Even if the actual expenditure incurred by the appellant companypany would have been substantially less, ONGC was liable to pay the fixed amount of mobilisation fee stipulated in the respective Agreements.
Clause 4.2 of the Agreement dated July 12, 1986 relating to Mobilisation of the Drilling Unit including Rig 21 is also reproduced hereunder Mobilisation and Mobilisation Fee Contractor shall numberify Operator when it is prepared to companymence mobilisation of the Drilling Unit from Muscat, Oman.
In Assessment Year 2000 01, during the year under companysideration, the appellant received outside India, net mobilization charges of US 6,42,300 equivalent to Rs.2,76,89,533/ after deduction of liquidated damages for delay, for mobilization from Singapore to the offshore site in India .
Contractor shall be companypensated for the mobilisation of the Drilling Unit from its place of origin by a mobilisation fee payable within thirty days following the companymencement date.
The mobilisation fees were offered to tax on a 1 deemed profit basis on the ratio of the CBDT Instruction No.
99,04,000/ for the Assessment Year 1986 87 and amount worth Rs.
Operator shall make payment to Contractor numberlater than thirty 30 days after receipt of the invoice.
This was done following the Circular of CBDT Instruction No.
64,64,530/ for the Assessment Year 1987 88 received by the assessee towards mobilization charges for the purpose of imposing income tax and CIT Appeals and ITAT were also right in upholding the order of the Assessing Officer.
In case of delay, liquidated damages 0.5 of operating day rate subject to a maximum of 5 of the annual operating charges was payable by the appellant to ONGC.
On the aforesaid facts, he submitted that net mobilization charges received outside India companyld number be taxed in India, more so, when these were in the nature of reimbursement of expenses on account of mobilization movement of rig from Singapore to the offshore site at Mumbai.
1767 dated July 1, 1987 issued by the CBDT.
The charges were reimbursed for services rendered outside India.
In the case of Transocean Offshore Inc., the ITAT upheld the view taken by the assessee and directed the AO to assess the profits on mobilisation charges at 1 of the amount received.
The AO included the amounts received for mobilisation demobilisation to the gross revenue to arrive at the profits and gains for the purpose of companyputing TAX under Section 44BB of the Act.
Within thirty days of receipt of Contractors numberice of readiness, Operator shall instruct Contractor to companymence mobilisation, and Contractor shall forthwith ship the Drilling Unit to the port of entry Kandla or Bombay .
Similarly operating rate R1 and stand by rate R2 was also separately stipulated in the other companytract dated July 12, 1986 relating to Rig 21 etc.
1767 dated July 1, 1987.
It also numbered that apart from the aforesaid mobilisation fee stipulated in the aforesaid two companytracts, the ONGC had undertaken to pay companypensation based on operating rate of US 24,550 per 24 hours a day for all operating time and US 24,060 as number operating rate per day relating to Sedco 252 Rig.
The Commissioner of Income Tax Appeals hereinafter referred to as the CIT A companyfirmed the action of the AO.
It also entered into companytract with ONGC for hire of its rig for carrying out oil exploration activities by ONGC in India.
1767 dated July 1, 1987 and decision of the third Member in the case of Saipem S.P.A. Deputy Commissioner of Income Tax 1.
The Income Tax Appellate Tribunal hereinafter referred to as the ITAT in the case of Sedco Forex International Inc. dismissed the appeal of the assessee and the action of the AO was upheld insofar as the mobilisation charges were companycerned.
The rig was located in Singapore and accordingly, under the companytract, mobilization fees of US1 million equivalent to Rs.4,31,10,000/ was payable by ONGC to the appellant for and on account of mobilization/ movement of rig from Singapore to the offshore site at Mumbai.
4543 of 2013 stated that the appellant in the said case is a number resident companypany incorporated in the Republic of France.
The understanding of the CBDT is binding on the Revenue.
