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TMI Blog2016 (7) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... oils, is taxable on presumptive basis u/s 44BB of the Act. The services carried on by assessee are in connection with the prospecting for mineral oils and, therefore, following the decision of Hon’ble Supreme Court, the assessee’s appeal deserves to be allowed. In view of above discussion, the assessee’s appeal is allowed and the appeal filed by the Revenue stands dismissed. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... OG1 - 3653385date 16.03.2008 3D Seismic Data Onshore d Processing 33,049,053 Reliance Industries Ltd. Contract No. OG13650181 date 06.02.2008 Advanced processing (2.5D d Inversion) of CSEM Imaging 6,339,637 Reliance Industries Ltd. Contract No.OG1-3606488dated 31.07.2006 3D Data Onshore Processing 27,536,585 Reliance Industries Ltd. Contract No.OG1-3621135/001 dated 09.02.2007 2D Data Onshore Reprocessing of Colombia Borojo Block 5,352,678 Santos Contract No.700008 dated 23.01.2009 Marine 3D Seismic data processing services of blocks NEC-DWN-2004/1 andNEC-DWN-2004/2 Offshore India 57,908,845 Cairn Contract No.1000000 381 Provision of 3D PSTM Seismic Data Processing Services 41,680,828 Hardy Contract No. Delivery of pre migration gathers for PV3 and FonE Delivery of Pre Migration gahes fsor PY3 and 462,500 ENI Contract No.226/AN/PROC/2 009 dated 06.11.2009 3D Seismic Data Processing Servsics 5,792,869 GSPC Contract GSPC/O&G/GM(P&D )08/20-12-2008/KG-Q-Marinedated 20.01.2009 Q-Marine Acquisition, Processing and Inversion for Block KG-OSN-2005/3 1,487,565,365 ADANI Contract AWEL/MB-OSN-2005/2/2009/CC00 2 dated 18.11.2009 Acquiring Marine 3D Seismic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in India and, therefore, taxable u/s 44DA of the I.T. Act as these are fees for technical services. Ld.AO further made addition in respect of reimbursement of mobilisation/demobilisation receipts in the hands of the assessee to an extent of ₹ 63,46,38,677/-. 2.7. The Ld.AO also disallowed the reimbursement of service tax received by the assessee to an extent of ₹ 25,50,30,477/-. 3.Being aggrieved with the order of Ld.AO, the assessee preferred an appeal before the ld.CIT(A). 3.1. The assessee submitted before the lower net CIT (A) that the issue relating to services rendered are covered under section 44 BB of the act and the amendment to section 44 BB is applicable from assessment year 2011-12 on words, and the same is not retrospective in nature. The assessee relied upon the decision of this Tribunal in assessee's own case for assessment year 2007-08, in ITA No. 5977/Del/2010. The assessee had also placed reliance upon the decision of M/s CGG Veritas Services SA Vs. Additional Director of Income Tax (International taxation), Denradun, reported in (2012) 50 SOT 335 (DEL). The ld.CIT(A), following the decision of assessee's own case for the previous assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessing services etc ("services") were not in the nature of Fee for Technical Services (FTS) squarely covered u/s 9(l)(vii) of the IT Act, 1961 ("The Act"). 2. Whether on the facts and circumstances of the case, the Ld ClT(A) has erred in holding that the income of the assessee was not taxable under the provisions of see 44DA r.w.s. 115A even though the nature of services rendered by the assessee were technical in nature liable to tax u/s 44DA of the Act. 3. Whether on the facts and circumstances of the case, the Ld CIT(A) has erred in holding that the income of the assessee was taxable under the presumptive provisions of see 44BB and ignoring the fact that taxability u/s 44BB shall not apply in respect of income referred to in section 44DA in view of the clarificatory proviso to see 44BB and see 44DA of the Act. 4. Whether on the facts and circumstances of the case, the Ld CIT(A) has erred In interpretation of the legislative intent behind the scheme of taxation envisaged In 9(l)(vii) read with sections 44DA and 44BB of the Act, ignoring the decision in the case of CIT vs M/s ONGC As Agent of M/s Foramer France [(2008) 299 ITR 438 Utarakhand] . 5. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation, whether taxable in India or not is now settled by the order of this tribunal in assessee's own case for assessment year 2009-10 in ITA number 04/09/2006/del/12. This Tribunal wide order dated 24/01/2014 has held in para 10 as under: "10. After hearing rival contentions, we are of the considered opinion that the issue is covered by the judgement of the jurisdictional High Court in the case of Sedco Forex International Inc. (supra). We are not convinced with the arguments of the Ld. Counsel for the assessee trying to distinguish this case law for the reason that the entire payment in question was made for the purpose of execution of the contract in India. Mobilisation is a stage payment, as part of the total consideration for execution of the contract. The assessee would be moving its machinery from one place of work to another place of birth. Mobilisation is paid as advance for such movement and is generally adjusted against running bills. It is not a case where a separate payment is made for a transportation contract. The submission that the assessee would try to work out, based on some bases, the revenue is attributable to the activity of mobilisation carried out outside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with section 44 BB (1). The service tax is not an amount paid or payable, or received or deemed to be received by the assessee for the services rendered by it. The assessee is only collecting the service tax for passing it onto the government." 