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TMI Blog2004 (9) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... r the laws of Panama. It is engaged in the business of designing, fabrication, construction and installation of platforms, decks, pipelines, jackets and various other similar activities. A part of the said work consists of mobilization/demobilization and transportation of marine spread to off-shore India (this work is done by the assessee outside India) and the installation of structures and pipelines at Bombay High Oilfield, which is located beyond 12 nautical miles, i.e., in the continental shelf and/or exclusive economic zone of India, which is the work carried on by the assessee inside India . 3. During the assessment year under consideration, the assessee had received monies in respect of contract with Scandia Essar Ple. Ltd., Singapore. The Assessing Officer held that the receipts for work carried out by the assessee were assessable to tax in India. In doing so, the Assessing Officer rejected the assessee' s submissions vide letter dated November 15, 1994, that the activities carried on by the assessee as sub-contractor to the main contractor are neither covered under nor similar to the activities specified in Notification G.S.R. 304(E) (5147)/F. No. 188-(7)/ 82-TPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee outside India, as taxable in India. 6. Vide the impugned order, the learned Commissioner of Income-tax (Appeals) observed, inter alia, that the Central Board of Direct Taxes circular relied on by the assessee expressly states that it is operative for three years only and that period had long elapsed. Nothing had been brought before him the learned Commissioner of Income-tax (Appeals) to suggest that a fresh circular or instruction had been issued extending the life of the directions contained in that circular. Quoting various articles contained in the contract entered into by the assessee, the learned Commissioner of Income-tax (Appeals) observed that these articles indicate that the assessee was itself aware of the fact that it was covered by the provisions of the Income-tax Act. The case laws relied on by the assessee were held to be distinguishable on facts. Resultantly, the appeal was dismissed. 7. Before us, it has not been denied that the activities under the notification in question, i.e., Notification dated March 31, 1983, are-(a) the prospecting for, or extraction or production of, mineral oils in the continental shelf of India or the exclusive economic zone o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India . . . Explanation.-For the purposes of this section,- (i) ' plant' includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment used for the purposes of the said business ; (ii) ' mineral oil' includes petroleum and natural gas. 10. Thus, income of a non-resident Indian, which is taxable in India, is his income accrued or arisen or deemed to have arisen or received in India. The scope of section 44BB encompasses only receipts paid or payable either in India or abroad, for services rendered in India, and where the services are rendered outside India, the receipt by the non-resident in India. The assessee' s contention all through has been that it is a sub-contractor for the companies which are engaged in the activity of providing services or facilities or supplying ships, aircraft, machinery or plant in connection with any activity for prospecting for or extraction or production of mineral oil. Moreover, it is a sub-contractor activities, which are not covered under the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the assessee and in favour of the Revenue. Such, evidently, are not the facts before us. Here, the assessee is a sub-contractor of the main contractor, whose income is, such as could be said to have a direct and immediate nexus with the said three activities, and not the income of our present assessee. Our assessee is engaged in mobilization/demobilization and transportation, but merely as a sub-contractor, under the contract. Therefore, the quoted case does not apply hereto. 12. The learned Departmental representative has also contended that the agreement was signed in India. The income has been received in India. So, it is deemed income. However, we are not able to agree with this averment. The Explanation to section 9(1)(i) of the Act is the guiding principle applicable. Income deemed to accrue or arise in India has been dealt with in section 9 of the Act. Section 9(l)(i) provides as under : 9. (1) The following incomes shall be deemed to accrue or arise in India- (i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. It was held therein, inter alia, that section 44AB, being a special provision, it cannot replace , supersede or lean in favour of section 5, which is the charging section, whereby the scope of total income of an assessee, whether it be of a resident or of a non-resident is worked out. It would be necessary in every case whether either of a resident or of a non-resident, to first of all decide as to whether a particular receipt or an item of income is liable to be included in the total income vis-a-vis section 5 and if it is to be so included, then the question would arise as to how the taxable part thereof is to be computed and at this stage section 44BB steps in. The provisions of section 44BB visa-vis the legislative intent only mean that these replace the system of computation of income earlier envisaged by application of the provisions of sections 28 to 41 and sections 43 and 43A but the provisions of section 5, which is the charging section would remain intact and these by no maxim of interpretation, would be superseded by the provisions of section 44BB. 17. It is in respectful consonance with the aforesaid ratio laid down by the said Third Member decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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