Income Tax Appellate Tribunal - Delhi
Cgg Marine Sas (Now Cggveritas Services ... vs Assessee on 17 July, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : I : NEW DELHI
BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM
ITA No.234/Del/2013
Assessment Year : 2005-06
CGG Marine SAS (now CGG Vs. ADIT,
Veritas Services SA), International Taxation,
C/o BMR & Associates LLP, 13-A, Subhash Road,
22nd Floor, Building No.5, Dehradun.
Tower A, DLF Cyber City,
DLF Phase III,
Gurgaon.
PAN : AADFC8178N
(Appellant) (Respondent)
Assessee By : Shri Ajay Vohra, Advocate
Department By : Shri Yogesh Kumar Verma, CIT, DR
ORDER
PER R.S. SYAL, AM:
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.
ITA No.234/Del/2013
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 ` 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 2 ITA No.234/Del/2013 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 assesee 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 `212,21,85,946 and computed income at `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 3 ITA No.234/Del/2013 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.
3. 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 4 ITA No.234/Del/2013 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.
4. 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 5 ITA No.234/Del/2013 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
5. The main case of the ld. AR before us was that having thoroughly examined the question of taxability of receipts u/s 44B, the action of the AO in initiating reassessment to bring such receipts u/s 44DA amounted to a change of opinion, which was not possible in view of Kelvinator of India (SC)(supra). I. WHETHER JUDGMENT IN KELVINATOR(SC) IS APPLICABLE? 6.1. In order to decide as to whether the reassessment proceedings amounted to change of opinion or not, it is apposite to have a glance at the reasons which led to the initiation of reassessment proceedings, which are as under:-
"The assessee company is a non resident company. During the year under consideration the assessee has filed the return of income at the income of Rs.212,565,273/- on 31.10.2005 u/s 44BB (1) of IT Act. Assessment was completed u/s 143(3) of IT Act on 05.09.2006 at the income of Rs.212,565,270/-. During the year under consideration the assessee has derived revenues from ONGC for planning and executing acquisition of 3D seismic data and basis 3D seismic 6 ITA No.234/Del/2013 data processing in different survey areas in Mumbai, Kutch, Saurashtra, KG offshore and in Eastern Offshore, etc. As the assessee NRC is engaged in providing acquisition and on Board processing of 2D & 3D seismic data for activities relating to oil and gas sector by way of providing its men, the services rendered are technical services and are liable to be assessed as fees for technical services. The Hon'ble High Court of Uttarakhand vide its order in Income Tax Appeal No.239 of 2001 in the case of ONGC as agent of M/s Foramer France Dehradun, has held on 15.12.2005 that services which are technical in nature are not covered u/s 44BB(1) of IT Act. The copy of the order of the Hon'ble High Court of Uttarakhand is placed on record.
Further the Hon'ble Finance Minister while introducing Finance Bill 2010 has clarified in the explanatory note to Finance Bill that "Combined effect of the provisions of section 44BB, 44DA and 115A is that if the income of a non- resident is in the nature of fee for technical services, it shall be taxable under the provisions of either section 44DA or section 115A irrespective of the business to which it relates. Section 44BB applies only in a case where consideration is for services and other facilities relating to exploration activity which are not in the nature of technical services."
In view of this revenues of Rs.2,122,185,946/- earned during the year under consideration should be brought to tax @ 10%. Hence I have reasons to believe that the income of Rs.1,909,967,352/- has escaped assessment for the year under consideration."
6.2. From the above reasons, it clearly emerges that the assessee filed its return declaring income u/s 44BB of the Act. Such income was derived from ONGC for planning and executing 7 ITA No.234/Del/2013 acquisition of 3D seismic data and basis 3D seismic data processing in different survey areas in Mumbai and Kutch etc. It is also apparent from the reasons recorded, within a period of four years from the end of the relevant assessment year, that the original assessment was completed by the AO u/s 143(3) by assessing such income u/s 44BB of the Act. One of the two factors which led to the initiation of reassessment proceedings, is the judgment of the Hon'ble jurisdictional High Court in the case of ONGC as agent of M/s Foramer France (supra). Let us examine as to whether it is a case of change of opinion in terms of the judgment of the Hon'ble Supreme Court in Kelvinator of India Ltd. (supra) ?
6.3. Section 147, to the extent it is relevant for the present appeal, provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the 8 ITA No.234/Del/2013 course of the proceedings under this section. Then there is proviso to this section, which provides that where an assessment under sub-section (3) of section 143 has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year.
6.4. A close reading of section 147 divulges that in ordinary circumstances, the AO can assess or reassess any income chargeable to tax which escaped assessment, subject to the other relevant sections. Such escapement may be due to any reason. However, there is a statutory caveat to this sweeping provision, which is contained in the proviso limiting the reassessment only to such cases where the any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all 9 ITA No.234/Del/2013 material facts necessary for his assessment, provided a period of four years has not expired from the end of the relevant assessment year and the assessment was originally made u/s 143(3).
6.5. The Hon'ble Supreme Court in Kelvinator of India Ltd. (supra) considered a case in which the original assessment was made u/s 143(3) and the AO sought to reopen the assessment within a period of four years from the end of the relevant assessment year. The CIT(A), the tribunal and Hon'ble High Court quashed/upheld the quashing of the reassessment proceedings by holding that the assessee had disclosed all the facts and that it was a case of a mere change of opinion on the part of the AO. When the matter came up before the Hon'ble Apex Court, it was held that a mere "change of opinion" cannot per se be a reason to reopen. It was further held that the AO has power to reopen the assessment u/s 147 provided there is some tangible material for coming to the conclusion about the escapement of income. The crux of the judgment is that a mere "change of opinion" cannot per se be a reason to reopen.
