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TMI Blog2011 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ire when used in the prospecting for or extraction or production of oil and gas is covered under the special provision for computing profits and gains under section 44BB of the Act - The nature of receipts on account of provision of supply of vessels on hire basis cannot have the character of fees for technical services within the meaning of explanation 2 to section 9(1)(vii) - The rate at which tax is to be withheld from payments made by Transocean to BOA towards time charter of service vessels will be 4.22% - Decided in favour of the assessee - A.A.R. No. 937of 2010 - - - Dated:- 12-7-2011 - Mr. Justice P.K. Balasubramanyan, Mr. V.K. Shridhar, JJ. Present for the applicant Dr. Anitha Sumanth, Advocate, Mr. Akhil Sambar, ACA,Mr. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipped with various equipments. Therefore such offshore services vessels are the basic requirement for carrying out activity of offshore drilling operations. 3. The applicant submits that section 44BB of the Income-tax Act 1961 (Act) applies to non-residents who are engaged in the business of providing services or facilities which are 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 oil. One of the very generally accepted meanings of in connection with is relation between things one of which is bound up with or involved in another : or again having to do with . Therefore, in connection with any activity would mean that everything which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income derived by BOA ought to be computed in accordance with the computation mechanism under section 44BB of the Act? 2. If the answer to question 1 is in affirmative, what would be the rate at which tax is to be withheld from payments made by Transocean to BOA towards time charter of service vessel? 6. The Ld. Addl. DIT (Intl.Tax) appearing on behalf of the revenue submits that the services carried out by the applicant is technical in nature and income from providing services in India is liable to be taxed as fee for technical services. The services contemplated in section 44 BB are services other than those coming within the purview of Explanation 2 to section 9(1)(vii) of the Act. The services extended by the applicant fall und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing various offshore drilling and support services to ONGC, the applicant has provided 4 vessels to TOVIL to be used on east and west coast of India. For the purposes of section 44BB of the Act, the vessels provided are covered under the definition of plant . The consideration received for supply of plant i.e. the vessels on hire when used in the prospecting for or extraction or production of oil and gas is covered under the special provision for computing profits and gains under section 44BB of the Act. The intention to exclude construction, assembly and mining or like project from the purview of fees for technical services is to draw a line of distinction between business activities and mere rendering of services. This authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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