Boskalis ... vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI ी संजय अरोड़ा, लेखा सद य एवं ी संजय गग , या यक सद य के सम ।

BEFORE SHRI SANJAY ARORA, AM AND SHRI SANJAY GARG, JM रोक आवेदन सं./S.A. Nos. 120/Mum/2015 (Arising out of ITA No. 4938/Mum/2014) ( नधा रण वष / Assessment Year: 2008-09) & रोक आवेदन सं./S.A. Nos. 129/Mum/2015 (Arising out of ITA No. 5348/Mum/2014) ( नधा रण वष / Assessment Year: 2009-10 Boskalis International - Dredging Dy. DIT(IT)-3(2), International CV, 702, 7th Floor, Trade बनाम/ Mumbai Centre, Bandra Kurla Complex, Bandra Vs. (E), Mumbai-400 051 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AADFB 4877 B (Applicant) : (Respondent) Applicant by : Shri M. P. Lohia Respondent by : Shri Pawan Kumar Beerla

सनु वाई क% तार'ख / : 27.03.2015 Date of Hearing घोषणा क% तार'ख / : 27.03.2015 Date of Pronouncement आदे श / O R D E R Per Sanjay Arora, A. M.:

This is a set of two Stay Petitions by the Assessee for two assessment years, being A.Ys. 2008-09 & 2009-2010. The issues involved therein being the same, they were taken up for hearing, and accordingly heard, together.

S.A. Nos. 120/Mum/2015 (A.Y. 2008-09)

2.1 Explaining the assessee's case, it was submitted by the ld. Authorized Representative (AR), the assessee's counsel, that the assessee, a partnership firm incorporated in Netherlands, is in the dredging business, being engaged in oil exploration and, therefore, the provision of section 44BB is applicable in its case. Income was, accordingly, computed under the said section, i.e., at 10% of the gross receipts. The 2 SA Nos. 1 2 0 & 1 2 9 / M/1 5 (A . Y s. 2 0 0 8 - 0 9 & 2 0 0 9 - 1 0 ) Boskalis International - Dredging International CV vs. Dy. DIT(IT)

principal dispute with the Revenue, however, lies in the non set-off of the brought forward business loss relating to A.Y. 2002-03, claimed u/s.72 of the Act. This was for the reason, and which found favour with the first appellate authority, that the assessee had admittedly discontinued its business for the two of the intervening years, not filing any return of income for the said years, placing reliance on the decision in the case of Hiralal Jeramdas vs. CIT [1965] 58 ITR 1 (Bom). The said decision is under the 1922 Act, wherein the law provided for the continuation of the said business, i.e., in which the loss had been suffered. The said condition, even forming part of section 72, has since been deleted, i.e., by Finance Act, 1999 w.e.f. 01.04.2000, so that the discontinuation of the business, or carrying on a different business also would not adversely affect the assessee's case. In fact, in the present case, there has been no discontinuation of business, but only a temporary suspension for some time; the assessee biding for and undertaking oil exploration for the subsequent years. As long as the requirement of section 72 is met, which provides for the set off of brought forward loss, its adjustment against the business income for the subsequent years could not be denied. Adverting to para 15.15 of the stay application, he informed that adjusting the said loss would reduce the disputed demand to Rs.6,99,213/-.

2.2 The ld. Departmental Representative (DR), on the other hand, would rely on the order by the authorities below, stating that the matter, in view thereof, cannot be said to be not disputed, so that the assessee has a prima facie case. The stay may, therefore, not be allowed or, in the alternative, subject to payment of a fair proportion thereof.