10 ITA No.234/Del/2013 6.6. A unison reading of section 147 with its proviso makes it manifest that where assessment was originally made u/s 143(3), there can be escapement of income in four situations. The first situation is where the assessee did not properly disclose the particulars of his income. The second is where the assessee properly disclosed the particulars of his income, but the AO failed to examine the relevant issues. The third is again where the assessee properly disclosed the particulars of his income and the AO also examined the relevant issues but still the income escaped assessment. The fourth is the happening of some post assessment event leading to escapement of income, such as, retrospective statutory amendment or assessment of earlier year or enunciation of law by higher judicial forum. There can be no question of 'change of opinion' in the first and second situations. 'Change of opinion' in the fourth situation would always be the outcome of such a post assessment event. 'Change of opinion' in the third situation may normally happen under one of the two circumstances. First circumstance is the change of opinion simplicitor, when the AO, without reference to any earlier unconsidered material, reapplies his mind to the assessment and 11 ITA No.234/Del/2013 forms a belief about the escapement of income. Second circumstance is the change of opinion triggered by some tangible material, whether or not existing at the time of original assessment, coming to the notice of the AO after the completion of original assessment illuminating escapement of income in the original assessment. It is the first circumstance of the third situation in which the ratio in the case of Kelvinator of India (supra) applies, that is, where the original assessment was made u/s 143(3) in which the assessee properly disclosed the particulars of his income and the AO also examined the issue but still the income escaped assessment and now the AO is proposing the reopen the assessment to bring such escaped income to tax net without reference to any tangible material coming to his notice after the completion of original assessment. 6.7. Going by the mandate of section 147, without the aid of the proviso, it prima facie appears that a reassessment can be undertaken when there is escapement of income by all or any of the above four situations. When we take the assistance of proviso as well and make an indepth analysis of the provision, it emerges 12 ITA No.234/Del/2013 that where the original assessment was completed u/s 143(3) and a period of four years has expired from the end of the relevant assessment year, the recourse to the provisions of section 147 can be taken only if the case falls under the first situation, namely, where the income escaped assessment because of the assessee not properly disclosing the particulars of his income. No reassessment in such an event is permissible under the second, third and fourth situations as discussed above, namely, where the assessee properly disclosed the particulars of his income, but the income escaped assessment with or without the failure on the part of the AO to examine the issue properly or some post assessment event as discussed above. However, when we thoroughly examine the provision, it turns out that where a period of four years has not expired from the end of the relevant assessment year and the reassessment is taken up after the original assessment u/s 143(3), the provisions of section 147 can be activated in the first two situations, the second circumstance of the third situation and the fourth situation. The embargo on reassessment in such an event is only in the first circumstance of the third situation, being the change of opinion simplicitor without 13 ITA No.234/Del/2013 reference to any unconsidered tangible material coming to the notice of the AO indicating escapement of income. 6.8. It is noticed that in the instant case, the AO has unequivocally referred, inter alia, to the judgment of the Hon'ble jurisdictional High Court in the case of ONGC as agent of Foramer France (supra) for holding that the revenue from services which are technical in nature in a business to which section 44BB applies, does not fall within the ambit of section 44BB(1) of the Act but is taxable under the provisions of either section 44D or section 115A.
II. WHETHER INITIATION OF REASSESSMENT ON THE BASIS OF EXISTING OR LATER JUDGMENT IS VALID?
7.1. It is vivid that the AO referred to the judgment of the Hon'ble jurisdictional High Court in the case of ONGC as agent of Foramer France (supra) for canvassing a view that the revenue from technical services in the business of exploration etc. of mineral oils etc., does not fall within the ambit of section 44BB(1) of the Act as was erroneously held in the original assessment. 14 ITA No.234/Del/2013 7.2. Before proceeding further, it is sine qua non to decide the preliminary question which looms large before us is as to whether an existing judgment of the Hon'ble Supreme Court or that of the Hon'ble jurisdictional High Court on the date of the passing of the original assessment order or such judgment coming into existence after the passing of such order, can constitute a foundation for initiating reassessment? The ld. AR argued with vehemence that a judgment contrary to the view taken by the AO in the original assessment cannot form a bedrock for reopening of the assessment.
7.3. It goes without saying that the Hon'ble courts declare the law and do not legislate. The interpretation given to a particular provision by the Hon'ble Supreme Court or for that matter by the Hon'ble High Court is considered as the correct interpretation of that provision not from the date of the judgment, but from the date on which this provision was enacted. It means that if after the passing of an order by the AO, there is an advent of interpretation of law by the Hon'ble Supreme Court or that of the Hon'ble jurisdictional High Court, which runs contrary to what was opined and understood by the AO in the original assessment, 15 ITA No.234/Del/2013 the reopening of the assessment to make it in line with the interpretation rendered by the Hon'ble Supreme Court or the Hon'ble jurisdictional High Court, cannot in our considered opinion, vitiate the initiation of reassessment. 7.4. The Hon'ble Apex Court in ITO vs. Saradbhai M. Lakhani and Another (2000) 243 ITR 1 (SC) has held in the context of section 147(b) that the decision of a High Court constitutes 'information' and the ITO can initiate proceedings u/s 147 on becoming aware of the relevant decision of the High Court. The Hon'ble Punjab & Haryana High Court in Punjab State Co-operative Agricultural Development Bank Ltd. vs. CIT (2008) 305 ITR 156 (P&H) considered a case in which the deduction allowed u/s 80P in the original assessment turned out to be not allowable pursuant to the subsequent decision of the Hon'ble Supreme Court. The AO issued notice for reopening the assessment to be made in conformity with the judgment of the Hon'ble Supreme Court. The assessee filed writ petition, which met with the fate of dismissal by the Hon'ble High Court on the premise that notice for reassessment was not based merely on change of opinion, but also on subsequent judgment of the Hon'ble Supreme Court and, 16 ITA No.234/Del/2013 hence, the reopening was justified. The same view has been restated in the case of Jawand Sons vs. CIT(A) (2010) 326 ITR 39 (P&H).
