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TMI Blog2014 (7) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... d as only clarificatory in nature and in order to make all the provisions relating to royalty/FTS workable, harmonious construction was to be placed. Relying upon CIT v. Hindustan Bulk Carrier [2002 (12) TMI 10 - SUPREME Court] – revenue’s contention is that section 44DA inserted by the Finance Act, 2010 w.e.f. 1-4-2011 in section 44BB is retrospective and, therefore, royalty and fees for technical service should be taxed u/s 44DA and not u/s 44BB - the amendment cannot be held to be retrospective particularly because it brings substantial change in the taxability of assessee - an amendment to the taxing statute if results in higher tax burden on assessee then it is prospective in nature and not retrospective - the contentions cannot be accepted - income arising from letting out equipment, used in connection with the exploration/ prospecting/ extraction of mineral oil taxed u/s 9(1)(vi) by cannot be accepted in view of explanation (iv-a), the income is to be assessed u/s 44BB – Decided in favour of Assessee. Income from sale of goods – AO taxed the revenue receipts by applying a presumptive profit rate of 25% in gross revenues - Held that:- The assessee is a Cayman Island com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt it has nexus with the operations carried out in India in connection with the sale - Section 5(2) which deals with the scope of total income of a non-resident is relevant - the total income of a non-resident includes all income from what-ever source derived which is received or deemed to be received in India in such year by or on behalf of such person or accrues or arises or is deemed to accrue or arise to him in India during such year - receipt of income refers to the first occasion when the recipient got the money under his own control – thus, the matter is remitted back to the AO for attributing income out of the two contracts to the extent of operations relating to sales carried out in India – Decided partly in favour of Assessee. Levy of interest u/s 234B of the Act – Held that:- The AO is directed not to charge interest u/s 234B in respect of all contracts entered into by the assessee with various organizations in India except with respect to the contracts entered into with HOEC and ONGC - as far as income taxable u/s 44BB in respect of various contracts are concerned, the assessee itself has accepted the liability from the very beginning - it cannot be inferred that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) What is the basis of claim the benefits of Sec. 44BB. (ii) Furnish the copies of all contracts entered by you through which revenue has been earned during the year. (iii) Details of revenue earned but not offered for taxation and the basis for the same; (iv) Copies of accounts submitted to RBI for F.Y. 2006-07; (v) Detailed note on the type of services rendered; (vi) Reply to all the queries raised in earlier notices issued by the DDIT(Int. Tax), Dehradun; (vii) Certificate of Incorporation of the Company abroad for claiming the status of non-resident; (viii) Submit the details of payments on which tax has been deducted at source together with copies of TDS returns. (ix) Details of supplies made during the year. (x) Revenue reconciliation with TDS certificates. 3. The assessing officer noticed that as per the revenue reconciliation the assessee had, inter alia, earned revenue as under: ( a ) on account of sale of material from M/s Cairn Energy India Pte. Ltd. ₹ 12,66,244 ( b ) M/s Gujarat State Petroleum Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of expenses, the revenue received by it from rendering of various services and rental receipts was to be taxed @ 25% of the total receipts. 7. As regards the receipts from ONGC, the assessing officer observed that as per contract with ONGC the bidding document was procured by the Indian office of the assessee NRC where Mr. C.K. Pathak was the Manager. He pointed that Mr. C.K. Pathak had signed the Bond Application Request also and the contract was signed on 2-8-2006 in India by Mr. C.K. Pathak. He further noted that in the contract the address of the assessee was the same as Mumbai office address noted earlier and the supplies were made in India and the equipment supplied had been put to use by the contractor. He further noted that in the scope of work it had been mentioned that the contractor would deliver the goods at NHAVA Supply Base for transportation to worksite. He further noted that regarding delivery of goods the following clause was inserted: The goods shall be delivered as per the delivery schedule hereunder: First five sets of items#1: Within 30 days of ONGC Nhava Base from date of firm order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olidated contracts were independent of each other; 2. That the assessing officer erred on facts and in law in holding that the contractual revenues were to be bifurcated into 'equipment rental', 'service charges' and 'sale of consumables' and brought to tax independently and separately; 3. That the assessing officer erred on facts and in law in not accepting that the contracts executed by the assessee were in the nature of 'mining or like projects' as referred to in the Explanation to section 9(1)(vii) of the I.T. Act, 1961. 4. That the assessing officer erred on facts and in law in not accepting that the contractual revenues of the assessee were taxable under section 44BB of the I. C. Act, 1961. 5. That the assessing officer erred on facts and in law in holding that the aggregate revenues of the assessee against services and rentals were ₹ 479,998,930 against the actual revenue of ₹ 329,970,586. The AO in annexure to his own draft assessment order u/s 144C has mentioned that the revenues against equipment rental and services are ₹ 148,725,387 and ₹ 181,245, I 99/- respectively. The AO has erroneously added the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st had been mentioned in the assessment order. 13. That the assessing officer has erred on facts and in law in levying interest under section 234B especially when there was no liability on the assessee to pay advance tax under section 209( 1)( d) of the Income-tax Act, 1961. 13. At the time of hearing, ld. Counsel for the assessee did not press ground no. 5 as the necessary correction had been carried out by assessing officer in the proceedings us/ 154. 14. Ld. Counsel submitted that ground nos. 1 to 8 deal with invoking of section 44DA by assessing officer thereby attributing 25% profit to the PE as against 10% of the aggregate of the amount deemed as profits and gains of such business chargeable to tax under the head profits gains of business , computed by assessee by applying sec. 44BB of the Act. 15. Ld. Counsel pointed out that sec. 44DA is applicable from A.Y. 2011-12. He further submitted that assessing officer was not justified in segregating the revenue between royalty, fees for technical services etc., because assessee was imparting composite services and the contract was a consolidated contract for executing a specific scope of work. He pointed out that se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -6-1976 by the Finance Act, 1976. The heading of section 44D is Special provisions for computing income by way of royalties, etc., in the case of foreign companies . This section provided gross basis of taxation of royalty or fees for technical services (FTS). As per section 115A (1) (b) royalty/FTS was to be taxed at the rate prescribed therein. Section 115A (3) provided that no deduction in respect of any expenditure or allowance shall be allowed to the assessee. The heading of Section 115A is Tax on dividends, royalty and technical fees in the case of foreign companies . Amendment was also made in section 9(1)(vii) whereby Explanation 2 was inserted by the Finance Act, 1977 w.e.f. 1-4-1977. 