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TMI Blog2014 (3) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... ract is for providing of mud services on service contract to drill 17 nos. of horizontal and multilateral wells - wells were drilled for the purpose of exploration/production of mineral oil - the services provided by the assessee squarely fall within the ambit of Section 44BB(1) – the CIT(A) rightly directed the AO to compute the income u/s 44BB of the Act – Decided against Revenue. Cancelation of penalty u/s 271(1)(c) of the Act – Held that:- This is not a fit case for levy of penalty under Section 271(1)(c) - As per profit & loss account, there was a loss - merely because the income of the assessee is directed to be determined by the deeming provision of Section 44BB, it cannot be said that assessee concealed the income or furnished inaccurate particulars of income - It is nowhere mentioned either in the assessment order or in the penalty order that assessee concealed any fact or any details furnished by the assessee were found to be wrong or false – The decision in CIT Vs. Reliance Petroproducts Pvt.Ltd. [2010 (3) TMI 80 - SUPREME COURT] followed – the CIT(A) rightly cancelled the penalty levied under Section 271(1)(c) – Decided against Revenue. - ITA Nos. 1509/Del/2013 & 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of DIT vs. OHM Ltd. ignoring the fact that the decision of Delhi High Court has not been accepted by the department against which an SLP has been filed. 7. Whether the CIT(A), has erred in ignoring decisions of jurisdictional High Court in the case of CIT vs. ONGC as an agent of M/s Foramer France and M/s Rolls Royce Pvt.Ltd. 8. Whether the CIT(A), was right in allowing losses on account of expenditure claimed for a contract which had been wound up and for which vouchers were not presented to AO, without examining the vouchers at Appellate stage having rejected these under Rule 46A. 9. Whether on the facts and circumstances of the case, the CIT(A) has erred in holding that the AO was not right in estimating the income of the assessee @ 25% since the assessee failed to produce the books of accounts during the assessment proceedings, despite adequate opportunity. 10. The appellant prays for leave to add, amend, modify or alter any grounds of appeal at the time of before the hearing of the appeal. 3. The facts of the case are that the assessee is a non-resident which is deriving income from providing drilling and well integrated services etc. During th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or to be used, in the prospecting for, or extraction or production of, mineral oils including petroleum and natural gas. Revenues earned by the non-resident from rendering such specific services are covered by section 44BB. Section 44DA is also a provision which applies to non-residents only. It is, however, broader and more general in nature and provides for assessment of the income of the non-resident by way of royalty or fees for technical services, where such non-resident carries on business in India through a permanent establishment situated therein or performs services from a fixed place of profession situated in India and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with the permanent establishment or fixed place of profession. Such income would be computed and assessed under the head 'Business' in accordance with the provisions of the Act, subject to the condition that no deduction would be allowed in respect of any expenditure or allowance which is not wholly or exclusively incurred for the business of such permanent establishment or fixed place of profession or in respect of am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traction or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession : 7. When we read Section 44BB in the light of the scope of the contracts entered into by the assessee with ONGC, we find that the scope of the work of the assessee falls squarely within the ambit of Section 44BB because the first contract is for hiring of production testing surface equipment in operation condition for carrying out production testing of high pressure exploratory and development wells. The second contract is for providing of mud services on service contract to drill 17 nos. of horizontal and multilateral wells. Admittedly, such wells were drilled for the purpose of exploration/production of mineral oil. In view of the above, in our opinion, the services provided by the assessee squarely fall within the ambit of Section 44BB(1) and, therefore, applying the ratio of Hon'ble Jurisdictional High Court's decision in the case of OHM Limited (supra), we hold that the CIT(A) rightly directed the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s directed to be determined by the deeming provision of Section 44BB, it cannot be said that assessee concealed the income or furnished inaccurate particulars of income. It is nowhere mentioned either in the assessment order or in the penalty order that assessee concealed any fact or any details furnished by the assessee were found to be wrong or false. In view of the above, on these facts, in our opinion, the decision of Hon'ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. - (2010) 322 ITR 158 (SC) would be squarely applicable. Respectfully following the same, we hold that learned CIT(A) rightly cancelled the penalty levied under Section 271(1)(c). The same is sustained. Cross Objection No.120/Del/2013 :- 13. At the time of hearing before us, the learned counsel stated that the cross-objection is only in support of the order of learned CIT(A). He fairly submitted that if the Revenue's appeal is dismissed, the cross- objection would be rendered infructuous. 14. Since we have already upheld the order of learned CIT(A) and dismissed the Revenue's appeal, the cross-objection filed by the assessee is treated as infructuous and rejected as such. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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