7.5. At this juncture, it is relevant to mention that the AO passed original order u/s 143(3) on 05.09.2006. The judgment of the Hon'ble jurisdictional High Court, dated 15.12.05 in ONGC as agent of Foramer France (supra), is one of the reasons for issuing notice u/s 148. It means that the judgment of the Hon'ble jurisdictional High Court, which formed the basis for initiation of reassessment proceedings, was in existence at the time of passing of the original order by the AO. In this regard, it become relevant to note the judgment of the Hon'ble Supreme Court in the case of A.L.A. Firm vs. CIT (1991) 189 ITR 285 (SC) in which it has been held that reassessment u/s 147(b) on the basis of a judicial decision though available at the time of original assessment, but not considered by the ITO, is perfectly valid, being based on definite material not considered earlier. 7.6. Here, we want to clarify that the scope of reassessment prior to 1.4.1989 was limited inasmuch as this section had two 17 ITA No.234/Del/2013 clauses. Clause (a) of section 147 provided for reassessment by the AO for the reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment; and clause (b) empowered the AO to reassess income escaping assessment in consequence of information in his possession notwithstanding any omission or failure as mentioned in clause (a). The legislature brought comprehensive changes and considerably enlarged the scope of section 147 by omitting the hitherto clauses (a) and (b) and mandating reassessment of income escaping assessment by any reason whatsoever de hors the earlier limited scope of section 147. To put it in simple terms, the amended section 147, as substituted w.e.f. 1.4.1989, not only embraces the cases of income escaping assessment covered under earlier provisions of clauses (a) and (b), but also other situation leading to the escapement of income, of course, subject to the other relevant provisions. Thus, it is manifest that all the decisions rendered in the context of section 147 in the pre- substitution era upholding the validity of reassessment, apply with full vigor in the post-amendment era as well. In the light of the above discussion and coming back to our context, we have 18 ITA No.234/Del/2013 absolutely no doubt in our minds that not only the non- consideration of a decision of a jurisdictional High Court available at the time of passing the original assessment order, but the subsequent decisions also validate reassessment, if it turns out that the income chargeable to tax escaped assessment in the light of the ratio decidendi of such decisions. Thus, we do not find any force in the contention of the ld. AR that a decision of the Hon'ble jurisdictional High Court cannot be a good ground to reopen the assessment. Whereas, the decision rendered after the completion of original assessment indicating escapement of income would validate reassessment by putting the case in the afore discussed fourth situation, the decision rendered before the completion of original assessment, which was omitted to be considered earlier, would validate reassessment by landing the case in the above discussed second circumstance of third situation.
8. Reverting to the instant facts, it is more than clear that the AO did not venture to re-examine the assessment afresh de hors any fresh material, which would otherwise have made it a case of 19 ITA No.234/Del/2013 change of opinion ousting the jurisdiction of the AO to initiate proceedings u/s 147. As in the instant case, the original assessment was completed u/s 143(3) and notice u/s 148 was issued within a period of four years from the end of the relevant assessment year, basing the initiation of reassessment, inter alia, on the basis of the existing judgment of the Hon'ble jurisdictional High Court, the same is thus covered under the above referred second circumstance of the third situation. As such, the judgment in the case of Kelvinator of India (supra) has no application. This contention advanced on behalf of the assessee is, ergo, jettisoned.
III. IS JUDGMENT IN ONGC REALLY APPLICABLE?
9.1. Having held that a judgment of the Hon'ble Summit Court or that of the Hon'ble jurisdictional High Court delivered subsequent to the passing of the assessment order or non-consideration of an existing judgment empowers the AO to initiate reassessment proceedings, it needs to be examined if the decision in the case of ONGC as agent of Foramer France (supra) is really applicable to the facts of the instant case. In that case, ONGC as agent of 20 ITA No.234/Del/2013 Foramer France (non-resident) submitted its return declaring a particular income. The AO observed that the non-resident company had entered into a contract with ONGC for supply of personnel having expertise in operation and management of drilling rigs, 'Sagar Jyothi' and 'Sagar Pragati'. After going through the terms of the Contract, the AO held that the assessee had provided technical expertise to ONGC for which the latter paid technical fee to the foreign company (the assessee). That is how, the AO completed the assessment of the said non-resident as per the provisions of section 44D of the Act, as against section 44BB which was claimed by the assessee to be applicable. The CIT(A) as well as the Tribunal decided the issue in assessee's favour. However, the Hon'ble jurisdictional High Court noticed that the Foramer France was required to carry out, inter alia, the drilling operations through its personnel. The purpose for which the contract was entered into, was found to be requiring the assessee to render technical services through its personnel and the owner, namely, ONGC utilizing the services of such expatriate personnel. The Hon'ble High Court held that the consideration received by the assessee for rendering technical services was 21 ITA No.234/Del/2013 liable to be considered u/s 44D read with section 115A and not u/s 44BB of the Act.