3. Section 44BB which is a special provision for computing profits and gains in connection with the business of exploration, etc. of mineral oils was inserted by the Finance Act, 1987 with retrospective effect from 1-4-1983. 4. Subsequently, section 44DA was inserted by the Finance Act, 2003 w.e.f 1- 4-2004. The heading of this section is special provision for computing income by ways of royalties, etc., in case of non-residents. As per this section royalty/ FTS r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be concluded that the same was to override section 44BB. This is also clear from the fact that the non obstante was there in section 44D right from its insertion, which as stated above had come into operation much prior to insertion of section 44BB in the Act. Also no deduction is contemplated u/s. 44BB or for that matter under any of the presumptive taxation sections like 44AD, 44AF, 44B, 44BBB, etc. Thus the relevance of non- obstante clause in section 44D was only to the extent of non-allowance of deductions otherwise available u/s. 28 to 44C 9. In section 44DA there is no such non-obstante clause for the simple reason that under this section income is to be computed on net basis i.e. after allowing deduction u/s. 28 to 44C Since u/s. 44DA income is to be computed as per the provisions of Act there is no need for having any non-obstante clause. Thus from the absence of non-obstante clause it cannot be inferred that section 44DA shall not have overriding effect over 44BB. Section 44D or section 44DA overrides section 44BB not because of presence or absence of non obstante clause but because royalty/FTS was always intended to be taxed under these sections and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubts have been raised regarding the scope of section 44BB vis-a-vis section 44DA as to whether fee for technical services relating to the exploration sector would also be covered under the presumptive taxation provisions of section 44BB. In order to remove doubts and clarify the distinct scheme of taxation of income by way of fee for technical services, it is proposed to amend the proviso to section 44BB so as to exclude the applicability of section 44BB to the income which is covered under section 44DA. Similarly/ section 44DA is also proposed to be amended to provide that provisions of section 44BB shall not apply to the income covered under section 44DA. These amendments are proposed to take effect from 1st April 2011 and will/ accordingly/ apply in relation to the assessment year 2011-12 and subsequent years. n [Clauses 16/ 17J 11. From the above, it is absolutely clear that the legislature always intended to tax FTS u/s 44D/44DA/115A and not u/s 44BB. Precisely for this purpose clarificatory amendments were brought in sections 44DA and 44BB. This being the position, in my opinion, the amendments shall have operation right from the time section 44DA was inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights/ it is deemed to be prospective only- 'nova constitutiofuturis formam imponere debet non praeteritis'-a new law ought to regulate what is to follow/ not the past. It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectively may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole. 14. The presumption against retrospective operation is not applicable to declaratory statutes ... In determining, therefore, the nature of the Act, regard, must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well-settled that if a statute is curative or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in certain decisions of different High Courts in which a contrary view was taken. Thus, the Explanation is merely a clarificatory provision and has application to the period of assessment in the case, i.e., assessment year 1984-85. (c) CIT v. Shelly P. Products 261 ITR 367 (SC): In this case the issue involved was whether insertion of proviso ( b) to section 240 by the Finance Act, 1988 and made effective from 1-4-89, had retrospective operation or not. The assessment year involved the Supreme Court was 1976-77. The Supreme Court held that the amendment was retrospective in nature. The Court held as under: We have held that even under the unamended section 240 of the Act, the assessee was only entitled to the refund of tax paid in excess of the tax chargeable on the total income returned by the assessee. We have held so without taking the aid of the amended provision. It, therefore, follows that proviso (b) to section 240 is also declaratory. It seeks to clarify the law so as to remove doubts leading to the courts giving conflicting decisions, and in several cases directing the Revenue to refund the entire amount of income-tax paid by the assessee where the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on must of necessity be regarded as clarificatory. If it is clarificatory in nature, it is expressive of a position in law which Parliament intended to hold the field at all material times and must consequently be regarded as operating with retrospective effect. 14. Moreover, if it is held that the amendments are prospective and would be applicable from A.Y. 2011-12 onwards it would then mean that in assessment years 2004-05 to 2010-11 the FTS would be taxed u/s 44BB while in all other, prior or subsequent, years the same would be taxable either u/s 44D or 44DA or 115A and not u/s 44BB. Certainly the legislature has not intended so. There are no valid reasons or circumstances to hold that for AY 2004-05 to 2010-11 the legislature wanted to give a different treatment to FTS. Such a situation, in my view, would not be consistent with the above discussed legislative intent. 15. In view of the above discussion and the legal position it is humbly submitted that the amendments made in section 44DA and proviso to section 44BB(l) by Finance Act, 2010 are clarificatory in nature and hence shall have retrospective operation right from the time when section 44DA was inserted in the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter due verification and enquiry, passed an assessment order dt. 29th Nov., 2005 under s. 143(3) of the Act. 39. Sec. 44BB of the Act provides that where an assessee, being a non-resident, is engaged in the business of providing services or facilities in connection with, or supplying plant and machinery or hire used, or to be used, in prospecting for, or extraction or production of, mineral oils, in which case, a sum equal to ten percent of the aggregate of the amounts specified in sub-s. (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 . 40. The proviso to s. 44BB further clarifies that sub-s. (1) of s. 44BB would not apply where the provisions of s. 42, or s. 44D or s. 115A or s. 293A apply for the purposes of computing profits or gains or any other income referred to in these sections. 41. Sec. 44D is a special provision for computing income by way of royalties and fees for technical services in the case of foreign companies. It starts with a non-obstante clause notwithstanding anything to the contrary contained in ss. 28 to 44C . Sec. 44D(b) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of mineral oils and the revenues received by the assessee. The AO rejected the stand taken by the Revenue authorities and held that the income of the petitioner was chargeable under s. 44BB of the Act. Once an order is passed under s. 143(3) of the Act, a presumption is raised that such an order has been passed on an application of mind. 46. By the Finance Act 2003, s. 44DA was inserted in the Act w.e.f. 1st April, 2004. This is another special provision for computing income under the head profits and gains of business or profession by way of royalty or fees for technical services received by a non-resident or foreign company which carries on a business in India through a permanent establishment. The Explanation to this section provided that fees for technical services shall have the same meaning as provided in Expln. 