referred to
as CIT(A)) has erred in confirming the action of the Ld.
Assessing Officer in not accepting revised computation of
income for ONGC contract though he considered revised
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ITA No.3348/Del/2013 & CO 191/Del/2014
computation of income for Cairn contract thereby adopting
contrary views for different contracts. While doing so, the Ld.
CIT(A) has also failed to consider Circular No. 14(XL-35)
dated 11th April 1955 issued by the Central Board of Direct
Taxes wherein the assessee is entitled to make a claim which it
may have omitted to claim at the time of filing of its return of
income due to any reason.
2. Your appellant craves to leave to add, to amend, to delete
and/or to modify all or any of the foregoing ground(s) of
appeal."
6. The facts of the case are that the assessee is a non-resident
company which derives income from providing of services/facilities in
connection with the extraction or production of mineral oils. During the
year under consideration the assessee company had executed the
contract with Cairn Energy and ONGC. In the computation of income
the gross receipts offered by the assessee from this 2 contracts are as
under:
Cairn Energy Contract - Rs. 1,11,45,78,365/-
ONGC Contract - Rs. 1,53,16,71,223/-
Total - Rs. 2,64,62,49,589/-
7. During the year under consideration the assessee claimed vide
letter dated 23.10.2012 and 02.11.2012 the modification of the receipts
from these two companies. The relevant facts and the finding of the AO
in this regard reads as under:
"6. During the course of assessment proceedings vide reply
dated 23.10.2012 filed on 02.11.2012, AR of the assessee has
requested for considering revised computation of income
wherein assessee has requested for considering revenues in
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respect of ONGC contract as 1,43,85,87,412/- as against Rs.
1,53,16,71,223/- under the claim that there were certain
liquidated damages amount to INR 9,30,83,811/- which were
inadvertently not considered by the assessee while preparing
tax return. In respect of Cairn Energy India contract it has
been stated that gross revenues were reported less on account
of exchange rate difference and should have been taken at Rs.
1,17,36,58,416/-. Thus, according to the assessee gross receipts
under both the contract, should have been Rs. 2,61,22,44,824/-
as against Rs. 2,64,62,49,589/- as filed as per computation filed
with the return. The assessee's contention of acceptance of
income as per their revise computation filed by them during the
course of assessment proceedings have been considered. The
same is not found to be acceptable. The receipts on account of
contract with Cairn Energy India have been found to be
reported less when compared to the figures disclosed by the
Cairn Energy India on TDS verification, against the TDS
reported and claimed by the assessee. Therefore, gross receipts
from Cairn Energy India contract is being taken at Rs.
1,17,36,58,416/-. The assessee's claim of revision of income in
respect of ONGC contract to take a lesser figure is not
acceptable as the assessee is trying to file claim for revision of
income during the course of assessment proceedings before the
AO which is not allowable as the assessee should have followed
the provision of I.T. Act in reference to filing the Revised
Returns u/s 139(4) of I.T. Act. This is in accordance with the
principle laid by the Hon'ble Supreme Court in the case of
Goetze (India) Ltd. Vs CIT (2006) 284 ITR 323 (SC) and such a
claim of the assessee would be contrary to the ratio laid down
by the Hon'ble Supreme Court in this case."
8. From the above, it is evident that during the assessment
proceedings the assessee requested for reduction of the Revenue from
ONGC from Rs. 153.16 crores to Rs. 143.85 crores. At the same time, it
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enhanced the receipts from Cairn Energy from Rs. 111.45 crores to Rs.
117.36 crores. The Assessing Officer accepted the enhanced receipt
from Cairn Energy India but the receipt from ONGC was taken as
disclosed in the return of income. Thus, as against the receipts offered in
the return of income at Rs. 264.62 crores. The Assessing Officer adopted
the receipts at Rs. 270.53 crores and applied Sec. 44BB thereon. The
assessee filed the appeal before the CIT(A) who concluded as under:
"3.2 The findings of the Ld. AO and the averments of the Ld.
AR have been considered. It is seen that the Appellant wanted
to revise his ITR through a letter and not through a revised
return. Thus the Ld. AO was correct in applying the case of
Goetze (supra) in denying him relief which would have resulted
in a lower taxable income than what was mentioned in the ITR.
The Hon'ble Apex Court's decision is unambiguously worded
and the Ld. AO had no power to do what the Appellant had
wanted him to do. To this extent this Appellate Authority finds it
difficult to be persuaded otherwise by the Ld. AR. However,
what is clear is that while the AO adopted the positive figure
(which would enhance the income) he ignored the negative
figure (which would bring the taxable income below the
returned income). In the interests of justice the benefit of
negative figure must be given to the extent of the positive figure
so that the addition made to the returned income would be
entirely wiped out. Thus the Ld. AO is directed to compute the
income tax payable on the income returned by the assessee."
9. The Revenue aggrieved with the order of the CIT(A) is in appeal
before us while the assessee also aggrieved with the order of the CIT(A)
is in Cross Objection before us.
