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Issues Involved:
1. Taxability of receipts under Section 44BB vs. Section 44D read with Section 115A of the IT Act, 1961. 2. Withdrawal of interest under Section 244A and charging of interest under Section 234D. Issue-Wise Detailed Analysis: 1. Taxability of Receipts under Section 44BB vs. Section 44D read with Section 115A of the IT Act, 1961: The assessee contended that the receipts of the non-resident were taxable under Section 44BB of the IT Act, 1961, which deals with profits in connection with the business of exploration, etc., of mineral oils, and not as 'fees for technical services' under Section 44D read with Section 115A of the IT Act, 1961. The AO, however, held that the services rendered were purely for 'technical services' offered in connection with the assessment (inspection) of internal damages to CPI units of the SHG platform, thereby attracting the provisions of Section 44D read with Section 115A of the Act. The CIT(A) upheld the AO's view, stating that the services provided were not 'services or facilities' in connection with prospecting, extraction, or production of mineral oils as contemplated under Section 44BB. Instead, the services were for assessing internal damage and providing an estimate for replacement, which were managerial and technical in nature. The CIT(A) also noted that the appellant was hired for work assessment and estimate for drinking water plant for personnel, thus falling within the purview of Section 44D. The assessee argued that the services rendered were a necessary prerequisite and step-in-aid to the mining for mineral oils, and thus should be covered under Section 44BB. They cited various precedents, including the Tribunal judgment in the case of Agland Investment Services Inc. vs. ITO, where bid evaluation and engineering services were held to be a step-in-aid for construction of factories and plants. However, the Tribunal held that the services in question were independent activities unrelated to the basic activity of prospecting, extraction, or production of mineral oils. The Tribunal emphasized that only services directly connected with the basic activity of extracting or producing mineral oils could be included under Section 44BB. The Tribunal also noted that the assessee failed to furnish the agreement copy despite adequate opportunities, thus relying on the established facts by the lower authorities. Additionally, the Tribunal rejected the argument that the services did not qualify as 'fees for technical services' under the Indo-UK treaty, stating that the term should be understood from Explanation 2 to Section 9(1)(vii) of the IT Act. The Tribunal concluded that the services rendered were covered by the definition of 'fees for technical services' under the Indian IT Act, and therefore, Section 44D was rightly applied. 2. Withdrawal of Interest under Section 244A and Charging of Interest under Section 234D:The second issue involved the confirmation of the AO's order on the withdrawal of interest under Section 244A and the charging of interest under Section 234D. The Tribunal noted that this ground was consequential and directed the AO to give consequential effect. Conclusion:The Tribunal dismissed the appeal, upholding the findings of the lower authorities that the receipts were taxable as 'fees for technical services' under Section 44D read with Section 115A of the IT Act, 1961, and not under Section 44BB. The Tribunal also directed the AO to give consequential effect regarding the withdrawal and charging of interest under Sections 244A and 234D, respectively.
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