2 to cl. (vii) of sub-s. (1) of s. 9. 47. Sec. 44DA was amended w.e.f. 1st April, 2011 by Finance Act, 2010, and a proviso was added indicating that the provisions of s. 44BB shall not apply in respect of income referred to in this section. 48. After the insertion of s. 44DA in the Act, the combined effect of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific finding that sec. 44DA would take effect from 1-4-2011 and would apply in relation to assessment year 2011-12 and subsequent years. He submitted by inserting section 44DA in the proviso to sec. 44BB, w.e.f. 1-4-2011 a substantive amendment has been made as it affects the liability of assessee because u/s 44BB there is presumptive basis of taxation. Ld. Counsel submitted that the amendment brought out by the Finance Act 2010 in section 44BB and 44DA of the Act amounts to substantial change in the scheme of taxation of income arising to non-resident engaged in the business of exploration/ prospecting/ extraction of mineral oil. Such a substantial amendment can take effect prospectively and cannot have retrospective operation. In this regard ld. Counsel relied on the decision of Hon'ble Supreme Court in the case of Sedco Forest International Drilling Inc. others v. CIT 279 ITR 310, wherein the Hon'ble Court turned down the department's contention and held that amendment in explanation 2 to section 192 made by the Finance Act 1999 would apply prospectively w.e.f. 1-4-2000 even though the explanation was inserted for the removal of doubts. He further submitted that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision is more specific than what is contemplated by Section 44DA. Section 44BB refers specifically to services or facilities 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 oils . Revenues earned by the non-resident from rendering such specific services are covered by Section 44BB. It is a well settled rule of interpretation that if a special provision is made respecting a certain matter, that matter is excluded from the general provision under the rule which is expressed by the maxim Generallia specialibus non derogant . It is again a well-settled rule of construction that when, in an enactment two provisions exist, which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This was stated to be the rule of harmonious construction by the Supreme Court in Venkataramana Devaru v. State of Mysore, AIR 1958 SC 255. If as contended by the Revenue, Section 44DA covers all types of services rendered by the non-resident, that would reduce section 44BB to a useless lumber or dead letter and such a result would be opposed to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing been inserted only to clarify the position. So understood, the proviso to sub-section (1) of Section 44BB can only mean that the flat rate of 10% of the revenues cannot be deemed to be the profits of the non-resident where the services are of the type which do not fall under that section, but are more general in nature so as to fall under Section 44DA. Similarly, the second proviso to sub-section (1) of Section 44DA can only be interpreted to mean that where the services are general in nature and fall under the sub-section read with Explanation 2 to Section 9(1)(vii) of the Act, then an assessee rendering such services as provided in Section 44BB cannot claim the benefit of being assessed on the basis that 10% of the revenues will be deemed to be the profits as provided in Section 44BB. In other words, the amendment made by the Finance Act, 2010 w. e. f. 01.04.2011 in both the sections, cannot have the effect of altering or effacing the fundamental nature of both the provisions or their respective spheres of operation or to take away the separate identity of Section 44BB. We do not, therefore, see how these amendments can assist the Revenue's contention in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be pressed into service. 44. The normal function of a proviso is to except something out of the main enactment or to qualify something enacted therein which but for the proviso would be in the purview of the enactment. It is also a settled law that the main part of a section must not be construed in such a way as to render a proviso to the section redundant (R v. Leeds Prison (Governor) Ex. p. Stafford [1964] 2 QB 625). Proviso sometime clarifies ambiguity in the section to which it is attached to. Sometimes proviso can stand on its own independent of main enactment to which it is attached. Hon'ble Supreme Court in the case of UP State Road Transport Corporation v. Mohd. Ismail (AIR 1991 SC 1099), while interpreting the proviso to the Regulation 17(3) of the UP State Road Transport Corporation has held that sometimes a proviso in effect becomes a substantive provision. Regulation 17(3) reads as follows: 17(3) The service of a person who fails to pass the fitness test, referred to in sub-regulation (2), may be dispensed with; Provided that the persons, whose services are dispensed with may, in the discretion of the Corporation, be offered alternative job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than income referred to in sub-section (1) of section 44DA for words a foreign company, includes any income by way of royalty or fees for technical services . Therefore, w.e.f. 1.4.2004 fee for technical services which is not connected with permanent establishment of business or fixed place of profession in India, will be taxable u/s 115A(1)(b) of the Act. As observed earlier section 44DA was inserted in proviso to section 44BB (1) by the Finance Act, 2010 with effect from 1.4.2011 and simultaneously inserted second proviso to section 44DA applicable from assessment year 2011-12 according to which provisions of section 44BB (1) will not be applicable in respect of income referred to this section. On combined reading of proviso to section 44BB (1) and second proviso to section 44DA it is clear that the fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil though effectively connected with PE or fixed place of profession will fall not under section 44BB(1) and will be assessable under section 44DA of the Act. To make it more clear the fee for technical services can be divided in following categories: (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loration and production companies in India. The assessee had applied to the Authority for a ruling as to whether its income would fall within the ambit of and should be taxed u/s 44BB of the Ac, which claim of assessee was upheld and it was held that if the non-resident was engaged in the business of providing services in connection with the prospecting etc., of mineral oils, the computation provisions relating to fees for technical services in sec. 44DA had to yield to sec. 44BB. He pointed out that this decision was followed in the case of Ohm Ltd. 335 ITR 423 (AAR), which view has been upheld by Hon'ble Delhi High Court in the case of OHM Ltd. (supra), as noted earlier. 