Law:

Section:

Section 44BB of the Income-tax Act, 1961 - Non-residents - Mineral oil, business for prospecting exploration, etc., in case of - Assessment year 1991-92 - Whether for arriving at profits and gains at rate of 10 per cent under section 44BB all amounts received or deemed to be received are to be taken into account and not only income or accrued income - Held, yes - Whether where assessee, a non-resident company, was rendering services as per provisions of section 44BB, amount received by it on account of reimbursement of freight and transportation charges was to be added to its total income - Held, yes FACTS The assessee, non resident company, was rendering services to ONGC as per provisions of section 44BB. The Assessing Officer made addition of the amount received by the assessee on account of reimbursement of freight and transportation charges actually incurred in respect of equipment to the total income for arriving at profits and gains at the rate of 10 per cent under section 44BB. The Commissioner (Appeals) as well as the Tribunal held that those charges were freight and transportation charges incurred in respect of transportation of equipment by the assessee to ONGC and did not constitute an income and could not be added to total income of the assessee and could not be said to have accrued as income to the assessee so as to fall within the ambit of charging provisions of section 5. On revenue's appeal : HELD It is clear from the perusal of section 44BB that all the amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive. This amount is the basis of determination of deemed profits and gains of the assessee at the rate of 10 per cent. Therefore, the Tribunal fell into error in not appreciating the difference between the amount and the income. The amount paid or received refers to the total payment to the assessee or payable to the assessee or deemed to be received by the assessee, whereas income has been defined under section 2(24) and sections 5 and 9 deal with income, accrued income, deemed income. Section 4 is the charging section and the definition…

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