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2015 (6) TMI 487 - AT - Income TaxServices for geophysical and geological interpretation of 3D and 2D seismic data - Whether are in the nature of fees for technical services (FTS) or should fall under sec. 44BB of the Act? - Held that - In the present case, there is no dispute that the assessee is having PE in India as it is evident from the assessment order wherein the Assessing Officer has noted as the PE of assessee in India is not disputed as the assessee has filed the return under sec. 44BB offering its income as taxable in India . So far as the other conditions that the Revenue of the assessee is effectively connected with PE in India is concerned, it is found that the Assessing Officer has already examined the effective connection of the Revenue of the assessee with the PE in India while holding that the income of the assessee is taxable under sec. 44DA of the Act. The Delhi Bench of the ITAT in the case of Fugro Geoteam AS vs. ADIT (2015 (6) TMI 436 - ITAT DELHI) has noted that the ruling of AAR in the case of Geophzika Torun SP. GO. 2009 (12) TMI 4 - AUTHORITY FOR ADVANCE RULINGS has been confirmed in the case of DIT vs. OHM Ltd. (2012 (12) TMI 422 - DELHI HIGH COURT). The said judgment was followed in the assessment year 2008-09 in the case of PGS Geophysical AS (2014 (7) TMI 723 - DELHI HIGH COURT ). In the light of above judgments held that for the relevant assessment year i.e. 2008-09, the assessee is entitled to declare its income under the provisions of sec. 44BB of the Act. The Learned CIT(Appeals) was thus justified in holding so. - Decided in favour of assessee.
Issues Involved:
1. Whether services related to 2D and 3D Seismic Data are Fees for Technical Services (FTS) or fall under sec. 44BB of the Income-tax Act, 1961? Analysis: 1. The primary issue in this case pertains to the classification of services provided in connection with 2D and 3D Seismic Data as either Fees for Technical Services (FTS) or falling under sec. 44BB of the Income-tax Act, 1961. 2. The Revenue contested the first appellate order on various grounds, questioning the classification of revenue from services as not FTS, contrary to the decision in the M/s. CGG Veritas case, and the applicability of sec. 44BB for taxation. 3. The facts revealed that the assessee received revenue for services related to seismic surveying for hydrocarbon reservoir exploitation and other activities. The Assessing Officer argued that the income should be treated as FTS, while the CIT(A) relied on the CGG Veritas case to classify it under sec. 44BB. 4. The arguments presented by both parties were considered in light of previous decisions and the material on record. The CIT(A) upheld the classification under sec. 44BB based on the CGG Veritas case. 5. The Revenue, represented by the CIT(DR), emphasized the assessment order and cited the ONGC case, urging that the income should be taxed as FTS. They also referred to the Siem Offshore A.S. case and the PGS Geophysical A.S. case to support their stance. 6. Conversely, the assessee's representative highlighted the decision in the PGS Geophysical AS case, asserting that 2D and 3D Seismic Services fall under sec. 44BB. They pointed out that the Assessing Officer acknowledged the presence of a Permanent Establishment (PE) in India, a crucial factor for sec. 44BB eligibility. 7. The Tribunal agreed with the assessee, noting that the facts in the ONGC case were distinguishable, and the eligibility for sec. 44BB was established based on the presence of a PE in India and effective connection with the revenue. They cited relevant judgments supporting the assessee's position and upheld the CIT(A)'s decision. 8. Consequently, the Tribunal dismissed the appeal, affirming the assessee's eligibility for taxability under sec. 44BB for services related to 2D and 3D Seismic Data. 9. In conclusion, the judgment pronounced on 22.05.2015 favored the assessee, confirming the application of sec. 44BB over FTS classification for the services provided, based on the presence of a PE and effective connection with the revenue in India.
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