32. Ld. Counsel further pointed out that in the case of Schlumberger v. DIT 6063/Del/10 (supra) the ITAT relying on the decision of CGG Veritas has held that income in connection with the business of exploration of mineral oils in the assessment year prior to 1-4-2011 will be assessed u/s 44BB. In para 7.11 the ITAT has observed as under: It has further been the contention of the revenue that the amendments vide Finance Act 2010 inserting mutually exclusionary clauses in s. 44BB and s. 44DA a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115A and not u/s 44BB. 37. We have considered rival submissions and perused the material on record. Admittedly there were different composite contracts entered into between assessee and Indian companies and the assessing officer had bifurcated the contract receipts between service fee, rental income and sale of equipment. The assessing officer was of the opinion that payment received qua services rendered was in the nature of fees for technical services in terms of sec. 9(1)(vii) and the payments received qua hire of equipment was in the nature of 'royalty' in terms of section 9(1)(vi) of the I.T. Act. It is not disputed that assessee had PE in India and, therefore, the aforesaid receipts were taxed u/s 44DA by the assessing officer. The assessing officer taxed the entire receipts of assessee @ 25%. The assessing officer held that the simultaneous amendment made by Finance Act 2010 w.e.f. 1-4-2011 in section 44DA and proviso to section 44BB of the Act, being clarificatory in nature, are retrospective in operation and was, thus, applicable to the year under consideration. The assessee's contention was that its receipts were taxable u/s 44BB because they were in conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head salaries . 44. As per CBDT Instruction no. 1862 dated 22-10-1990 [ 165 ITR 161 (St.)], consideration for mining includes rendering of services like imparting of training for carrying out drilling operations in connection with the extraction of mineral oils undertaken by recipient. Thus, the consideration, inter alia, for mining was excluded from section 9(1)(vii), provided the same was undertaken by assessee itself. 45. From the above exclusionary clause it is evident that the Royalty and FTS in respect of incomes contemplated u/s 44BB were taxable u/s 9(1)(vi) and 9(1)(vii) till the date of insertion of exclusionary clauses. Thus, the royalty and FTS which was for the nature of services contemplated u/s 44BB were excluded from sections 9(1)(vi) and 9(1)(vii) and brought under section 44BB which is a special provision for computing profits and gains in connection with the business of exploration etc. of mineral oils. Section 44BB was inserted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning as in section 80B; (c) royalty shall have the same meaning as in 87 [Explanation 2] to clause (vi) of sub-section (1) of section 9; (d) royalty received 88[from Government or an Indian concern in pursuance of an agreement made by a foreign company with Government or with the Indian concern] after the 31st day of March, 1976, shall be deemed to have been received in pursuance of an agreement made before the 1st day of April, 1976, if such agreement is deemed, for the purposes of the proviso to clause (vi) of sub-section (1) of section 9, to have been made before the 1st day of April, 1976.] 48. Noticeable features of this section are as under:- (a) It is special provision for computation of income by way of royalty or fees for technical services. Thus a computation provision. (b) Applicable to only that portion of royalty which consists of lump sum consideration for the transfer outside India, or for imparting of information outside India in respect of any data, documentation, drawing or specification relating to patent, invention, model, design, secret formula or process or trade mark or similar property. Thus, it primarily deals with considerations pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (b) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; (c) permanent establishment shall have the same meaning as in clause (iiia) of section 92F.] 50. Noticeable features of section 44 DA are as under:- (a) covers the cases of royalty and FTS received from 1-4-2003 onwards by non-residents/ foreign co. (b) non-resident/ foreign co. carries on business in India through a PE situated in India. (c) Non-resident performs professional services from a fixed place of profession in India. (d) Right, property or contract in respect of which the royalty/ FTS are paid is effectively connected with such PE/ fixed place of profession. (e) Taxable under profits and gains of business or profession. (Note) [Therefore, if royalty/ FTS is received by a non-resident who is engaged in the business of providing services or facilities in connection with, or supplying P M on hire used, or to be used, in the prospecting for, or extraction or production of mineral oils then this will be taxed u/s 44BB but if it is received on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ; (c) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; [(3) No deduction in respect of any expenditure or allowance shall be allowed to the assessee under sections 28 to 44C and section 57 in computing his or its income referred to in sub-section (1). 52. Noticeable features of section 115A are as under:- Section 115A(b) w.e.f. 1-4-04. (a) covers the cases of royalty/ FTS other than referred to in section 44DA(1). (b) Rate of tax is as under: (i) 30% if in pursuance to agreement made after 31/3/76 to 31/5/97; (ii) 20% if in pursuance to agreement made between 1-6-97 to 31/5/2005; (iii) 10% if in pursuance to agreement made on 1-6-2005 or thereafter. (c) No deduction is allowable in respect of any expenditure or allowance u/ss 28 to 44C and 57. 53. Section 44BB inserted by the Finance Act, 1987 with retrospective effect from 1-4-1983 reads as under: [Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. 44BB. (1) Notwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um and natural gas.] 54. The basic ingredients of this section are: (i) that the non-resident assessee is engaged in the business of providing services or facilities in connection with the prospecting or extraction or production of mineral oils. (ii) Non-resident assessee is engaged in the business of supply plant and machinery on hire used or to be used, in prospecting for or extraction or production of mineral oils. (iii) The amount being 10% of gross receipts would be assessable as business income . However, a proviso was also inserted which, inter alia, excluded the royalty or FTS contemplated u/s 44D or section 115A. Section 44DA inserted in this proviso by Finance Act 2010 w.e.f. 1-4-2011. 55. From the combined reading of these sections it is evident that all the sections relating to royalty/FTS operate in different fields and that is the reason for insertion of proviso to sections 44BB/44DA/115A. Where the assessee was imparting services which entitled it to royalty or FTS simpliciter then the same continues to be assessed u/s 9(1)(vi)/(vii) read with section 115A but where the assessee is imparting services in relation to oil exploration the Royalty/ FTS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the case of CIT v. Hindustan Bulk Carrier 259 ITR 449 (SC): The court ascertain the intention of the Legislature by directing its attention not merely to the clauses to be construed but to entire statute; it must compare the clause with other parts of the law and the setting in which the clause to be interpreted occurs. Such a construction has the merit of avoiding any inconsistency or repugnancy either within a section or between two different sections or provisions of the same statute. It is the duty of the court to avoid a head on clash between two sections of the same Act. Whenever it is possible to do so, it must be done to construe the provisions which appear to conflict so that they harmonise. It should not be lightly assumed that Parliament had given with one hand what it took away with the other. The statute must be read as a whole and one provision of the Act should be construed with reference to other provision in the same Act so as to make the consistent enactment of the whole statute. 