The Director Of Income Tax(International Taxation)-Ii… v. Bechtel International Inc Usa

bsb IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 2448 OF 2011 The Director of Income Tax(International Taxation)-II… Appellant v/s Bechtel International Inc USA … Respondent Mr.Suresh Kumar for the appellant. Mr.Mihir Naniwadekar for the respondent. CORAM: S.C. DHARMADHIKARI & G.S. KULKARNI, JJ. DATED : 30TH APRIL, 2014 P. C. : 1This appeal is challenging the order passed by the Income Tax Appellate Tribunal dated 8[th] June, 2011 in the two appeals pertaining to two assessment years, namely, 2003-2004 and 2005-2006. 2The assessee came to India in connection with the projects referred to by the Income Tax Appellate Tribunal, namely, Dabhol Power Company in relation to setting up a power plant in the State of Maharashtra and Haldia Petrochemical Limited for setting up a petrochemical plant in West Bengal. The return of income tax was filed declaring total income Rs.13,02,55,470/-. The assessment was completed and an income of Rs.15,35,19,800/- was brought to tax. 3The assessee claimed deduction in relation to expenses of Dabhol Power Project quantified at Rs.1,52,87,952/-. That was disallowed by the Assessing Officer and equally by the Commissioner of Income Tax (Appeals). 4The Tribunal noted the factual position and found that though the contract with the Dabhol Power Company was terminated with effect from 17[th] June, 2001 for default in payment, yet, the assessee's presence in India was noted for pursuing its claim against the said Dabhol Power Company. The project office was not the only reason by which the assessee claimed the deduction but urged it was following up the matter and seeking the extension from the Reserve Bank of India. The correspondence in that behalf has been referred to by the Tribunal. It is in these peculiar circumstances that the Tribunal held that the assessee could not be said to be not carrying on any business in India during the relevant period. The finding of fact at paragraph 9 of the order is that the project with Dabhol Power Company was not completed. It was temporarily terminated with effect from 17[th] June, 2001. The extension was granted by the Reserve Bank of India from time to time till 30[th] September, 2003 and further extension was granted till 30[th] September, 2005. There was an extension till 30[th] September, 2006. In the meanwhile, the assessee entered into an agreement with Bharat Heavy Electrical Limited on 27[th] March, 2006 for providing through the very office services in relation to revival of the Dabhol Power Company. In such peculiar circumstances, the Tribunal held that the disallowance by the Assessing Officer and sustained by the Commissioner of Income Tax (Appeals), cannot be upheld. We are of the opinion that the conclusions arrived at by the Tribunal are consistent with the factual materials. The objection of the revenue that there was no business activity and, therefore, the income could not be said to be generated or earned from the business, has been rejected. That has been rejected in the light of the peculiar factual position. This was not a total or complete discontinuance of the business activity. In such circumstances, we do not think that the view of the Tribunal suffers from perversity or an error of law apparent on the face of the record requiring correction by this Court. The appeal does not raise any substantial question of law and considering the factual back ground. 5It is factually considered that question No.2 in relation to the interest under Section 234B of the Act, 1961 is a controversy which stands concluded by the judgment of the Division Bench of this Court in the case of Director of Income Tax (International Taxation) v/s NGC Network Asia LLC, reported in (2009) 313 ITR 187. 6In the light of the above, we find that the appeal does not raise any substantial question of law. It is accordingly dismissed. (G.S. KULKARNI, J.) (S.C.DHARMADHIKARI, J.)