M/S Smith International Inc v. The Addl. Director Of Income Tax

IN THE HIGH COURT OF UTTARAKHAND AT NAINITALIncome Tax Appeal No. 61 of 2014 M/s Smith International INC ...Appellant Vs. The Addl. Director of Income Tax ...Respondent Mr. Porus Kaka, learned Senior Advocate assisted by Mr. Manish Kant and Mr. Chetan Joshi, learned counsel for the appellant. Mr. Hari Mohan Bhatia, learned Standing Counsel for the Income Tax-respondent. Dated: 26[th] February, 2019 Coram: Hon’ble Ramesh Ranganathan, C.J.Hon’ble Sudhanshu Dhulia, J. Hon’ble Alok Singh, J. Ramesh Ranganathan, C.J. (Oral) This Appeal is preferred, under Section 260A of the Income Tax Act, against the order passed by the Income Tax Appellate Tribunal, New Delhi in ITA No. 5287/Del/2010. The substantial question of law, raised by the Assessee in this appeal, is whether reimbursement of expenses, towards customs duty paid by the Assessee, are to be included under Section 44BB of the Income Tax Act; and whether the Tribunal had erred in not following its own decision in the appellant’s case for the Assessment Year 2006-07, and/or the binding judgment of this Court in DIT Vs. Schlumberger Asia Services Ltd. : 317 ITR 156. 2. In the order under appeal, the Tribunal has only recorded that, after having heard both the parties, it was of the view that, under Section 44BB, gross receipts are to be considered. The Tribunal has not even examined the question whether reimbursement of customs duty, in accordance with the terms and conditions of the contract entered into between the Assessee and the ONGC, is liable to tax under Section 44BB of the Income Tax Act. The Tribunal is the final court of facts, and an appeal under Section 260A of the Income Tax Act would lie only if the order of the Tribunal gives rise to a substantial question of law. The Tribunal has failed to examine the terms and conditions of the contract, and has not assigned reasons for its conclusion that gross receipts (evidently including reimbursement of expenses towards customs duty) are to be considered under Section 44BB of the Income Tax Act. Failure on its part to consider relevant questions, both on facts and law, would give rise to a substantial question of law warranting interference in an appeal under Section 260A of the Income Tax Act. 3. We are satisfied, therefore, that the matter necessitates examination afresh by the Tribunal. The order under appeal is set aside, and the appeal before the Tribunal is restored to file. The Tribunal shall, with utmost expedition, decide the appeal afresh in accordance with law. 4. The appeal is, accordingly, disposed of. No costs. (Alok Singh, J.) (Sudhanshu Dhulia, J.) (Ramesh Ranganathan, C.J.)26.02.2019 26.02.2019 26.02.2019Rahul