61. A question arises as to why such an amendment was necessitated. 62. The international tax policy adopted by a country is always driven by economi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gher tax burden on assessee then it is prospective in nature and not retrospective. We find that this issue has been dealt elaborately by Hon'ble Jurisdictional High Court (Uttrakhand) in B.J. Services (supra). We are not inclined to accept the contentions advanced on behalf of the revenue, reproduced earlier, for the simple reason that the issue is squarely covered by the decision of Hon'ble Jurisdictional High Court, decision of Hon'ble Delhi High Court in the case of OHM (supra) and by the decision of the ITAT in CGG Veritas (supra) and Phonex (supra). 66. As far as ground no. 8 regarding income arising from letting out equipment, used in connection with the exploration/ prospecting/ extraction of mineral oil taxed u/s 9(1)(vi) by assessing officer is concerned, we are of the opinion that in view of explanation (iv-a), the income is to be assessed u/s 44BB. 67. Accordingly, ground nos. 1 to 8 are allowed. 68. Ground no. 9: Brief facts apropos ground no. 9 are that contract with Cairn Energy Pty Ltd. was entered into with assessee for providing various consumables by assessee like fishing tools and services etc. Assessing officer had taxed these revenue recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to use by the contractor's personnel. (c) In the scope of work, it was mentioned the Contractor shall deliver the goods at NHAVA Supply Base for transportation to worksite . It further mentioned the goods shall be delivered as per the delivery schedule hereunder (d) The invoices submitted by the assessee mentioned consignee as Baker Hughes Asia Pacific Ltd., Mumbai also. 72. With reference to the contract with Hindustan Oil Exploration co. Ltd., the assessing officer pointed out that income arose or accrued to the assessee u/s 5(2) for the following reasons: (i) Mr. C.K. Pathak, the Country Manager, was negotiating and concluding the contract on behalf of Baker Hughes Asia Pacific Ltd., which was evident from the correspondence with the Hindustan Oil Exploration Co. Ltd. and the assessee. (ii) The purchase order was issued to Baker Hughes Asia Pacific Ltd., Mumbai; (iii) The place of delivery of goods was Chennai Sea Port in India and it was CIF Chennai and as per the agreement, the title in goods passed in India. 73. Ld. DRP confirmed the AO's action by observing that provisions of section 44BB were restricte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - CIF (named port of destination); Cost, Insurance freight means that a seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss or damage to the goods, as well as any additional costs due to events occurring after the time of delivery are transferred from the seller to the buyer. 81. He referred to the details contained in the invoice ( at page 558 of the PB) and pointed out that commercial invoice shall, inter alia, contain details of total price CIF from which-ever port the materials will be imported into India. Nevertheless the CIF rates shall include the transit insurance upto the company's warehouse in India. Transportation from the port to warehouse shall be company's responsibility. 82. Ld. counsel, accordingly submitted that in accordance with the Incoterm under CIF, the title in the goods was transferred by BHAPL to ONGC at the port of shipment i.e. Singapore. This is evident from the invoice copy as well as the bill of lading enclosed in Annexure 'C'. As per the Incoterm CIF, the risk was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shore service contract for port handling and clearance, inland transportation, insurance, delivery on f.o.r. destination basis, storage, erection including associated civil works, testing and commissioning of all equipment and materials including offshore equipment. Under the terms of the bid, the foreign bidder was authorized to assign the whole or part of the contract to an independent contractor, subject to approval of PGCL. In view of this provision the applicant requested PGCI to award the offshore contract to itself and the on-shore supply and service contract to be performed in India to L T of India. PGCI awarded to the applicant the off-shore contract covering all works to be performed outside India including supply of all offshore equipment and material on c.i.f. Indian Port of embarkation basis. The Authority ruled: (i) That none of the stipulation in the contract gave rise to the formation of an association of persons in the matter of the execution of the contract which was a mere collaboration and overall responsibility assumed by the applicant for the successful performance of the project. PGCI awarded separate aspects of the contract to the applicant and L T, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 1987-88 and 1988-89. He treated the fabrication as having a nexus with the installation and treated the income from the Korean operations as taxable in India; and estimated the profits of the assessee under the agreement at 20 percent of the gross receipts and taxed 2 per cent of the contract revenue in Korean operations. The Commissioner (Appeals) held that the contract was indivisible for the purposes of attributing the profits to the permanent establishment in India and held that though the actual receipt on fabrication operations in Korea was not taxable, the work of designing and engineering of platforms was taxable under the Convention read with section 9(1) of the Income-tax Act, 1961 and directed that the profits be computed at one per cent of the receipts in respect of the Korean operations and at 10 per cent of the receipts relating to the Indian operations in terms of the CBDT Instruction No. 1767 dated July 1, 1987. Tribunal, on appeal, held that: (i) the contract was divisible, (ii) no part of the income attributable to Korean operations could be taxed in India as before the coming into existence of the permanent establishment in India the work of fabrication was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test found out that the system did not conform to the contractual parameters, as per article 21.1 of the Supply Contract, the only consequence would be that the Cellular Operator would be entitled to call upon the assessee to cure the defect by repairing or replacing the defective part. If there was delay caused due to the acceptance test not being complied with, Article 19 of the Supply Contract provided for damages. Thus, the taxable event took place outside India with the passing of the property from seller to buyer and acceptance test was not determinative of this factor. The position might have been different if the buyer had the right to reject the equipment on the failure of the acceptance test carried out in India. In Skoda Export (supra), the Andhra Pradesh High Court dealt with this issue in the following manner:- We may also mention that learned standing counsel for the Department challenged the finding of the Tribunal that the sale of machinery was completed outside India; According to him, the sale was completed only in India, inasmuch as the assessee was entitled to inspect and satisfy itself about the quality and standard of the machinery supplied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. He, therefore, submitted that no income can be attributed in respect of operations which were carried out outside India. 93. Ld. DR referred to the decision of Hon'ble Supreme Court in the case of Kanchanjunga Sea Foods Ltd. (Civil Appeal no. 3844-3847 of 2003 dated 7-7-2010). 