9.2. It can be seen from the factual matrix of that case that Foramer France earned revenue for placing its expatriate personnel at the disposal of ONGC and showed it as chargeable to tax u/s 44BB. However, the Hon'ble High Court approved the view of the AO that such revenue was in the nature of fee for technical services covered u/s 9(1)(vii) of the Act, liable to be taxed as per section 44D of the Act. When we view the facts of the present case, it emerges that the assessee derived revenue from ONGC for planning and executing acquisition of 3D seismic data and basis 3D seismic data processing in different survey areas with the help of its personnel and vessel, income from which was earlier assessed to tax u/s 44BB, but the AO initiated reassessment by forming the belief that such revenue should have been charged to tax u/s 44DA of the Act. At this stage, it would be relevant to set out the relevant part of section 44BB, which is as under:-
'Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils.22 ITA No.234/Del/2013
44BB. (1) Notwithstanding anything to the contrary contained in sections 28 to 41 and section 43 and 43A, in the case of an assessee, being a non-resident, engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for , or extraction or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head "Profits and gains of business or profession".
Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D or *section 44DA or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections.' (Emphasis supplied by us) *inserted by the Finance Act, 2010 w.e.f. 1.4.2011 9.3. A bare perusal of the above provision reveals that where a non-resident assessee is engaged in the business of providing services or facilities in connection with or supplying of plant and machinery on hire used or to be used in prospecting or for extraction or production of mineral oils, etc., then, notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, a sum equal to 10% of the amount specified in sub-section (2) shall be deemed to be the profits and gains of such business. It is pertinent to note the marginal note of section 44B, which is: "Special provision for computing profits 23 ITA No.234/Del/2013 and gains in connection with the business of exploration, etc., of mineral oils."
9.4. Now, let us examine section 44D, relevant to the case of ONGC as agent of Foramer France (supra), which is applicable in relation to an agreement entered into before 1.4.2003 by a foreign company with Government or with the Indian concern.
The relevant part of section 44D is as under:-
'Special provisions for computing income by way of royalties, etc., in the case of foreign companies.
44D. Notwithstanding anything to the contrary contained in sections 28 to 44C, in the case of an assessee, being a foreign company,--
(a)....
(b) no deduction in respect of any expenditure or allowance shall be allowed under any of the said sections in computing the income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or with the Indian concern after the 31st day of March, 1976 but before the 1st day of April, 2003;
Explanation.--For the purposes of this section,--
(a) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;
(b) to (d)...' (Emphasis supplied by us) 24 ITA No.234/Del/2013 9.5. A quick glance at this provision divulges that it is also a special provision for computing income by way of royalty or fees for technical services in the case of foreign companies. It is further clear that the non obstante clause contained in section 44D excludes the contrary provisions contained in section 28 to 44C of the Act. It is still further worthwhile to note that this section is not applicable in respect of agreements made by a foreign company after 01.04.2003. The term 'fees for technical services' has been assigned the same meaning which is given in Explanation 2 to section 9(1)(vii). In turn, the Explanation 2 defines 'fees for technical services' to mean any consideration for rendering of any managerial, technical or consultancy services including the provision of services for technical or other personnel, but excluding any consideration for any construction, assembly, mining or like projects undertaken by the recipient of the consideration which would be income of the recipient chargeable under the head 'salaries'.
9.6. The rule of generalia specialibus non derogant means that a special provision prevails over a general provision. In other words, if a particular subject falls both under a general provision 25 ITA No.234/Del/2013 as well as a specific provision, then it is the specific provision which would take such subject in its ambit to the exclusion of general provision. This rule has been quoted with approved by the Hon'ble Supreme Court and several High Courts in a plethora of cases including CIT vs. Shahzada Nand and Sons & Ors (1966) 60 ITR 392 (SC) (relevant page 400) and Forbes Forbes Campbell and Co. Ltd. vs. CIT (1994) 206 ITR 495 (Bom.) The effect of this rule is that a special provision overrides a general provision on the same subject matter.
9.7. Coming back to our context, we find that section 44BB applied by the assessee in the case of ONGC as agent of Foramer France, has been statutorily designated as a special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. It is also found that section 44D, held to be applicable by the AO in that case, has also been statutorily designated as a special provision for computing income by way of royalties, etc. There would have been no difficulty in holding as to which provision would apply to a given case, if one had been general and the other a special. But, in the present case, the state of affairs is that both sections 44BB and 44D have 26 ITA No.234/Del/2013 been categorized by the legislature as special provisions. In such a situation, the question arises as to which of these two special provisions should have an overriding effect over the other. It is patent that section 44BB is a special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils, which applies to a non-resident engaged in the business of providing services or facilities in connection with or supplying plant and machinery on hire used or to be used in the prospecting for or extraction or production of mineral oils. The non obstante clause in this section makes the contrary contents of sections 28 to 41 and sections 43 and 43A inapplicable. Section 44D, which is again a special provision, is applicable to an assessee, being a foreign company, earning royalty income or fees for technical services engaged in any kind of business. The non obstante clause in section 44D making the contrary provisions of section 28 to 44C inoperative, has made the things clear that section 44D is a special provision when pitted against section 44BB in so far as income by way of royalty or fees for technical services earned by a foreign company engaged in any business, including prospecting etc. of minerals 27 ITA No.234/Del/2013 oils, is concerned. The reason for our this conclusion is that the exclusion of sections 28 to 44C by section 44D also covers section 44BB, which applies in respect of income from the business of exploration, etc., of mineral oils. When sections 28 to 44C have been made inoperative in the case of section 44D, it implies that the subject matter of section 44D, if covered under any of the sections including 44BB, shall also fall in section 44D. Now, when we examine the language of section 44BB, it can be seen that the non obstante clause is restricted in application only in respect of sections 28 to 41 and sections 43 and 43A. It implies that section 44D has not been made inoperative by section 44BB. The nitty gritty of the matter is that royalty or fees for technical services pertaining to any kind of business, including exploration, etc., of mineral oils as covered u/s 44BB, shall be considered only u/s 44D. This position can also be culled out from the language of proviso to section 44BB as applicable to the previous year relevant to the assessment year under consideration, which provides that this sub-section shall not apply in a case where the provisions of sections 42, 44D, 115A or 293A apply for the purposes of computing profits and gains or any other income. 28 ITA No.234/Del/2013 The effect of this proviso is again the same that if section 44D applies to a particular income, then section 44BB would not apply. As assessee in the case of ONGC as agent of Foramer France (supra) received consideration by way of fees for technical services albeit engaged in the business of exploration, etc., of mineral oils, the income was rightly chargeable to tax u/s 44D of the Act and not section 44BB.
