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TMI Blog2011 (1) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... business operation of the assessee in India - Hence, the explanation (1)(a) to section 9(1)(i) is not applicable in the facts and circumstances of the case - The appeal of the revenue is allowed X X X X Extracts X X X X X X X X Extracts X X X X ..... ization fee to the assessee to cover the cost of moving the rig from Sharjah to Bombay high. Since the assessee has not at all mobilized the rig as the same was already in the Bombay High under the existing agreement with the same hirer M/s Neptune Exploration and Industries Limited. The learned DR further contended that the mobilization charges received by the assessee in connection with the business in India and therefore as per the provisions of section 44BB, the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with extraction or production of, mineral oils in India is taxable in India. The mobilization fees received by the assessee in connection with the plant and machinery given on hire to be used for extraction or production of, mineral oils in India. Therefore, even if, the said payment was received by the assessee outside the India the same shall be deemed to be profit and gains of such business chargeable to tax in India. He has submitted that the provisions of section 44BB has specifically provided that if any amount paid or payable in or outside India if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me being accrued or arises in India is deemed only that part of income as is reasonably attributable to the operation carried out in India. In assessee's case the activities/operation of moving the rig from Sharjah to India were carried out side the India, therefore, mobilization fees cannot be accrued or arisen in India as per the provisions of section 9(1)(i) of the Act. He has further contended that the provisions of section 44BB provided only modes of computation of profit or the gains of the non-resident engaged in the business of services or facilitates for the exploration of mineral oils and the said provision does not override the provisions of section 5(2) which is a charging section. He has relied upon the following decisions: 1 ACIT v. Jindal Drilling ITA No.6452/Bom/91 2 Saipem SPA v. DCIT 88 ITD 213(Delhi) TM 3 DCIT v. Sonat offshore drilling Inc (Approved by the Bombay High Court (ITA No. 508 of 2007) vide order dated 16th Sept 2008) ITA No.7414/Bom/94 4 Transocean offshore Inc v. DCIT ITA No.05/Del/2003 5 Mc Dermott ETPM Inc v. DCIT 92 ITD 385 (Mum.) 6 R and B Falcon Drilling Co. v. ACIT 14 SOT 281 (Delhi) 7 JDIT(IT) 3(1) v. J Ray Mc. Dermott east ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NGCL and to provide the rig and equipment required to operate under the said contract with the ONGC. The assessee represented in the agreement that Rig is in efficient operating condition and is capable of drilling exploratory, development oil and gas wells and for workover operations, including high angle wells, short drift side track, longdrift side track, drain hole and multilateral hole drilling. Further, it is to be noted that before entering into the agreement dated 3.12.1998 which is a subject matter of this appeal, there was a agreement already subsisting between the assessee and NEPL dated 12.11.1997 and was already in progress on the date when new agreement was signed. The rig in question had been working in India at the time of signing of the agreement in question and working in India as per the agreement between the same parties which has been referred as current agreement in the agreement in question. Therefore, it is clear that at the time of the signing of the agreement dated 3.12.1998, the rig in question was very much in India and working at the site under hire with the same hirer i.e. NEPL. All these facts are not controverted by the assessee. The CIT(A) issued a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is paid outside India is deemed to have accrued in India through business connection as the operations are carried out in India. Thus, there would be no apportionment of income by application of section 9(1) or the explanation (1)(a) to section 9(1)(i). As far as the applicability of section 44BB is concerned, the CIT(A) has also upheld the applicability of the section in the case of the assessee. Therefore, there is no issue before us regarding the applicability of the provisions of section 44BB. As regards, the decisions relied upon by the assessee, first of all it is to be noted that all these decisions are in respect of mobilization fees for the initial mobilization of the rig/machinery/equipments from outside India to the working site at India. Moreover, there are divergent views taken by the different benches of this Tribunal. Some of the decisions are in favour of the assessee and some are in favour of the revenue. Without going into the controversy of the issue of overriding effect of the provisions of sections 5, 9 and 44BB, we are of the view that when there was no initial mobilization of rig for bringing the machinery from outside India to the site of work in India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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