94. Ld. DR referred to the agreement with HOEC vide agreement no. PY1L6A060, contained at pages 539 onwards of the paper book. He referred to page 540 and pointed out that the address of the assessee company was as under: 852, 5th Floor, Building No. 8, Solitaire Corporate Park, Andheri- Ghatkopar Link Road, Chakala, Andheri (East), Mumbai-400093 95. He referred to delivery terms contained at page 541 of the paper book and pointed out that the same were CIF (Cost Insurance and Freight) Chennai Sea Port and, accordingly, the insurance was to be paid by assessee from the port of shipment to the port of delivery (Chennai Sea Port) and, thereafter, insurance from Chennai to company's supply base at Cauvery Basin was responsibility of the company viz. HOEC. 96. Ld. DR further referred to : - delivery documents - Title of supply (clause 17 section 1) - Ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al feature of a contract of sale CIF is that performance is satisfied by delivery of documents and not by the actual physical delivery of the goods, it follows that all that the buyer can call for is the delivery of the documents we have mentioned. This represents the measure of the buyer's right and the extent of the vendor's duty. The buyer cannot refuse the documents and ask for the actual goods nor can the vendor withhold the documents and tender the goods they represent. 101. Ld. DR submitted that as per CIF contract, sale of goods is complete when documents are tendered and the same is not linked with supply of goods. He submitted that transfer of risk is different from transfer of title. Risk is only of loss or damage. 102. Ld. DR referred to a note on CIF contract and pointed out that CIF contract is not a sale of goods itself but sale of documents relating to goods. It was observed in the said note that effectiveness of the CIF contract depends on the transfer of the documents which give the buyer control, and a right of disposal of the goods, and rights to recover compensation if they are damaged due to the default of the carrier or due to some insured peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livered and the payment is made by buyer. He submitted that decisions relied on by the assessee, pertaining to sales, which took place on FOB basis, are not applicable to the facts of the case. 106. In regard to the contract with ONGC, contained at pages 656 onwards of the paper book, ld. DR referred to following clauses: 2.0 Scope of work/ contract: Scope of contract shall be as defined in the contract, specifications, drawings and annexure thereto at Annexure-III. 4.3. Contractor's local address: Baker Hughes Asia Pacific Limited 851, 5th Floor, Bldg No. 8, Solitiare Corporate Park, Chakala, Andheri (East) Mumbai0400063. Fax: 56976835 7.0 Remuneration and terms of payment. 7.4. Invoices with original supporting documents duly countersigned by the Corporation's representative/ engineer wherever applicable will be submitted on completion of job by the contractor or corporation and payment shall be made within 15 working days from the date of receipt of invoice at the above office. The first payment under the contract shall however be subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er recovering the storage charges at the rate of 5% of the value of goods for each month or part of a month and the loss and expense if any caused to ONGC, pay balance to the supplier. 27. Packing Marking. 27.1. The supplier shall consign/ship the materials in sea worthy/ Air worthy packing conforming to the international norms of packing/ prescribed standards in force to withstand air/ ocean/ land journey and ensuring the safety of cargo en-route and also arrival of materials at ultimate destination in good condition. Hazardous/ dangerous cargo ordered alongwith other material, against a particular supply order, the hazardous/ dangerous cargo should be packed in a separate box to avoid payment of excess freight and delay in clearance. The consignment shall be comprehensively insured against all risks by the supplier in case of CIF contracts from contractor's ware-house to ultimate consignee's ware house basis and each case/packing shall have on its outer side the following marking in English in indelible ink: . 29. Short/damaged/defective/non receipt of material: The supplier is responsible for safe arrival of the material upto destination. Should there be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale of Goods Act will apply and, accordingly, the intention of the party when the title passes assumes significance. In this regard he referred to para 667 of the paper book wherein clause 7 dealing with remuneration and terms of payment is contained, as reproduced earlier, and pointed out that invoice was raised in the name of sister concern. 109. He further referred to para 7.4 of the agreement and pointed out that invoice could be raised only on completion of job. 110. As per para 8.3 read with para 8.4.2, the custom duty was also paid by assessee. 111. As per para 11, import clearance was to be done by assessee and as per para 16 read with section 27, insurance was done by assessee. 112. Ld. DR further referred to the clause 12 dealing with rejection and pointed out that ONGC had right to reject the goods if they were not as per the specified terms of the contract. He pointed out that assessee was responsible for the safe arrival of goods up to the destination and he had to make good the deficiency as per clause 29 of the agreement. He referred to clause 30 of the agreement and pointed out that 100% payment was to be made for the equipment/ goods supplied withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shipping documents were handed over to the nominated bank where the letter of credit was opened. The sale was complete and unequivocal. There is no condition in the contract which empowers the respondent to keep control of the goods and/or to repossess the same. With the completion of this sale the income accrued outside India. There was neither any material to show that accrual of such income was attributable to any operations carried out in India nor any material to show that the PE of the respondent-assessee had any role to play in the offshore supply of the equipments. 117. Ld. DR pointed out that in view of above facts it was held that the title to goods passed outside India. 118. With reference to the decision in the case of Hyundai Heavy Industries (supra), ld. DR pointed out that the finding in the said decision was that contract was divisible and the work of fabrication was complete in Korea and the fabricated platform was handed over to the company before the PE had come into existence. Therefore, this decision is distinguishable on facts. 119. The other decisions relied on by the Ld. AR primarily deal with the attribution of income having regard to the operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offshore services and furthermore title of goods passed on to Petronet outside the territory of India and services had also been rendered outside India. In this regard ld. DR referred to page 425 of the report, wherein clause 22.1, dealing with one of his title to the goods was reproduced: 22.1. Title to equipment and materials and contractor's equipment: The contractor agrees that title to all equipment and materials shall pass to the owner from the suppli4er or subcontractor pursuant to section E of exhibit H (general project requirements and procedures). Contractor shall, however, retain care, custody, and control of such equipment and materials and exercise due care thereof until (a) provisional acceptance of the work or (b) termination of this contract, whichever shall first occur. Such transfer of title shall in no way affect the owner's rights under any other provision of this contract . 