9.8. Having seen that income by way of royalty or fees for technical services earned by a foreign company in pursuance of an agreement made before 1.4.2003 is chargeable u/s 44D of the Act, now it needs to be considered as to whether the same thing would be applicable in the context of section 44DA also. In order to find answer to this question, it is of immense importance to note down the relevant parts of section 44DA, which are as under:-
*'Special provision for computing income by way of royalties, etc., in case of non-residents.
44DA. (1) The income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by a non-resident (not being a company) or a foreign company with Government or the Indian concern after the 31st day of March, 2003, where such non- resident (not being a company) or a foreign company carries on 29 ITA No.234/Del/2013 business in India through a permanent establishment situated therein, or performs professional services from a fixed place of profession situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed place of profession, as the case may be, shall be computed under the head "Profits and gains of business or profession" in accordance with the provisions of this Act :
Provided that no deduction shall be allowed,--
(i) in respect of any expenditure or allowance which is not wholly and exclusively incurred for the business of such permanent establishment or fixed place of profession in India; or
(ii) in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to its head office or to any of its other offices :
**Provided further that the provisions of section 44BB shall not apply in respect of the income referred to in this section.
Explanation.--For the purposes of this section,--
(a) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;
(b) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;
(c) "permanent establishment" shall have the same meaning as in clause (iiia) of section 92F.' (Emphasis supplied by us) *inserted by the Finance Act, 2003 w.e.f. 1.4.2004 **inserted by the Finance Act, 2010 w.e.f. 1.4.2011 9.9. A single asterisk above indicates that section 44DA was inserted by the Finance Act, 2003 w.e.f. 1.4.2004 in respect of 30 ITA No.234/Del/2013 agreements made by the non-resident or foreign company with Government or the Indian concern after 1.4.2003. The sunset clause in section 44D(b), being the agreement made before 1.4.2004, led to the birth of section 44DA which, in turn, applies in respect of income by way of royalty or fees for technical services received by a non-resident (not being a company) or a foreign company in pursuance of an agreement entered into after 31.3.2003. The agreements in the present case were admittedly entered into after this cut-off date of 31.3.2003, which implies that our case cannot be governed by section 44D, which was applicable in case of ONGC as agent of Foramer France (supra). It is not even the case of the AO that the assessee is covered u/s 44D.
9.10. Now, let us examine as to whether it is section 44DA or section 44BB, which applies to our case. When we read section 44DA in juxtaposition to section 44D, it is manifested that there is no non obstante clause in section 44DA as is there in section 44D, which made the provision of section 28 to 44C, including section 44BB, inoperative. Now, when we examine the language of section 44DA, it follows that the income by way of royalty or fees 31 ITA No.234/Del/2013 for technical services received by a non-resident is chargeable to tax under this section. The absence of the non obstante clause in section 44DA, which has again been designated as a special provision, has made the matter complex. Whereas, on one hand there is one special provision contained in section 44BB dealing, inter alia, with fees for technical services from the business of exploration, etc., of mineral oils, there is another special provision in section 44DA, which applies to royalty or fees for technical services received by a non-resident from any kind of business without any specific reference to the business of prospecting for or extraction or production of mineral oils. Thus, it is obvious that fees for technical services earned in the business of exploration, etc., of mineral oils stand included in both the provisions. Whereas fees for technical services from any kind of business including the business of exploration etc. of minerals oils is covered u/s 44DA, fees for technical services from the business of exploration etc. of minerals oils is specifically covered u/s 44BB. In such a situation, fees for technical services referred to in section 44BB, being a special provision as regards income from the business of exploration etc. of minerals, would assume the 32 ITA No.234/Del/2013 character of special provision vis-a-vis section 44DA and would be superimposed on the later section. Proviso to section 44BB(1) at the relevant time provided for non-application of the provisions of this section in a case where section 42 or section 44D or section 115A etc. applied. This proviso did not have any reference to section 44DA, which provision was albeit inserted w.e.f. 1.4.2004. The two asterisks above indicate that the proviso providing for non-applicability of section 44BB to the royalty and fees for technical services covered u/s 44DA, has been inserted by the Finance Act, 2010 w.e.f. 1.4.2011. Simultaneously, section 44DA has been added to the proviso to section 44BB along with the existing section 44D etc. by the Finance Act, 2010 w.e.f. 1.4.2011. This shows that during the period relevant to the A.Ys 2004-05 to 2010-11, the amount of royalty or fees for technical services arising in the business of exploration etc. of mineral oils was covered under section 44BB and not under section 44DA. The above discussion shows that the ratio of the judgment in the case of ONGC as agent of Foramer France (supra) rendered in the context of section 44D cannot be applied to the instant case because of significant difference in the language and scope of 33 ITA No.234/Del/2013 these two sections during the A.Ys 2004-05 to 2010-11. As we are concerned with the assessment year falling within the above referred block of assessment years, obviously there can be no parity between the two sections so as to apply the ratio of a decision rendered u/s 44D to a case to which section 44DA applies. We, therefore, hold that the AO was not justified in initiating reassessment by relying on the judgment in the case of ONGC as agent of Foramer France (supra).
