IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "H" NEW DELHI
BEFORE SHRI H.S.SIDHU, J.M. AND
SHRI J.SUDHAKAR REDDY, AM
ITA No: 419/Del/2012
AY : - 2008-09
Weatherford Oil Tools ME Ltd. Vs. ADIT (International Taxation)
C/o Nangia & Co. CAs Dehradun
Suite 4A, Plaza M-6, Jasola
New Delhi
PAN: AAACW 1524 G
(Appellant) (Respondent)
Appellant by : S/Shri Amit Arora, Suraj Nangia, CAs
Respondent by: Sh. Sanjeev Sharma, CIT, D.R.
ORDER
PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
This appeal is filed by the assessee directed against the order of the
AO passed u/s 143 r.w.s. 144C(13) of the Act on the following grounds.
"Based upon the facts of the case, the assessee respectfully submits the
following grounds which are without prejudice to and independent of each
other:
Addition qua break up of revenue against consolidated contract into
equipment rental and services:
1. That the AO erred on facts and in law in holding that the provision of
equipment, operating personnel and consumables under consolidated
contracts were independent of each other;
2. That the AO erred on facts and in law in holding that the contractual
revenues were to be bifurcated into equipment rental', `service revenue'
and consumables',
3. That the AO erred on facts and in law in not accepting that the contracts
executed by the assessee were in the nature of `mining or like projects'
as referred to in the Explanation to section 9(1)(vii) of the IT Act, 1961.
ITA No. 419/Del/2012
AY 2008-09
Weatherford Oil Tools ME Ltd., New Delhi
Addition qua services in connection with exploration/prospecting/extraction of
mineral oil:
4. That the AO erred on facts and in law in completing assessment u/s
144C/143(3) of the Act at an income of Rs.989,128,960/- as against the
income of Rs.186,959,080/- returned by the appellant.
5. That the AO erred on facts and in law in assessing revenue of
Rs.116,554,532/- arising from services rendered by the appellant to PSC
partners in connection with exploration/prospecting/extraction of mineral oil
u/s 9(1)(vii) of the Act as opposed to s.44BB of the Act.
6. That the AO erred on facts and in law in assessing revenue of Rs.822,062
arising from services rendered by the appellant to non-PSC partners in
connection with exploration/prospecting/extraction of mineral oil u/s 9(1)(vii)
of the Act as opposed to s.44BB of the Act.
Addition qua hiring of equipment used in connection with
exploration/prospecting/extraction of mineral oil
7. That the AO erred on facts and in law in assessing revenue of
Rs.765,635,785/- arising from letting out equipment, sued in connection with
the exploration/prospecting/extraction of mineral oil u/s 9(1)(vi) of the Act as
opposed to s.44BB of the Act.
Addition qua income from alleged supply of goods
8. That the AO erred on facts and in law in holding that income of
Rs.8,287,487/- arising from supply of consumables was in the nature of `fees
for technical services'/ `royalty' chargeable to tax applying tax rate of 10%, as
opposed to s.44BB of the Act.
Initiation of penalty proceedings
9. That the AO has erred on facts and in law in levying penalty u/s 271B
especially when the entire receipts of the assessee was liable to be
chargeable to tax u/s 44BB and the assessee was neither required to
maintain books of accounts nor get the same audited.
Levy of interest
10. That the Ld.AO/DRP erred on facts and in law in levying interest u/s
234B of the Act especially when there was no liability on the assessee to pay
advance tax u/s 209(1)(d) of the Income Tax Act, 1961.
11. That the Ld.AO/DRP erred on facts and in law in not following the
decision of the Hon'ble Jurisdictional High Court of Uttarakhand in the case of
DIT vs. Maersk Co.Ltd. 240 CTR 218 wherein the Hon'ble High Court held that
interest u/s 234B was not chargeable where the entire income is subject to
tax deduction at source."
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ITA No. 419/Del/2012
AY 2008-09
Weatherford Oil Tools ME Ltd., New Delhi
2. Both the parties admit that the case is covered in favour of the
assessee and against the Revenue by the decision of the Co-Ordinate Bench
of the Tribunal in ITA no.6391/Del/2013 and C.O.no. 39/Del/2013 for the
AY 2009-10 of Delhi "H" Bench of the Tribunal vide order dt. 5th
September,2014, wherein the Tribunal has followed the order of another
Coordinate Bench of the Tribunal in the assessee 's own case for the AY
2007-08. At para 9 the Tribunal observed as follows.
"9. In ITA 5290/Del/2010 which is the appeal in the case of the assessee
for the Assessment Year 2007-08, the Tribunal at para 227 at page 95 of the
common order passed in a batch of cases held as follows.
"227. Ground nos. 1 to 3 relate to addition qua equipment rental, service
charges and sale of consumables and services rendered by the assessee in
connection with exploration/prospecting/extraction of mineral oil. For the
detailed reasons given in ITA no.5283/Del/2010, we hold that the income
arising on account of royalty/FTS, letting out of equipment etc. was to be
taxed u/s 44BB. Adopting the same reasons, we allow ground nos. 1 to 3 in
favour of the assessee."
10. Consistent with the view taken therein, we uphold the order of the First
Appellate authority and dismiss this appeal by the Revenue."
3. The Ld.CIT, D.R. Shri Sanjeev Sharma,drew the attention of the Bench
to the judgement of Hon'ble Delhi High Court in the case of PGS Geophysical
AS vs. ADIT in ITA no.612/2012 jdugement dt. 9.7.2014 wherein at para 20
it is held as follows.
"20. Having stated the above, we must clarify that the income falling within
s.115A(1)(b) of the Act which does not fall within the four corners of section
44DA(1) of the Act would also not be taxable u/s 44BB(1) of the Act, the same
is excluded. Accordingly, the AO would specifically have to determine (a)
whether the assessee had a PE in India during the relevant period; and (b) if
so, whether the contracts entered into by the appellant with BG and RIL were
effectively connection with the appellant's PE in India. It is only, if the AO
finds that the said two conditions were satisfied, that the income of the
assessee would be computed u/s 44BB(1) of the Act. However, if such
conditions are not satisfied then the income tax payable by the appellant
would be computed in accordance with s.115A(1)(b) of the Act."
4. Shri Amit Arora, the Ld.Counsel for the assessee pointed out that the
AO in the draft assessment order at para 2 has given a finding that the
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ITA No. 419/Del/2012
AY 2008-09
Weatherford Oil Tools ME Ltd., New Delhi
assessee is having a P/E in India and this has been admitted by the
assessee in the return of income itself.
5. In view of the fact that the assessee had a P/E in India and as the
income in question is effectively connected with the assessee's P.E. in India,
the income should be considered u/s 44BB(1) of the Act.
6. In the result ground nos. 1 to 8 are allowed.
7. Ground no.9 is premature and is dismissed as such.
8. Ground no.10 is consequential in nature.
9. In the result the appeal of the assessee is allowed in part.
Order pronounced in the Open Court on 11th November,2014.
Sd/- Sd/-
(H.S.SIDHU) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 11th November, ,2014
*manga
Copy of the Order forwarded to:
1. Appellant;
2.Respondent;
3.CIT;
4.CIT(A);
5.DR;
6.Guard File
By Order
Asst. Registrar
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