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New Page 1Part C : Tribunal & AAR
International Tax Decisions
11 DCIT v. J Ray McDermott Eastern
Hemisphere Ltd.
(2010) TII 41 ITAT (Mum.-INTL)
S. 44BB
Execution of a contract for transportation and
installation work for mineral oil exploration platforms—Whether receipts for
services outside India, taxable in India u/s 44BB. Presumptive income can be
taxed only if it is otherwise taxable under Income-tax Act.
Facts :
The taxpayer was a company incorporated in, and tax
resident of, Mauritius (‘MCo’). MCo was engaged in the business of designing,
fabrication, construction and installation of platforms, docks, pipelines,
jackets and other similar services which are used in the exploration and
production of mineral oil. MCo undertook and executed a contract for
transportation and installation work for certain well platforms to be used in
mineral oil exploration. While furnishing its tax return, MCo did not offer for
tax receipts pertaining to activities carried on outside India.
S. 44BB provides for presumptive taxation @10% of
the gross receipts in respect of the services that are used in prospecting,
extraction or production of mineral oil. The AO concluded that u/s.44BB, income
is computed on presumptive basis, w.r.t. all receipts and therefore the
distinction between activities carried on in India and those carried on outside
India is not relevant. He accordingly applied presumptive rate to entire gross
receipts of the contract for determining taxable income.
The CIT(A), accepted contentions of the taxpayer.
Before the Tribunal, MCo contended that the income
pertaining to installation and transportation activities carried on outside
India is not taxable under the Income-tax Act. Alternatively, the income
pertaining to such activities or work carried on outside India cannot be
attributable to a PE in India.
Held :
The Tribunal referred to the following decisions
wherein it was held that before computing income on presumptive basis, it should
be ensured that such income falls within the scope of charging provisions :
-
Saipem SPA v. DCIT,
(2004) 88 ITD 213 (Delhi)
-
McDermott ETPM Inc v.
DCIT, (2005) 92 ITD 385 (Mum.)
The Tribunal held
that only the income which is reasonably attributable to operations carried on
in India is taxable in India. Therefore, income computed on presumptive basis
can be taxed in India only if such income is otherwise chargeable to tax under
general provisions of the Income-tax Act.