IV. WHETHER REASSESSMENT ON PRIMA FACIE MATERIAL IS O.K.? 10.1. We are conscious of the position under law that there should be some prima facie material to initiate reopening and that the sufficiency or correctness of such material is not relevant. The AO is not required to prove to the hilt at the stage of initiation of reassessment that the income chargeable to tax has escaped assessment. If there is some positive material on record which prima facie indicates the escapement of income, then there can be no fetters on the power of the AO to initiate reassessment. Sufficiency of such material can be ascertained or tested during the course of assessment or appellate proceedings. The Hon'ble Supreme Court in Raymond Woollen Mills Limited Vs. ITO & Ors 34 ITA No.234/Del/2013 (1999) 236 ITR 34 (SC) has held to this extent by laying down that: 'In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the Court cannot strike down the reopening of the case in the facts of this case.' Similar view was earlier taken by the Hon'ble Apex Court in Calcutta Discount Co. Ltd. Vs. ITO (1961) 41 ITR 191 (SC). In view of the foregoing discussion, it clearly surfaces that, by and large, there can be two such situations to clothe the AO with the power to reopen the assessment, viz., first, the existence of a material conclusively proving the income escaping assessment, and second, the existence of a material prima facie indicating the escapement of income. The term 'prima facie' means 'at first appearance' or 'on the face of things'. It is not as if the initiation of reassessment is possible only under the first situation and that the jurisdiction is ousted in the second situation. As long as there is some material to even prima facie indicate the escapement of 35 ITA No.234/Del/2013 income, the AO's power to initiate reassessment can't be curtailed.
10.2. The ld. DR vehemently argued that that the AO initiated reassessment proceedings, inter alia, on the strength of the judgment of the Hon'ble jurisdictional High Court in ONGC as agent of Foramer France (supra), in which the chargeability u/s 44D was upheld in preference to section 44BB. He stated that since section 44DA is successor of section 44D and the assessee had also returned income from ONGC u/s 44BB, definitely the AO could have prima facie formed belief that the income of the assessee ought to have been charged to tax u/s 44DA and not u/s 44BB as per the ratio decidendi of the judgment of the Hon'ble jurisdictional High Court.
10.3. This contention of the ld. DR though appears to be attractive at the first blush but loses its shine on an indepth analysis. The reason for our this conclusion is that the term 'prima facie' has reference to indicate the escapement of income and not to applicability of the material. To put it simply, there should be some positive material to prima facie indicate the escapement 36 ITA No.234/Del/2013 of income. It is not that any unconnected material or any judgment delivered on a particular section empowers the AO to initiate reassessment on all cases directly or indirectly involving such section. Any judgment, so as to constitute the foundation for reassessment, must be directly and fully applicable. If we accept the contention of the ld. DR and hold that the judgment in ONGC as agent of Foramer France (supra) is prima facie applicable, then we will be wrong in the elaborate analysis carried out above concluding about the inapplicability of such judgment to the facts of the instant case. A judgment is either applicable or not applicable. It cannot be a case that it is prima facie applicable but not applicable on proper appreciation. As we have held above that the judgment in ONGC as agent of Foramer France (supra) is inapplicable to the facts of the instant case, we are not persuaded to accept the contention of the ld. DR that it should be considered as prima facie applicable so as to validate the initiation reassessment. This contention is, ergo, rejected.
11. It is, therefore, held in the final analysis that the initiation of the present reassessment on the basis of the judgment in ONGC as agent of Foramer France (supra) is not valid in law. 37 ITA No.234/Del/2013 B. REASSESSMENT ON THE BASIS OF AMENDMENT TO SEC. 44DA 12.1. Now we take up the second reason adopted by the AO for initiating the reassessment proceedings, being, the explanatory note to Finance Bill, 2010 which in his opinion retrospectively clarified that section 44BB applies only in a case where consideration is for services and other facilities relating to exploration activity which are not in the nature of technical services. It has been seen above that during the period relevant to the A.Ys. 2004-05 to 2010-11 there was no straight forward provision providing for the exclusion of royalty or fees for technical services in the business of exploration etc. of mineral oils etc. from section 44BB and its inclusion in section 44DA and vice versa. Unlike the specific mention of section 44D and 115A, there was no reference to section 44DA in the proviso to section 44BB. It was largely a question of drawing inference from the interpretation of the provisions in totality that section 44BB was not excluded by section 44DA to that extent. Some authorities interpreted fees for technical services earned by a non-resident in the business of exploration, etc., of mineral oils as covered u/s 44BB, while others held it to be covered u/s 44DA. In view of this 38 ITA No.234/Del/2013 conflicting position, the legislature stepped in by inserting second proviso to section 44DA(1) by the Finance Act, 2010 w.e.f. 1.4.2011 providing that the provisions of section 44BB shall not apply in respect of the income referred to in this section. Simultaneously, an amendment was carried out in the proviso to section 44BB(1) by inserting section 44DA along with sections 42, 44D, 115A and 293 w.e.f. 1.4.2011. Effect of these amendments is that the provisions of section 44BB shall not apply in respect of royalty or fees for technical services received by a non-resident engaged in the business of exploration, etc., of mineral oils. Such amount would be covered within the ambit of section 44DA. 12.2. Presently, we are dealing with the assessment year 2005-06 in which the assessee included the revenue from business of exploration, etc., of mineral oils u/s 44BB. The AO, inter alia, taking assistance of the proposed amendment to section 44DA by the Finance Bill, 2010 formed the belief that such amount was liable to be considered u/s 44DA of the Act. It is not disputed that the other requirements of section 44DA are duly satisfied in the present case. In reaching the conclusion that the amendment carried out to section 44DA by the Finance Act, 2010 39 ITA No.234/Del/2013 shall apply to the assessment year under consideration as well, the AO held such amendment to be retrospective.