3. We have heard the parties, and perused the material on record. We firstly observe it to be quixotic that loss should arise where the assessee's income, being engaged only in oil exploration, so as to be covered by the provision of section 44BB, should result in a loss, suffered and claimed for A.Y. 2002-03. So, however, the loss stands assessed, and the only dispute brought to our notice is the validity of the assessee's claim in view of the amended provision of section 72. In our view, the assessee has a prima facie case and, accordingly, the balance of convenience is in its favour. We, therefore, consider it proper to grant stay for the outstanding demand for a period of six months or the disposal of the appeal by the tribunal, whichever is earlier, subject to the following conditions:

3 SA Nos. 1 2 0 & 1 2 9 / M/1 5 (A . Y s. 2 0 0 8 - 0 9 & 2 0 0 9 - 1 0 ) Boskalis International - Dredging International CV vs. Dy. DIT(IT)

a) Payment of Rs.10 lacs by 15.04.2015;

b) Early hearing on 17.06.2015 The said date being announced in the open court, no separate notice of hearing shall be issued to the parties. We may also clarify that the adjournment motion by the assessee, without just cause, shall operate to vacate the stay. We decide accordingly.

S.A. Nos. 129/Mum/2015 (A.Y. 2009-10)

4. Presenting the assessee's case, it was submitted by the ld. AR that the entire outstanding demand relates to the non-allowance of the assessee's claim for service tax (Rs.1.86 crores) and sale of camp office (Rs.2.90 crs.). The outstanding demand, for which the assessee seeks stay, is only Rs.79.68 lacs, so that it has, in fact, paid a good part of the disputed demand. In fact, even of this, Rs.11.17 lacs, being interest u/s.234B, is not leviable in-as-much as the same is against tax subject to TDS provisions. The sale of camp office is a part of the assessee's fixed assets, though the assessee had, by way of abundant caution, included it as a part of its gross receipt, offering it to tax u/s.44BB. Though the Revenue disallowed the assessee's claim, and in fact rightly so in-as-much as the said receipt did not form part of the receipts subject to the concessional tax u/s.44BB, the AO brought the entire amount to tax, ignoring cost incurred in setting up the office in the first place, being at over Rs.6 crores. No case for assessing the same as 'income', thus, arises. With regard to the inclusion of the service tax collected by the assessee, there are decisions by the tribunal in the assessee's favour, placing a copy of the some such decisions on record. Though, he conceded, upon enquiry, to contrary decisions by the tribunal, the matter thus was canvassed as disputed, so that the view in favour of the assessee ought to be taken. The ld. Departmental Representative (DR), on the other hand, would submit that both the issues were disputed, so that the assessee could not claim a prima facie case in its favour, while it has not pressed for any financial stringency for it to seek indulgence by the tribunal.

5. We have heard the parties, and perused the material on record. In our view, the assessee has exhibited a prima facie case in its favour in relation to the sale of camp office, i.e., going by the facts as narrated before us, and which have not been disputed by 4 SA Nos. 1 2 0 & 1 2 9 / M/1 5 (A . Y s. 2 0 0 8 - 0 9 & 2 0 0 9 - 1 0 ) Boskalis International - Dredging International CV vs. Dy. DIT(IT)

the Revenue during the hearing before us. Under the circumstances, we, therefore, consider it proper to grant stay of the outstanding demand of Rs.79.68 lacs, subject to the following:

a) Payment of Rs.25 lacs to the credit of the Central Government in partial satisfaction of the said demand, by 15.04.2015;

b) Out of turn hearing on 17.06.2015.

The said date being announced in the open court, no separate notices of hearing shall be issued to the parties. We may also clarify that the adjournment motion by the assessee, without just cause, shall operate to vacate the stay. We decide accordingly.

6. We may further clarify that grant of stay shall not be construed as our having expressed any opinion in the matter.

7. In the result, the assessee's stay applications are allowed on the afore-stated terms.

Order pronounced in the open court on March 27, 2015

Sd/- Sd/-

(Sanjay Garg) (Sanjay Arora) या यक सद य / Judicial Member लेखा सद य / Accountant Member मुंबई Mumbai; ,दनांक Dated : 27.03.2015 व. न.स./Roshani, Sr. PS

आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :

1. अपीलाथ. / The Applicant

2. /0यथ. / The Respondent

3. आयकर आयु1त(अपील) / The CIT(A)

4. आयकर आयु1त / CIT - concerned

5. 4वभागीय / त न6ध, आयकर अपील'य अ6धकरण, मुंबई / DR, ITAT, Mumbai

6. गाड फाईल / Guard File आदे शानस ु ार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai