Special provision for computing profits and gains in connection with the Business of Exploration etc. of Mineral Oils - Section 44BB - International Taxation - Income Tax

Special provision for computing profits and gains in connection with the Business of Exploration etc. of Mineral Oils - Section 4BB According to section 44BB of the Act, when a non-resident taxpayer is engaged in the business of providing services or facilities in connection with prospecting for, or extraction or production of mineral oils, a sum equal to 10% of gross receipts shall be deemed to be profits and gains of such business. Since, the deeming fiction is for determination of income under section 44BB, it cannot be applied for deeming allowance of depreciation. Applicable to Non-resident in business of supplying services or plant machinery on hire to be used in prospecting, extraction or production of mineral oil. Income deemed as PGBP 10% of: Amount received in India or outside India for prospecting, extraction or production of mineral oil in India . Amount received or deemed to be received in India for prospecting, extraction or production of mineral oil outside India. Income lower than presumptive rate Assessee can show provided he maintain books of account get the audit done under section 44AB his case will be put in scrutiny assessment under section 143(3) Provisions of sections 28 to 41 and sections 43 and 43A Not applicable Set-off of current year depreciation and b/f depreciation of other business against such income. Not Possible Set-off of current year losses and b/f losses of other business against such income. Possible (No set off B/F Loss) Chapter VI-A deduction Available Non- Applicability of presumptive taxation under section 44BB The provisions of section 44BB shall not apply to any income to which the provisions of section 42 or section 44DA, 115A or 239A apply for the purpose of computing profit or gains or any other income referred to in these sections. Section Provision 42 Special provision for deductions in the case of business for prospecting, etc., for mineral oil 44DA Special provisions for computing income by way of royalties, etc., in case of non-residents. 115A Tax on royalty and fees for technical services in case of foreign companies 293A Power to make exemption, etc., in relation to participation in the business of prospecting for, extraction, etc of mineral oils. Amount paid for technical services and knowhow used for prospecting/ extraction/ production of petroleum is covered by either Section 115A or section 44DA. It is not covered by section 44BB. However, rent paid/ amount paid for supply of plant machinery on hire/ services to be used in prospecting/ extraction/ production of petroleum is covered by section 44BB. Notwithstanding anything contained in section 32(2) and section 72(1) , where an assessee declares profits and gains of business for any previous year in accordance with the provisions of section 44BB(1), no set off of unabsorbed depreciation and brought forward loss shall be allowed to the assessee for such previous year. [ Section 44BB(4) ] [Amendment by FA, 2023 w.e.f. AY 2024-25].