Business Income Applicability of Beneficial Provisions Under Section 44BB While Computing Income of NonResidents—Scope of

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The Tax Publishers Income Tax--Business Income Applicability of Beneficial Provisions Under Section 44BB While Computing Income of Non-Residents--Scope of CA. Nisha Bhandari The learned author in this write-up aims at analysing the applicability of deeming provision contained in Section 44BB under various facts and circumstances. 1. Applicability of Section 44BB Section 44BB applies in case of non-resident who is engaged in the business of providing services, or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils. 2. Income presumed by Section 44BB Section 44BB(1) presumes a sum equal to ten percent of the aggregate of amounts referred to in sub-section (2) as the profits and gains of such business chargeable to tax under the head profits and gains of business or profession. The amounts, ten per cent of which will be deemed as income, are provided by sub-section (2). These amounts would be as follows : (i) the amount paid or payable (whether in or out of India) to the assesse or to any person on his behalf on account of the provision of services and facilities in connection with or supply of plant and machinery on hire used or to be used, in the prospecting for or extraction or production of, mineral oils in India; and (ii) the amount received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used or to be used, in the prospecting for or extraction or production of, mineral oils outside India. Section 44BB provides that only 10 per cent of the aggregate of aforementioned amounts will be taken as taxable profits derived from such business. 3. Non-applicability of provisions The proviso to Section 44BB(1) provides that Section 44BB would not be applicable where the following provisions applied for computation of profits or gains or any other income referred in these Sections : SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Business Income

Applicability of Beneficial Provisions Under Section 44BB While Computing Income of Non-Residents--Scope of

CA. Nisha Bhandari

The learned author in this write-up aims at analysing the applicability of deeming provision contained in Section 44BB under various facts and circumstances.

1. Applicability of Section 44BB

Section 44BB applies in case of non-resident who is engaged in the business of providing services, or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils.

2. Income presumed by Section 44BB

Section 44BB(1) presumes a sum equal to ten percent of the aggregate of amounts referred to in sub-section (2) as the profits and gains of such business chargeable to tax under the head profits and gains of business or profession.

The amounts, ten per cent of which will be deemed as income, are provided by sub-section (2). These amounts would be as follows :

(i) the amount paid or payable (whether in or out of India) to the assesse or to any person on his behalf on account of the provision of services and facilities in connection with or supply of plant and machinery on hire used or to be used, in the prospecting for or extraction or production of, mineral oils in India; and

(ii) the amount received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used or to be used, in the prospecting for or extraction or production of, mineral oils outside India.

Section 44BB provides that only 10 per cent of the aggregate of aforementioned amounts will be taken as taxable profits derived from such business.

3. Non-applicability of provisions

The proviso to Section 44BB(1) provides that Section 44BB would not be applicable where the following provisions applied for computation of profits or gains or any other income referred in these Sections :