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Income Tax Appellate Tribunal - Delhi

Shelf Drilling International ... vs Jcit (International Taxation), ... on 15 March, 2018

                                    1                       ITA NO. 503/Del/2016



                 IN THE INCOME TAX APPELLATE TRIBUNAL
                      DELHI BENCH: 'C' NEW DELHI

                BEFORE SHRI G. D. AGRAWAL, PRESIDENT
                                    AND
                 MS SUCHITRA KAMBLE, JUDICIAL MEMBER

                   I.T.A .No. 503/DEL/2016 (A.Y 2011-12)

     Shelf Drilling International Inc. Vs       JCIT ((International Taxation)
     (Formerly known as Sedco Forex             Income Tax Office
     International Drilling Inc.)               Subhash Road
     C/o. Nangia & Co.                          Dehradun
     Suite-4A, Plaza M-6,
     Jasola, New Delhi
     AACCS9208D
     (APPELLANT)                                (RESPONDENT)



               Appellant by      Sh. Vikas Misra, CA
               Respondent by     None

                 Date of Hearing            14.03.2018
                 Date of Pronouncement      15.03.2018

                                  ORDER

PER SUCHITRA KAMBLE, JM

This appeal is filed by the assessee against the Assessment Order dated 16/11/2015 passed by JCIT (International Taxation) Dehradun u/s 143(3) read with Section 144C(3) of the Income Tax Act, 1961 for Assessment Year 2011-12.

2. The grounds of appeal are as under:-

On the facts and circumstances of the case, the Ld. AO/DRP has erred on facts and in law in holding that the amounts aggregating to INR. 187,404,307/-, received by the appellant from its customers as reimbursement of actual expenses(tools and fuel reimbursement) incurred 2 ITA NO. 503/Del/2016 by the appellant on their behalf, is to be included in the gross receipts u/s 44BB of the Income Tax Act, 1961 (the Act).

3. The assessee, M/s Shelf Drilling International Inc. (SDII), is a non- resident company incorporated under laws of Panama. It is a group company of Transocean Group which is engaged in the business of providing services or facilitates in connection with exploration and production of mineral oils. Transocean Group has been operating globally and has been providing services and facilities in India through its multiple entities. For AY under consideration, the assessee filed its return of income on 25.11.2011 declaring therein an income of Rs. 18,81,09,080. under provisions of section 44BB of the Act. It offered its revenue from two contracts:

a) Contract no. MR/DS/MAT/RIG(CH) (TOIVL)/TRIDENT II/2006-

2009/DYKDF 0349 DT, 12.03.2007 with ONGC Limited for charter hire of Jack-Up rig 'Trident-II'.

b) Contract dated 16.04.2010 with Transocean Drilling Services (India) Pvt. Limited (TDSIPL).

The Assessing Officer in his draft assessment order dated 30.03.2015 held that service tax and reimbursement of expenses received from ONGC contract are includible in gross receipts for the purposes of section 44BB of the Act. Further, the Assessing Officer has held that receipts from contract with TDSIPL are taxable as royalty and not u/s 44BB because this is second leg contract. The Assessing Officer has held that since this royalty income is effectively connected with PE, it is taxable as business income, thereby computing taxable profits @ 25%. The Assessing Officer also included service tax element while computing income from contract with TDSIPL. Being aggrieved by the order, the assessee filed objection before the Dispute Resolution Panel (DRP). The DRP issued directions vide order dated 3/11/2015. In compliance to DRP directions, the income of the assessee is assessed at Rs.98,86,97,712/-.

4. Being aggrieved by the final assessment order, the assessee is before us.

5. The Ld. AR submitted that in assessee's own case for Assessment Year 2010-11, the issue is decided by the ITAT against the assessee. The Ld. AR further submits that this issue contested herein is also decided by the Hon'ble Supreme Court in case of SEDCO FOREX INTERNATIONAL INC. THROUGH IT'S CONSTITUTED ATTORNEY MR. NAVIN SARDA Vs. COMMISSIONER OF INCOME TAX, MEERUT & ANR. (Civil Appeal No. 4906 of 2010) vide order dated 30.10.2017 in favour of the Revenue.

6. None appeared for the Departments, but there was adjournment application on behalf of the DR. Since the issue is covered against the assessee by the Hon'ble Apex Court decision, no harm will be cause to the Revenue in case the matter is decided. Therefore, we are taking up the appeal.

7. We have heard the Ld. AR and perused the Tribunal order for Assessment Year 2010-11 in the assessee's own case as well as the Apex Court decision dated 30.10.2017. The Hon'ble Apex Court held as under:

"50) It is stated at the cost of repetition that, in the instant case, the amount which is paid to the assessees is towards mobilisation fee. It does not mention that the same is for reimbursement of expenses. In fact, it is a fixed amount paid which may be less or more than the expenses incurred. Incurring of expenses, therefore, would be immaterial. It is also to be borne in mind that the contract in question was indivisible. Having regard to these facts in the present case as per which the case of the assessees get covered under the aforesaid provisions, we do not find any merit in any of the contentions raised by the assessees. Therefore, the ultimate conclusion drawn by the AO, which is upheld by all other Authorities is correct, though some of the observations of the High Court may not be entirely correct which have been straightened by us in the above discussion. For our aforesaid reasons, we uphold the conclusion. Resultantly, all the appeals of the assessees are dismissed."

Thus, the issue contested herein is already covered against the assessee 4 ITA NO. 503/Del/2016 in light of Apex Court decision dated 30.10.2017. Therefore, the appeal of the assessee is dismissed.

8. In result, appeal of the assessee is dismissed.

Order pronounced in the Open Court on 15th March, 2018.

       Sd/-                                                         Sd/-
(G. D. AGRAWAL)                                          (SUCHITRA KAMBLE)
  PRESIDENT                                               JUDICIAL MEMBER

Dated:      15/03/2018
R. Naheed *

Copy forwarded to:

1.                          Appellant
2.                          Respondent
3.                          CIT
4.                          CIT(Appeals)
5.                          DR: ITAT




                                                  ASSISTANT REGISTRAR

                                                        ITAT NEW DELHI
                                           5                        ITA NO. 503/Del/2016




                                                 Date

1.    Draft dictated on                       14/03/2018 PS

2.    Draft placed before author              14/03/2018 PS

3.    Draft proposed & placed before              .2018    JM/AM
      the second member

4.    Draft discussed/approved       by                    JM/AM
      Second Member.

5.    Approved Draft comes to the                          PS/PS
      Sr.PS/PS                    15.03.2018

6.    Kept for pronouncement on                            PS

7.    File sent to the Bench Clerk            15.03.2018   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.
 6   ITA NO. 503/Del/2016