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10. At the time of hearing before us it is submitted by the ld. Counsel
that the decision of Hon'ble Apex Court in the case of Goetze India Ltd.
would have no application to the case of the assessee because in the case
under appeal before us. The assessee is not making any fresh claim but
the assessee is only correcting the figure of receipts from Cairn Energy
and ONGC. He further submitted that it is the duty of the Assessing
Officer to determine the income correctly. In this regard, he referred to
Circular No. 14(XL-35) dated 11.04.1955. He also referred to decision
of ITAT Mumbai Bench in the case of Chicago Pneumatic India Ltd. Vs
DCIT 15 SOT 252 wherein the ITAT has considered the decision of
Hon'ble Apex Court in Goetze India as well as above circular of the
CBDT. He also referred to the decision of Hon'ble Jurisdictional High
Court in the case of Jai Parabolic Springs Ltd. Vs CIT 172 Taxman 258.
He, therefore, submitted that the Assessing Officer may be directed to
adopt the correct figure of receipts from ONGC as well.
11. The ld. DR on the other hand, relied upon the order of the
Assessing Officer. He stated that the Hon'ble Apex Court has clearly
laid down that there is no provision under the Income Tax Act to make
amendment in the return without filing a revised return. He, therefore,
stated that the assessee wanted to revise the figure of receipts from Cairn
Energy and ONGC which in effect amounts to revising of the return
which is not permissible in law. He further submitted that the figure of
correct receipts from Cairn Energy was taken by the Assessing Officer
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as per TDS certificate. He stated that the CIT(A) was not justified in
observing that the AO adopted the positive figure which would enhance
income and ignore the negative figure which would bring the taxable
income below the return income. He stated that the Assessing Officer
adopted the correct figure of receipts from Cairn Energy as per TDS
certificate. The ld. DR further contended that the modification of figure
of receipts from ONGC is not supported by any documentary evidence
therefore if in Principle ITAT arrived at the conclusion that the decision
of Goetze India Ltd. (supra) is not applicable than the matter would be
set aside to the file of AO for verification of the correct receipts from
ONGC.
12. We have carefully considered the arguments and perused the
material before us. We find that the Mumbai Bench of ITAT in the case
of Chicago Pneumatic India Ltd. (supra) has considered the applicability
of the decision of Hon'ble Apex Court in the case of Goetze India Ltd.
(supra) and Circular No. 14(SL-35) dated 11.04.1955 and held as under:
"In this Circular, the Board has recognised the fact that
responsibility for claiming refunds and reliefs rests with the
assessee. AS IMPOSED BY LAW even then the Board has
directed the officers to draw the attention of the assessees in
respect of any refunds or reliefs to which they are eligible,
which they have not claimed for some reason or the other. The
Board has also given few examples in this regard and has
specifically clarified that, these examples are not exhaustive.
Further, the Board also issued Circular F. No. 81/27/65-IT(B),
dated 18th May, 1965 defining the duties of P.R.Os. in
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providing assistance to the public . In this circular, the Board
has also advised the P.R.O. to visit the Government/commercial
establishments to provide them assistance in filing correct
returns and making eligible claims. These Circulars issued by
the Board almost 4-5 decades before cast a duty on the
assessing authorities to collect only the legitimate tax. Starting
from late 1980s, the Government has focussed as voluntary
compliance by the assessees and, therefore, Government has
reduced the number cases selected for compulsory scrutiny and
has also reduced the tax rates. This policy of the Government
has resulted into higher tax revenues and simplification of laws.
It is a settled position that the Circulars issued by the Board
are binding on the subordinate income-tax authorities and if
C.B.D.T. issues directions which arc beneficial to the assessees
although the same may not be directly in consonance with the
provisions of law, even then these instructions have to be given
effect and adhered to by the concerned authorities. Thus, there
is a strong case for reciprocity to be shown by the revenue
Authorities while completing assessments and to avoid
administrative hardships to the assessee. As far as the decision
of the Hon'ble Apex court in the case of Goetze (India) Ltd.
(supra) is concerned, there is no dispute that the same is
binding on everybody concerned. In the said decision, the
Hon'ble Apex court has also ruled that Appellate Tribunal may
adjudicate the issue if a claim is made by any party subject to
satisfaction of prescribed rules, hence, even the Hon'ble Apex
court has not barred the assessee raise it's legal claim before
Appellate Authorities. However, such process would result into
undue hardships, delay and multiplicity of proceedings. The
Hon'ble Apex Court, on numerous occasions has laid the
proposition that the Assessing Authorities are bound to
compute the correct income only and collect only legitimate
tax, hence, merely for a procedural lapse or technicalities, in
our opinion, the assessee should not be compelled to pay more
tax than what is due from him. Therefore, this situation has
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necessarily to be looked upon from the angle of duties of
Assessing Authorities as stated earlier, CBDT is the Apex body
for tax administration and it can also issue directions which are
for the benefit of the assessee's though such directions may not
be inconsonance with the provisions of law, hence, if a circular
is now issued directing the assessing authorities to grant
reliefs/ refunds while completing the assessment proceedings,
even though such circular may be at variance with the law, as
pronounced by the Hon'ble Supreme Court, but the same would
be binding on the subordinate income-tax authorities. In our
opinion, therefore, circulars of same nature which have been
already issued would not become irrelevant or can be ignored.
