R.M.Mehta, - (1.) THE following point of difference has been referred to me under Section 255(4) of the I.T. Act 1961:- "Whether on facts and in law, the mobilization charges, received by the assessee outside India, attributable to the transportation of rigs outside territorial waters of India are chargeable to tax under Section 44BB read with Section 5(2) of the Income-tax Act, 1961?"
(2.) The facts pertaining to the point at issue are well set out in the order passed by the ld. Judicial Member and in respect of which the ld. Accountant Member has not expressed any dissent but for purposes of making the present order a self-contained one, I summarize these as under. The assessee in this case is non-resident company having its Registered Office at Milano Corso Venezia. It carried on the business pertaining to the exploration of mineral oils etc. In the year 1984, the company entered into an agreement with ONGC for offering one Land Drilling Rig on charter basis for exploratory drilling the Krishna-Godavari Basin area. Under the agreement between the parties the assessee was to receive a fixed sum of US $ 9,50,000 towards mobilization and transportation of the drilling rig from Sharjah, UAE to the Vishakapatnam port. Before the Assessing Officer, the assessee claimed that the amount received was in the nature of reimbursement charges and not taxable in view of the provisions of Section 5 read with Section 9. This contention of the assessee was rejected by the Assessing Officer as in his opinion Section 44AB covered all payments whether these be reimbursement or these were payments of any other nature. In view of this the sum of US $ 9,50,000 was brought to tax under Section 44BB.
(3.) THE matter was carried in appeal before the CIT(A) and at which stage reliance on behalf of the Revenue was placed on the decision of the Delhi Bench of the Tribunal in the case of ONGC as agent of M/s. Nippon Kokan KK and Ors. in TA No. 3413/Del/88 dated 20th June, 1990 wherein according to the Department the view had been taken that mobilization and demobilization charges were taxable under Section 44BB. Following the aforesaid decision of the Tribunal, the CIT(A) confirmed the view taken by the Assessing Officer.;