COMMISSIONER OF INCOME TAX Vs. ESSAR OIL LTD.

JUDGEMENT

(1.) The Commissioner of Income-tax has raised three questions in this appeal, which read as under :

(2.) So far as the second question is concerned, it is not in dispute that the assessee had executed certain contracts in the countries, viz., Oman and Qatar. The foreign currency earned from the said project was partially used for repaying the loan taken in foreign currency in the foreign country for executing the said project. The Tribunal relying on the decision of the apex court in the case J.B. Boda and Co. Pvt. Ltd. v. CBDT,1996 223 ITR 271 held that the assessee is entitled to claim deduction under section 80HHB of the Income-tax Act in respect of the entire foreign currency earned from the aforesaid projects. Although the decision of the apex court in the case J.B. Boda and Co. Pvt. Ltd. v. CBDT,1996 223 ITR 271 related to the deduction under section 80-O of the Income-tax Act, in our opinion, the ratio laid down therein would apply to the facts of the present case relating to grant of reduction under section 80HHB of the Income-tax Act because the loan amount was paid in foreign currency is not disputed and even if the entire foreign currency was brought into India, the assessee would have been required to remit the foreign currency to discharge the loan taken in foreign currency for executing the project. Therefore, the second question raised by the Revenue does not survive.

(3.) As regards the third question is concerned, it is not in dispute that the assessee has a permanent establishment at Oman and the assessee has been taxed in respect of the income earned from the said establishment under the provisions of the income tax law at Oman. Therefore, in the light of article 7 of the Double Taxation Avoidance Agreement (DTAA) entered into by and between India and Oman and in the light of the judgment of the apex court in the case CIT v. P.V.A.L. Kulandagan Chettiar, 2004 267 ITR 654 the decision of the Tribunal in excluding the profit earned from the permanent establishment at Oman cannot be faulted. In this view of the matter, we see no merit in the appeal and accordingly, the same is dismissed.