Shanti Prime Publication Pvt. Ltd.
Sec. 44BB and 44DA of Income Tax Act, 1961—Business disallowance— Petitioner-assessee is a company incorporated under the laws of Australia and is a tax-resident of that country. It is engaged in the business of developing and providing customized software enabled solutions and annual maintenance services. The solutions provided by the Petitioner are used by the oil and gas industry in relation to excavation, extraction, production activities and seismic analysis.Petitioner opted to be taxed on presumptive basis under section 44BB(1) of the Act, whereby 10% of the aggregate of receipts is deemed to be profits and gains of business and is subjected to tax. The assessee filed its return of for the assessment year 2012-2013, declaring a total income arising from the business of providing services or facilities in connection with extraction or production of mineral oils.The case was picked up for scrutiny and notice under Section 143(2)/142(1) was issued by the Assessing Officer. the AO held that in accordance with terms of the contract, the nature of services provided by the Petitioner fell within the purview of Royalty/ Fees for Technical Servicesof Royalty/ Fees for Technical Services and is liable to be taxed under section 44DA instead of section 44BB. On 05.03.2015, a draft assessment order was issued by the AO under Section 143(3)/144C (1) of the Act proposing to tax the revenues received by the Petitioner under section 44DA of the Act, estimating 25% of gross receipts as “business income” taxable under section 28 to 43C of the Act. Thereafter, the final assessment order was passed on 11.05.2015, under Section 44C(3)(b)/143(3), confirming the addition/adjustment proposed in the Draft Assessment Order. The Petitioner neither filed any objection before the Dispute Resolution Panel against the Draft Assessment Order, nor did it file an appeal before the Commissioner of Income Tax (Appeal). Assessee filed a revision petition under section 264 of the Act before CIT. The CIT declined to interfere with the final assessment order and rejected Petitioner’s revision petition, primarily on the ground of maintainability, without dealing with the merits of the case. Assessee filed the writ petition, held that the assessee was granted liberty to claim benefit under the said DTAA before the Ld. CIT if it wishes to do so. Besides, in the event the answer to the question is in the affirmative, the assessee shall also be at liberty to assail such findings on merit, as court have refrained themselves from determining whether the income of royalty is excluded from the definition under the Act.The writ petition was allowed. --- PARADIGM GEOPHYSICAL PTY LTD. vs. CIT. 23 ITCD Online 13 (DEL)