Admittedly, the circular issued in 1995 has not been withdrawn,
hence, it has got binding force on the subordinate authorities
even as on date. Accordingly, we hold that the assessing officer
is bound to assess the correct income and for this purpose, the
assessing officer may grant reliefs/refunds suo motu or can do
so on being pointed out by the assessee in the course of
assessment proceedings for which assessee has not filed revised
return, although, as per law, the assessee is required to file the
revised return. Having stated so, in our view, the learned
Commissioner (Appeals), having co-terminus powers with the
powers of assessing officer and the fact that appellate
proceedings are the continuation of original proceedings,
should have entertained the claim of assessee and allowed if
other conditions of the provisions of the law were satisfied. In
this view of the matter, we accept both the grounds of the
assessee and direct the learned Commissioner (Appeals) to
consider the claim of the assessee at the revised figures on
merits and decide the same according to the provisions of
Sections 80HH and 80-I of the Act after hearing the assessee.
Thus, this ground of the assessee stands accepted."
13. We entirely agree with the above observation of the ITAT Mumbai
Bench. It is the duty of the Assessing Officer to determine the correct
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tax liability of the assessee. That during the assessment proceedings the
assessee did not make any new claim but only modified the figure of
receipts from Cairn Energy and ONGC. The Assessing Officer accepted
the modification of the receipts from Cairn Energy which was upward
revision but did not accept the modification of receipts from ONGC
which was downward revision. In our opinion the correct determination
of receipts is a part of the duty of the Assessing Officer and he cannot
refuse to determine the correct receipts from ONGC. The Hon'ble
Jurisdictional High Court in the case of Jai Parabolic Springs Ltd.
(supra) held that the decision of the Hon'ble Apex Court in the case of
Goetze India Ltd. did not impinge on the power of the Tribunal. The
relevant observation their Lords reads as under:
"17. In Goetze (India) Ltd. V. CIT (2006) 284 ITR 323 (SC),
wherein deduction claimed by way of a letter before Assessing
Officer, was disallowed on the ground that there was no
provision under the Act to make amendment in the return
without filing a revised return. Appeal to the Supreme Court, as
the decision was upheld by the Tribunal and the High Court,
was dismissed making clear that the decision was limited to the
power of assessing authority to entertain claim for deduction
otherwise than by revised return, and did not impinge on the
power of Tribunal.
18. Further, revenue expenditure which is incurred wholly and
exclusively for the purpose of business must be allowed in its
entirety in the year in which it is incurred. It cannot be spread
over a number of years even if the assessee has written if off in
his books over a period of years. (Reliance can be placed on
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Madras Industrial Investment Corpn. Ltd. V. CIT (1997) 225
ITR 802 (SC).
19. In view of the above discussion, it is very clear that there is
no prohibition on the powers of the Tribunal to entertain an
additional ground which according to the Tribunal arises in the
matter and for the just decision of the case. Therefore, there is
no infirmity in the order of the Tribunal."
14. Respectfully following the decision of Hon'ble Jurisdictional High
Court as well as of the ITAT Mumbai Bench, we are of the opinion that
the assessee's correct receipts from the contract of Cairn Energy as well
as ONGC needs to be determined and thereafter Section 44BB should be
applied on the correct receipts. So far as the receipts from Cairn Energy
is concerned, now there remains no dispute. The only dispute remains is
with regard to the receipts from ONGC which was originally disclosed
by the assessee as Rs.153.13 crores which was sought to be reduced to
Rs.143.85 crores. The Assessing Officer rejected the assessee's claim on
technical ground and did not go into the question that what was the
correct receipts of the assessee from ONGC. We, therefore, set aside the
order of the authorities below on this limited point and direct the AO to
determine the correct receipts from ONGC in the year under
consideration and thereafter apply Section 44BB. We also direct the
assessee to produce necessary evidences with regard to correct receipts
before the Assessing Officer. Needless to mention that the AO will
allow adequate opportunity of being heard and producing necessary
evidences to the assessee.
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14. In the result, the Revenue's appeal as well as assessee's Cross
Objections, both are deemed to be allowed for statistical purposes.
Order pronounced in the open Court on 19/12/2014.
Sd/- Sd/-
(H. S. Sidhu) (G. D. Agrawal)
JUDICIAL MEMBER VICE PRESIDENT
Dated: 19/12/2014
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
Date Initial
1. Draft dictated on 16.12.2014 PS
2. Draft placed before author 17.12.2014 PS
3. Draft proposed & placed before the JM/AM
second member
4. Draft discussed/approved by Second JM/AM
Member.
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head
Clerk.
10. Date of dispatch of Order.
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