12.3. Now the effect of the amendment is that the proviso to section 44BB mandates that the provisions of section 44BB shall not apply in a case where the provisions of section 44DA apply and the second proviso to section 44DA provides that the provisions of section 44BB shall not apply in respect of the income referred to in this section. With the above amendments, there is not even an iota of doubt that fees for technical services in the business of exploration etc. of mineral oils shall be covered u/s 44DA and not section 44BB of the Act. Now the critical question is whether such amendments are prospective or retrospective. If the amendment are held to be retrospectively applicable from the date of insertion of section 44DA, being from 1.4.2004, then it would mean that the provisions of section 44BB shall not apply in respect of royalty or fees for technical services earned by the assessee engaged in the business of exploration, etc., of mineral oils. If, on the other hand, this amendment is held to be prospective, then, it would mean that the provisions of section 44BB shall apply in respect of the entire income including 40 ITA No.234/Del/2013 fees for technical services earned by the assessee engaged in the business of exploration, etc., of mineral oils. 12.4. Primarily we find that this amendment has been made applicable from 01.04.2011 and not retrospectively. This factor is quite significant though not decisive. The ld. DR relied on several judgments to contend that a clarificatory amendment is always retrospective. Since this amendment has been brought in to clarify the existing position of law u/s 44BB read with section 44DA, he contended that the same be construed as retrospective. None of the judgments relied by the ld. DR deal with the amendment to sections 44DA or 44BB by the Finance Act, 2010. On the contrary, we find that there is a direct judgment, and that too, of the Hon'ble jurisdictional High Court in the case of B.J. Services Company Middle East Ltd. vs. Dy. Director of IT (International Taxation) (2011) 339 ITR 169 (Uttarakhand) in which it has been categorically held that the present amendments to sections 44DA and 44BB are prospective in nature. The following observations of the Hon'ble High Court merit reproduction:-
41 ITA No.234/Del/2013
'As stated earlier, ....... the Explanatory Note to the Finance Bill, 2010 clearly indicates that the amendments proposed in s. 44BB and 44DA of the Act would take effect from 1st April, 2011 and would apply in relation to the asst. yr. 2011-12 and subsequent years. The amendment is prospective in nature and would not apply to the cases in hand which is of the earlier assessment years. ........ The Explanatory Note to the Finance Bill has ..... only been made prospectively and cannot be used or applied for reopening the case under ss. 147 and 148 of the Act.' 12.5. When we are confronted with a direct judgment of the Hon'ble jurisdictional High Court, which categorically lays down that the amendment to sections 44DA and 44BB by the Finance Act, 2010 w.e.f. 01.04.2011 are prospective, there can be no question of arguing or holding otherwise. The position which, therefore, emerges is that the insertion of second proviso to section 44DA by the Finance Act, 2010 is applicable only from assessment year 2011-12 and not prior to that. If the situation is such, then we fail to understand as to how the A.O. could take assistance of such amendment to initiate reassessment for the assessment year 2005-06 under consideration. In that view of the matter, the reasons recorded by the AO for initiating the re-42 ITA No.234/Del/2013
assessment by taking cognizance of the amendment proposed by the Finance Bill, 2010 and holding it to be retrospective, do not stand.
C. RELEVANCE OF TRIBUNAL ORDER FOR AY 2007- 2007-08 13.1. The ld. DR vigorously contended that the Tribunal in assessee's own case for the assessment year 2007-08 has held that the provisions of section 44BB are not applicable to the revenue earned from ONGC under similar circumstances. In view of this decision, it was contended that the Tribunal in the instant case should also follow the same rule and uphold the re- assessment on the question of initiation as well as on merits. 13.2. Before coming to any conclusion as regard the applicability or otherwise of the tribunal order for the AY 2007-08 to the year under consideration, it is essential to consider the factual scenario and the decision rendered. Admittedly, the assessee continued to be engaged in the same business of acquisition and on board processing of seismic data to be delivered to ONGC as is the position in the year under consideration. The assessee in such later year had also declared 43 ITA No.234/Del/2013 income u/s 44BB. The AO held for that year that the income was chargeable to tax u/s 9(1)(vii). In the absence of the assessee having any permanent establishment, it was opined that the receipts were chargeable to tax u/s 115A read with section 9(1)(vii) of the Act. The tribunal finally held that the activities undertaken by the assessee of seismic survey, processing of 3D seismic data and submission of its reports in desired media would be in the nature of 'fees for technical services' covered under Explanation 2 to section 9(1)(vii) of the Act. It was further held that where provisions of sections 42, 44D or 44DA or 115A or 293A are applicable, the provisions of section 44BB(1) would not apply by virtue of proviso to section 44BB(1). In the final analysis, the tribunal ruled that since the receipts were not connected with the PE in India, such 'fees for technical services' rendered in connection with prospecting for or extraction or production of mineral oil would be assessable u/s 115A of the Act. It also incidentally observed that if an assessee has a PE in India, then income in the nature of fees for technical services connected with such PE shall be includible u/s 44BB and not section 44DA during the period up to the A.Y. 2010-11.
