COMMISSIONER OF INCOME-TAX Vs. ENSCO MARITIME LTD.

JUDGEMENT

(1.) THIS appeal, preferred under Section 260 -A of the Income Tax Act, 1961 (hereinafter referred as the Act) is directed against the order dated 1st February 2006, passed by the Income Tax Appellate Tribunal, Delhi Bench 'B', New Delhi (hereinafter referred as ITAT), in Income Tax Appeal No. 3869 / Del of 2002, for the assessment year 1998 - 99.

(2.) FOLLOWING is the question of law involved in this appeal: Whether, reimbursement of catering charges is not liable to be included in 'amount' mentioned in Sub -section (2) of Section 44BB of the Income Tax Act, 1961?

(3.) BRIEF facts of the case giving rise to this appeal are that assessee, a non -resident company, received a sum of Rs. 98,49,041.15 from M/s Oil and Natural Gas Company Limited and M/s Paramount Offshore as consideration for loss of down hole equipment. The assessee further received catering charges amounting to Rs. 16,12,958/ -. But the aforesaid two charges were not offered for taxation. The Assessing Officer took the view that the aforesaid amount received by the assessee as catering charges is part of the amount on which ten per cent deemed profit is to be calculated under Section 44BB of the Income Tax Act, as such, the Assessing Officer clubbed this receipt with other receipts, and the assessment was made at Rs. 6,32,11,641/ - as against Rs. 6,20,65,440/ - shown in the return of income. Aggrieved by said order, the assessee preferred appeal before the Commissioner of Income Tax (Appeals) [for brevity CIT(A)]. The said authority following the decision of the ITAT, Delhi, in Sedco Forex International Drilling Inc. v. Dy. Commissioner of Income -tax, in I.T.A. No. 257, 4549, 4550, 4557 and 4562, allowed the appeal holding that the reimbursement of the catering charges and the one received on account of loss of down hole equipment are not liable to be included for the purposes of Section 44BB of the Act. The Revenue challenged said order passed by the CIT(A) on 06.06.2002, before the ITAT, Delhi, which was registered as I.T.A. No. 3869 / Del / 02 (Assessment Year 1998 -99). The ITAT after hearing the parties concurred with the CIT(A) and dismissed the second appeal. Hence, this appeal by the Revenue.