INCOME TAX APPELLATE TRIBUNAL
Cgg Marine Sas
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R.S.Syal, Member (A) -
(1.) THIS appeal by the assessee is directed against the order passed by the AO u/s. 147/143(3)/144C(13) of the Income -tax Act, 1961 (hereinafter also called 'the Act') on 30.11.2012 in relation to the assessment year 2005 -06.
(2.) THE first ground is against initiation of the assessment. Briefly stated, the facts of the case are that the assessee filed its return declaring income under the head 'Profits and gains of business or profession' at Rs. 21,22,18,595/ -. The AO issued notice u/s. 143(2), inter alia, requiring the furnishing of copies of Contracts with ONGC, which led to the earning of the above business income. The assessee furnished copies of such Contracts along with details of its employees/personnel who came to India in connection with the execution of the contract. Here, it is relevant to mention that the assessee received US $ 4,65,428/ - from ONGC on account of mobilization fee in terms of Contracts for hire of vessel for 3D Seismic Data Acquisition. The said amount was included u/s. 44BB of the Act for the purposes of computing gross receipts. However, it was mentioned in the return that the assessee reserved its right to revise the computation of gross receipts to the extent of the amounts received on account of mobilization fee attributable to the activity undertaken in India. That is how, it was claimed during the course of the assessment proceedings that the receipt from mobilization or demobilization be taxed only to such extent as could be reasonably attributed to the operations carried out in India. In support of this contention, the assessee relied on a Third Member order passed by the Delhi Bench of the Tribunal in the case of Saipem SPA vs. DCIT : (2004) 88 ITD 213 (Del)(TM). The AO passed order u/s. 143(3) of the Act on 05.09.2006 after fully considering and discussing the two Contracts with ONGC. In that order, he accepted that the assessee was engaged in the business of providing equipments and services or facilities in connection with prospecting for extraction or production of mineral oils and as such the revenue received in pursuance of the aforesaid Contracts was taxable u/s. 44BB of the Act. He, further held that the entire mobilization fee constituting gross receipts u/s. 44BB included by the assessee in its return of income was correct and hence the claim that mobilization fee attributable to mobilization activity undertaken outside India should not be taxed in India, was not acceptable. That is how, the AO completed the original assessment on the basis of gross revenues from ONGC at Rs. 212,21,85,946 and computed income at Rs. 21,22,18,594 u/s. 44BB of the Act @ 10% of such gross receipts. Thereafter, a notice u/s. 148 was issued on the ground that section 44BB was not applicable to the facts of the instant case. It was opined that the income of the assessee was required to be assessed as 'fees for technical services'. In reaching this prima facie belief, the AO relied on the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. ONGC as agent of M/s. Foramer France, Dehradun : (2008) 299 ITR 438 (Uttaranchal) and the amendment made to section 44DA through the Finance Bill, 2010. The assessee raised objections against the initiation of reassessment proceedings but without success. Consequently, the draft assessment order was passed. The assessee approached the Dispute Resolution Panel (DRP), inter alia, against the reopening of assessment proceedings. However, it failed to convince the DRP on its line of reasoning for declaring the initiation of reassessment as bad in law. The Assessing Officer passed the final order. That is how, the assessee is now before us against the initiation of reassessment proceedings through ground No. 1 of its appeal. We have heard the rival submissions and perused the relevant material on record. The ld. AR argued that the AO embarked upon the reassessment by changing his opinion on the question of taxability of receipts from ONGC pursuant to contracts, copies of which were placed before him and thoroughly examined during the original assessment proceedings. Now, terming the revenue of the assessee as 'fees for technical services' covered u/s. 9(1)(vii) of the Act, in the opinion of the ld. AR, amounted to change of opinion, which was not sustainable. To buttress his contention, the ld. AR relied on the judgment of the Hon'ble Supreme Court in CIT Vs. Kelvinator of India Ltd. : (2010) 320 ITR 561 (SC). Per contra, the ld. DR stated that the income chargeable to tax escaped assessment in the original assessment order passed u/s. 143(3) by taxing such revenue u/s. 44BB(1) of the Act whereas it ought to have been considered as 'fees for technical services' as per the judgment of the Hon'ble jurisdictional High Court in the case of ONGC as agent of Foramer France (supra) read with the amendment made to section 44DA liable to tax under the later provision.
(3.) IT is evident that the AO initiated reassessment by forming belief about the escapement of income due to its earlier erroneous taxation u/s. 44BB instead of u/s. 44DA on two factors, viz., the judgment of the Hon'ble jurisdictional High Court in ONGC as agent of M/s. Foramer France (supra) and the amendment proposed to section 44DA through the Finance Bill, 2010. We will examine both the factors, one by one.
A. Reassessment on The Basis of Judgment in ONGC;
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