44 ITA No.234/Del/2013 13.3. When we advert to the facts for the instant year, namely, A.Y. 2005-06, it is seen that the AO has specifically held on page 9 of the draft order that the existence of PE of the assessee in India is not disputed. He further held that: "Receipts of the assessee are covered under provisions of section 44DA of the I.T. Act." Since the books of account were not prepared by the assessee, the AO estimated 25% of the gross receipts as chargeable u/s 44DA of the Act. In the final order passed u/s 144C(13), the AO computed the assessee's total income u/s 44DA (sic 44BB) on the last page of the impugned order by considering total revenue and then estimating income @ 25% thereof. Ordinarily, income by way of royalty or fees for technical services earned by a non-resident pursuant to agreement made after 31.3.2003 is computed u/s 44DA where such non-resident carries on business in India through a permanent establishment situated in India and the contract, etc., in respect of which fees for technical services results is effectively connected with such permanent establishment. On satisfaction of such conditions, the income is computed under the head 'Profits and gains of business or profession' in accordance with the provisions of this Act. Thus, 45 ITA No.234/Del/2013 in order to bring a particular income from royalty or fees for technical services within the ambit of section 44DA, it is essential that the non-resident must have a permanent establishment in India and the contract from which fees for technical services arises should be effectively connected with such permanent establishment. When these conditions are satisfied, income is computed under the head 'Profits and gains of business or profession' as per regular provisions. In other words, the income is computed u/s 44DA on net basis after allowing deductions admissible under Chapter IV-D of the Act. On the other hand, section 115A applies where non-resident earns income by way of fees for technical services in cases other than those referred to in section 44DA(1). In such circumstances, the income is taxed on gross basis at the rate prescribed in the section. When we consider section 44DA in conjunction with section 115A, it becomes obvious that income by way of fees for technical services earned by non-resident from the agreement entered into after the specified date is chargeable to tax u/s 44DA only when the non-resident has a permanent establishment in India and the agreement from which such fees for technical services arises is 46 ITA No.234/Del/2013 effectively connected with the permanent establishment. To put it conversely, where a non-resident assessee has no permanent establishment in India and he earns income by way of fees for technical services pursuant to a contract made after the specified date, then, the income is chargeable to tax u/s 115A read with section 9(1)(vii) of the Act.
13.4. Coming back to the facts of the instant year, it is noticed from the reasons reproduced above that the AO embarked upon the extant re-assessment by opining that the income of the assessee was chargeable to tax u/s 44DA and not u/s 44BB. In the final computation of total income, the AO applied the provisions of section 44DA when he computed income from fees for technical services by estimating income at 25%, being the net income by holding that the assessee has PE in India and fees for technical services is arising from the agreement effectively connected with the PE. When we re-visit the facts for the AY 2007-08, it transpires that the Tribunal held the income chargeable to tax u/s 115A read with section 9(1)(vii) of the Act because of the absence of PE. There is a clear distinction of the facts for the instant year vis-a-vis those considered and decided 47 ITA No.234/Del/2013 by the Tribunal for the afore noted subsequent year. As the AO in the instant case has initiated reassessment by treating the income of the assessee chargeable to tax u/s 44D of the Act and has also, in fact, computed such income accordingly by holding the assessee to have a PE in India and such fees for technical services arising from a contract effectively connected with the PE, we are unable to hold that the income for the present year be also covered u/s 115A in line with the view taken by the tribunal for the AY 2007-08, which was neither the case of the Assessing Officer at the time of initiation of reassessment nor at the time of computation of the total income.
13.5. It is trite that reasons recorded by the Assessing Officer are final and the validity of reassessment is tested on the basis of such recorded reasons alone. Neither the Assessing Officer can later on improve his reasons or make out a different case from the one on which basis he initiated reassessment, nor is it permissible to the ld. DR to argue that the reassessment be sustained on the ground other than that of the Assessing Officer as mentioned in the reasons. In view of the fact that the Tribunal for the AY 2007-08 has held the income to be chargeable to tax 48 ITA No.234/Del/2013 u/s 115A read with section 9(1)(vii) and the AO for the instant year took such income u/s 44DA of the Act by holding that the assessee has a PE and the income from ONGC is attributable to contract which is effectively connected with the PE, we express regret in changing the entire complexion of the case for the instant year by holding that the decision taken by the Tribunal for AY 2007-08 be applied. Be that as it may, it is clear that the tribunal for the AY 2007-08 ruled out the application of section 44DA up to the A.Y. 2010-11 and held by way of obiter dicta that fees for technical services can be charged to tax u/s 44BB where the assessee has a PE in India and the agreement leading to such income is effectively connected with the PE. Though the ratio of such order cannot be applied to the facts of the instant year, the obiter dicta is rather supporting the view of the assessee that the provisions of section 44DA cannot be applied to the facts for the year under consideration. Since the tribunal order for the AY 2007-08 is not germane to the instant year, we hold that it does not advance the case of the Revenue in validating the initiation of the present reassessment.
49 ITA No.234/Del/2013
14. Coming back to the question of initiation of re-assessment, we find that both the factors, on whose strength the AO issued notice u/s 148, viz., applicability of the judgment of the Hon'ble jurisdictional High Court in the case of ONGC as agent of Foramer, France (supra) and the retrospective application of the amendments brought out by the Finance Act, 2010 to section 44DA and section 44BB, are not relevant and hence do not support the initiation of reassessment. We, therefore, set aside the initiation of re-assessment and the proceedings flowing there from.
15. In view of our decision in quashing the initiation of re- assessment, there is no need to dispose of the grounds raised by the assessee on merits.
16. In the result, the appeal is allowed.
The order pronounced in the open court on 17.07.2014.
Sd/- Sd/-
[A.T. VARKEY] [R.S. SYAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 17th July, 2014.
dk
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ITA No.234/Del/2013
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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