123. With reference to above clause, ld. DR pointed out that the contract clearly stated, where title would pass and this was made clear at page 430 placitum 34. Therefore, this decision is not applicable. 124. Ld. DR further referred to the decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the terms of the contract it was found that sale and the transfer of title took place outside India. 130. Ld. DR Shri Sanjeev Sharma in his written submissions dated 11th February 2014, inter alia, submitted as under: 6. To understand the scope of sale of goods the contract with HOEC is discussed. Contract dated 19th April 2006 is issued to Indian office of the assessee (page 540 of the PB) and accepted by its country manager in India (page 543). It is not the case of the assessee that the persons of the HOEC visited Cayman Islands and the terms of contract were negotiated there. The assessee has a full fledged office in Mumbai and therefore the natural presumption is that full business in India is being looked after by its employees in India. Notices to the assessee need to be sent to its Indian office (page 551). The Governing law is Laws of India and venue for arbitration shall be Mumbai, India (page 543 of the PB). Item 8 of the compensation schedule (page 562) provides for the deployment of line engineer. Page 563 has details of Assembly Make-Up in connection with the supply. Page 564 contains details of 7 Inch Linear Hanger Equipment -Purchase Basis a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v Ahmedbhai Umarbhai and Company [1950] 18 ITR 472 (SC). Anglo French Textile Company Limited v CIT [1954] 25 ITR 27 (SC) Hukam Chand Mills Ltd. v. CIT, Bombay 103 ITR 548(SC) Rolls Royce Pic (113 TIJ 446-ITAT Delhi) Rolls Royce Pic Vs DIT 339 ITR 147(Delhi) Hyundai Heavy Industries Limited 2911TR 482 (sq.) 8. The claim of the assessee that transactions of sale of equipments/material were concluded outside India is baseless. This issue has been dealt by Shri Gupta in his oral arguments. 131. The submission in sum and substance is that the profit has to be attributed on the basis of business operations carried out in India. 132. We have considered rival submissions and perused the material available on record. 133. The assessee had not offered any revenue from the contracts entered with Hindustan Oil Exploration Company Ltd. (HOEC) and ONGC. The revenue received by the assessee are divided into three parts: (1) Supply; (2) Rental; (3) Services. 134. In the annexure annexed with the assessment order, the assessing officer has pointed out as under: Name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. 142. The usual contracts of sale which involve the carriage of goods by sea are three, namely, c.i.f, f.o.b and ex-ship. In all the contracts the parties may vary the usual terms of such contracts or add others to them. 143. CIF contract: This contract is a contract for sale of goods at a price which covers cost, insurance and freight and is normally a contract for the sale of goods to be carried by sea. 144. Under this contract the seller is bound to do following six things: (i) make out an invoice of the goods sold; (ii) to ship at the port of shipment goods of the description contained in the contract (iii) to procure a contract of affreightment under which the goods will be delivered at the destination contemplated by the contract. (iv) To arrange for an insurance upon the terms current in the trade, which will be available for the benefit of the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r must put them safely on board, meet the cost of doing so, and for the buyer's protection give possession of them to the ship only upon the terms of a reasonable and ordinary bill of lading or other contract of carriage; there the contractual liability of the seller as seller ceases and the delivery to the buyer is complete as far as he is concerned. The goods are then at the risk of the buyer, he is responsible for the freight, and subject to the seller reserving the right of disposal, the property passes to the buyer. Thus, in all the cases it is the terms of the contract signifying the intention of the parties which will determine where the right to property in goods has passed and the crucial test would be as to when the buyer acquires the control of the goods. 148. The decision in the case of Phulchand Exports v. Vs. OOO Patriot, considered earlier, relied upon by ld. DR, clearly defined the scope of CIF contracts. The delivery of documents to the buyer is the symbolic delivery of the goods. Once the documents are delivered, the goods are at the buyer's risk and the seller is entitled to the price. If no place is named in the contract for the tender of the shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss or damage to the goods, as well as any additional costs due to events occurring after the time of delivery are transferred from the seller to the buyer. 153. A bare perusal of this definition makes it clear that port of destination has to be given in terms of this contract, which has been specified as Chennai Sea Port. 154. Ld. Counsel's main thrust of argument is that since the risk has transferred at the port of shipment, therefore, the title also has passed to the company. 155. In our opinion, this argument cannot be accepted because CIF as understood in inco terms, no where contemplates passing of title simultaneously with passing of risk. CIF Chennai Airport implies that up to Chennai Airport, the supply is to be arranged by seller. Seller has to pay cost, insurance, freight and risk during the carriage of goods. However, loss or damage to the goods and risk is to be borne by the purchaser. This does not imply that ownership has also passed to purchaser. It is not correct to say that risk and title pass simultaneously. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply due to defective or insufficient packing as well as for corrosion due to insufficient surface protection. 159. The total price in commercial invoice is to be on the basis of CIF for whichever part and the CIF rates also include the transit insurance up to the company's warehouse in India (page 558 P.B.). However, the transportation from the port to warehouse is to be at company's responsibility. This makes it clear that CIF price should be taken up to the port of destination. 160. As per the compensation schedule, section 11 (page 562 of PB), clause 4, the delivery of all items listed under price tables, is to be at Chennai port and as per clause 5 the company is to take the responsibility for import clearance of purchased items (including obtaining Essentiality Certificate). Thus, until the import clearance is over, the title in goods cannot pass to the company. 161. Thus, all the terms are summarized as under: (i) The agreement was signed in India. (ii) The delivery of documents was to be in India. (iii) Supply was at CIF Chennai Port. (iv) The payment was to be made within 30 days of receipt of goods in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as laid down by Hon'ble Andhra Pradesh High Court in the case of Addl. CIT v. Skoda Exports (supra), it is clear that both the parties intended for transfer of title in goods in India. We, accordingly, hold that title to goods passed in India in respect of contracts with HOEC and ONGC and, therefore, income from such sale has accrued or arisen in India. 