SEDCO FOREX INTERNATIONAL INC. THROUGH ITS CONSTITUTED ATTORNEY MR. NAVIN SARDA Vs. COMMISSIONER OF INCOME TAX, MEERUT

JUDGEMENT

(1.) Leave granted in SLP(C) No. 2955 of 2012, SLP(C) No. 11560 of 2014, SLP(C) No. 20000 of 2015, SLP(C) No. 22343 of 2012, SLP(C) No. 22833 of 2012, SLP(C) No. 39683 of 2013 and SLP(C) No. 21939 of 2017.

(2.) In all these appeals filed by different appellants (hereinafter referred to as the 'assessees') except Civil Appeal No. 3695 of 2012 which is filed by Director of Income Tax (Revenue), the question of law which arises for consideration is identical and pertains to the scope and interpretation of Sec. 44BB of the Income Tax Act, 1961 (hereinafter referred to as the 'Act').

(3.) For computation of profits and gains of a business, to make it exigible to tax under the Act, provisions contained in Chapter IV, from Sections 28 to 41, 43 and 43A of the Act apply. However, in those cases where the assessee is a non-resident and specifically engaged in the business of exploration etc. of mineral oil, special mechanism is provided in Sec. 44BB of the Act for computation of profits and gains, on which the tax is charged. It, however, gives choice to such non-resident assessees to opt for computation formula provided under Sec. 44BB or to be covered by normal computation mechanism contained in Sections 28 to 41, 43 and 43A of the Act. Sec. 44BB of the Act stipulates that a sum equal to 10% 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'. Thus, concessional rate of 10% is charged as tax, which is admittedly much less than the normal tax rate payable on profits and gains of business or profession. However, this tax @10% is on the aggregate of the amounts specified in sub-section (2) which are "deemed" profits and gains of such business. Thus, insofar as calculation of profits and gains of the business under Sec. 44BB of the Act is concerned, on which 10% tax is payable, it is worked out on fictional basis by adopting the formula laid down in sub-section (2). Sub-section (2) mentions those amounts aggregate whereof is to be treated as deemed profits and gains of such a business.