Law:

Section:

Section 44BBB of the Income-tax Act, 1961 - Foreign companies, civil construction business in case of - Assessment years 2004-05 and 2005-06 - Whether where assessee, a German company, had set up a project office in India for providing engineering and technical services for various projects and it fulfilled all conditions stipulated in section 44BBB(1), profits and gains of assessee were to be computed at 10 per cent in accordance with said provision - Held, yes - Whether provision made in sub-section (2) of section 44BBB is for benefit of assessee under which assessee, on basis of books maintained by it, is given a chance to demonstrate and prove before Assessing Officer that actual profits earned by assessee were less than 10 per cent; on basis of this provision, revenue cannot plead or make out a case that profits earned by assessee are more than 10 per cent - Held, yes FACTS The assessee was a German company. It set up a project office in India in the year 2000 for providing engineering and technical services for various projects. It filled all the conditions stipulated in sub-section (1) of section 44BBB and claimed that a sum equal to 10 per cent of the amount paid or payable to the assessee under the projects undertaken by it be treated as deemed profits and gains chargeable to tax under the head "Profits and gains of business or profession". The Assessing Officer did not accept the aforesaid contention of the assessee. Relying upon sub-section (2) of section 44BBB, he observed that as the assessee was maintaining the books of account and on the basis of those documents, it could be shown that it was earning more than 10 per cent profits, then actual profits should be brought to tax. The Commissioner (Appeals) dismissed the assessee's appeal. However, in further appeals to the Tribunal, the assessee succeeded. On revenue's appeal: HELD The view taken by the Tribunal was perfectly justified on correct interpretation of section 44BBB. It is clear from the reading of this section that it starts with a non obstante clause by clearly stating "Notwithstanding anything to the contrary contained in sections 28 to 44AA". It is, thus, clear that the computation of…

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