165. Now, an incidental question regarding extent of profits taxable in India is to be considered. Ld. Counsel submitted that the profits, if any, be taxed u/s 44BB. We are not inclined to accept this plea because, as rightly observed by ld. DRP, section 44BB deals only with royalty and FTS and not sales. The profit arises out of sales activity of non-residents has to be taxed under normal provisions of income-tax. The next issue is whether entire profits arising out of sales are to be attributed or only to the extent it has nexus with the operations carried out in India in connection with the sale. 166. In this regard Section 5(2) which deals with the scope of total income of a non-resident is relevant. As per this sub-section, the total income of a non-resident includes all income from what-ever source derived which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s aimed at establishing that the scheme of the Indian Income tax Act was not to tax the source of income but the income, profits or gains from whatever source derived which were received or were deemed to be received in the taxable territories or which accrued or arose or were deemed to accrue or arise in the taxable territories during the particular year and that it was immaterial whether the income, profits or gains were derived from business operations carried on in the taxable territories or without the taxable territories. This argument was possible when the decisions which held that income, profits or gains arose or accrued at the places where the sales took place were good law, because then there was no question of apportionment of income, profits or gains arising from the business operations carried on in the taxable territories and income, profits or gains arising from business operations carried on without the taxable territories. The moment however it was held, as it was done in Commissioner of Income tax, Bombay v. Ahmedbhai Umarbhai Co., Bombay, that though profits may not be realised until a manufactured article was sold, profits were not wholly made by the act of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en no interest would be chargeable u/s 234B from the payee assessee. 171. In this case the assessee denied its liability to tax in India on the ground that it did not have taxable presence in India and the equipments were sold outside India. The Hon'ble Delhi High Court observed that in such a scenario it is impermissible or unreasonable to visualize a situation where, the assessee would have represented to its Indian telecom dealers not to deduct tax from the remittances made to it. It was held that there may not be any direct or positive evidence to show that the assessee did make a representation to its Indian telecom dealers not to deduct tax from the remittances, such a representation or informal communication of the request can be reasonably inferred or presumed. 172. The Hon'ble Delhi High Court further observed that when sales by the non-resident company were claimed to have concluded outside India, it would be a fair and reasonable inference to be drawn that the Indian dealers would have had an interface with the assessee while concluding the sale contracts and on such an occasion it is normal for the parties to finalise all aspects touching on their relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hheld by assessee. 175. Considering the entirety of facts, we direct the assessing officer not to charge interest u/s 234B in respect of all contracts entered into by the assessee with various organizations in India except with respect to the contracts entered into with HOEC and ONGC. As far as income taxable u/s 44BB in respect of various contracts are concerned, the assessee itself has accepted the liability from the very beginning and, therefore, it cannot be inferred that assessee would have made any representation which would have influenced the deductor companies for not deducting the tax. However, as far as contract with HOEC and ONGC are concerned, as we have held that income arose in India, therefore, in view of decision of Hon'ble Delhi High Court in Alcatel Lucent USA Inc. (2013-TII-44-HC-DEL-INTL dated Nov. 07,2013), the interest u/s 234B is leviable. In the result this ground is partly allowed. 176. In the result, appeal is partly allowed. ITA NO. 420/Del/2012 ( Baker Hughes Asia Pacific Ltd. A.Y. 2008-09): 177. Ground nos. 1 to 7 raised in this appeal are identical to ground nos. 1 to 7 discussed in ITA no. 5283/Del/2010. After elaborate discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quires no adjudication. 189. Ground no. 2 relates to taxability of fees for technical services . While deciding ITA no. 5283/Del/2010, after elaborate discussion therein we have held that where assessee was imparting services in relation to oil exploration, the income arising on account fee for technical services was to be taxed u/s 44BB. Adopting the same reasons, we allow ground no. 3 in favour of the assessee. 190. Ground no. 3 4 relate to taxability of reimbursement and grossing up receipts. Having heard both the parties we hold that u/s 44BB gross receipts are to be considered, which will include reimbursement also. Therefore, these grounds are dismissed. 191. Ground no. 5 relates to charging of interest u/s 234B. For the reasons given in ITA no. 5283/Del/2010, we hold that the assessee was not liable to pay interest u/s 234B. Accordingly, ground is decided in favour of the assessee. 192. Ground no. 6 relating to levy of penalty u/s 271B is premature and requires no adjudication at this stage. 193. In the result, appeal is partly allowed. ITA no. 5633/Del/2010 (SIEM offshore Inc. A.Y. 2007-08): 194. Ground no. l is general in nature and requires no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for statistical purposes. ITA nos. 165/Del/2012 (Smith International Inc. A.Y. 2008-09): 205. Ground nos. l to 4 relate to taxability of royalty/fees for technical services. While deciding ITA no. 5283/Del/2010, after elaborate discussion therein we have held that where assessee was imparting services in relation to oil exploration, the income arising on account royalty/ FTS was to be taxed u/s 44BB. Adopting the same reasons, we allow ground nos. 1 to 4 in favour of the assessee. 206. Ground no. 5 to 8 relate to taxability of reimbursement and grossing up receipts. Having heard both the parties we hold that u/s 44BB gross receipts are to be considered, which will include reimbursement also. Therefore, these grounds are dismissed 207. Next ground raised relates to charging of interest u/s 234B/D. For the reasons given in ITA no. 5283/Del/2010, we hold that the assessee was not liable to pay interest u/s 234B. Accordingly, ground is decided in favour of the assessee. 208. In the result, appeal is allowed. ITA no. 5562/Del/2011 (Hallin Marine UK Ltd. A.Y. 2008-09) 209. Grounds raised in respect to addition qua hiring of equipment in connection with explor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83/Del/2010, we hold that the assessee was not liable to pay interest u/s 234B. Accordingly, grounds are decided in favour of the assessee. 218. In the result, appeal is allowed. ITA no. 5824/Del/2011 (Baker Hughes Singapore Pte. A.Y. 2008-09): 219. Ground nos. 1 to 7 relate to addition qua equipment rental, service charges and sale of consumables and services rendered by assessee in connection with exploration/ prospecting/ extraction of mineral oil. For the detailed reasons given in ITA no. 5283/Del/2010, we hold that the income arising on account royalty/ FTS, letting out of equipment etc. was to be taxed u/s 44BB. Adopting the same reasons, we allow ground nos. 1 to 7 in favour of the assessee. 220. Ground no. 8 relates to addition qua supply of consumables. For the detailed reasons given in ITA no. 5283/Del/2010, we hold that receipt on account of supply of consumables is taxable u/s 44BB. Ground is allowed. 221. Ground no. 9 relates to the taxability of service tax grossing up and ground no. 10 relates to taxability of reimbursement of expenditure. Having heard both the parties we hold that u/s 44BB gross receipts are to be considered, which will include re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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