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 Whirlpool of India Ltd., Plot No. 40, Whirlpool House, Sector-44, Gurgaon-122002, Haryana vs. Asstt. Commissioner of Income Tax, Circle-1, LTU, Delhi

Asstt. Director of Income Tax, International Taxation, 13ASubhash Road, Aayakar Bhawan Dehradun-248001 Vs. M/s Global Geophysical Services Ltd., C/o Shilpi Agarwal & Co., B-18, Lower Ground Floor, Express Green Towers, Sector-44, Noida-201304
December, 22nd 2014
             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,
(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)
              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

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

                                            ITA No.3348/Del/2013 & CO 191/Del/2014

     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
     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

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

                                            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
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 4 ITA No.3348/Del/2013 & CO 191/Del/2014 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 5 ITA No.3348/Del/2013 & CO 191/Del/2014 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. 6 ITA No.3348/Del/2013 & CO 191/Del/2014 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 7 ITA No.3348/Del/2013 & CO 191/Del/2014 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 8 ITA No.3348/Del/2013 & CO 191/Del/2014 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 9 ITA No.3348/Del/2013 & CO 191/Del/2014 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 10 ITA No.3348/Del/2013 & CO 191/Del/2014 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 11 ITA No.3348/Del/2013 & CO 191/Del/2014 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. 12 ITA No.3348/Del/2013 & CO 191/Del/2014 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. 13
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