6.2. The Hon'ble High Court while deciding this issue has dealt with all the judgments, referred by Ld.CIT (DR) before us, which are as under: 1. Chowringhee sales Bureau Pvt.Ltd. Vs. CIT reported in (1973) 87 ITR 542(SC) 2. George Oaks (P) Ltd Vs. State of Madras (1962) 2 SCR 570. 6.3. The Hon'ble High Court has distinguished these judgments to the facts therein, which are identical to that of the present case before us. Respectfully following the decision of Hon'ble High Court we are of the considered OP near that the service tax collected cannot be included in the gross receipts in terms of section 44 BB(1) of the act. Accordingly this ground raised by the assessee stands allowed. Now we shall deal with the appeal filed by the revenue in ITA 5400/Del/2013. 7. The short issue for consideration in the appeal filed by the revenue relates to the taxability of fees for technical services under section 44 BB or under section 44DA or and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fee for technical services can be divided in following categories: (i) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil having business PE or fixed place of profession-(section 44DA); (ii) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil without having business PE or fixed place of profession- (section l15A); (iii) Other fee for technical services having business PE or fixed place of profession-(section 44DA); (iv) Other fee for technical services without business PE or fixed place of profession-(section l15A); Thus it is abundantly clear that with effect from assessment year 2011-12 fee for technical services whether rendered in connection with prospecting for or extraction or production of mineral oil or otherwise will be assessable either u/s 44DA or section l15A of the Act depending on fact whether such receipts are effectively connected with PE or fixed place of profession, or not. However, for assessment year 2004-05 to 2010-11 the consideration received for fee for technical services rendered in connection with prospecting for or extr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble court has set aside the issue back to the assessing officer for examining the same. 8.2. In the rejoinder ld.AR submitted that the Hon'ble Uttrakhand High Court has actually dismissed the appeal filed by the revenue. He submitted that the Hon'ble High Court has set aside the issue to the assessing officer only with respect to permanent establishment or fixed place of profession which has not been examined by the assessing officer. He submitted that the Hon'ble High Court in para 2 of that decision has held as under: "2. Section 44 BB of the act deals with income arising out of, amongst others, business of providing services or facilities in the prospecting for, or extraction or production of mineral oils. However section 44 BB applies only to such assessee, who is a non-resident and not to an assessee who has a permanent establishment in India or has a fixed place of profession situated in India by the judgment under appeal, the claim of the department that the assessee is not covered by section 44 BB and it falls either under sections 115 A over 44 DA was not accepted by the tribunal in view of the insertion of the proviso to subsection (1) of section 44 BB by the finance ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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). 9.2. Hon'ble Delhi High Court in the case of OHM Ltd. Reported in AAR No.935 of 2010, wherein in para 11 &12, has been held as under; "11. We do not think that there is any error in the view taken by AAR. Basically the rule that the specific provision excludes the general provision has been applied. Section 44BB is a special provision for computing the profits and gains of a non-resident in connection with the business of providing 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 including petroleum and natural gas. 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 nonresident by way of royalty or fees for technical services, where such non-resident carries on business in India through a permanent e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s more general and which is more specific and to construe the more general one as to exclude the more specific. 12. The second proviso to sub-section (1) of Section 44DA inserted by the Finance Act, 2010 w. e. f. 01.04.2011 makes the position clear. Simultaneously a reference to Section 44DA was inserted in the proviso to sub-section (1) of section 44BB. It should be remembered that section 44DA also requires that the non-resident or the foreign company should carryon business in India through a permanent establishment situated therein and the right, property or contract in respect of which the royalty or fees for technical services is paid should be effectively connected with the permanent establishment. Such a requirement has not been spelt out in Section 44BB; moreover, a flat rate of 10 percent of the revenues received by the non-resident for the specific services rendered by it are deemed to be profits from the business chargeable to tax in India under Section 44BB, whereas under Section 44DA, deduction of expenditure or allowance wholly and exclusively incurred by the non-resident for the business of the permanent establishment in India and for expenditure towards reimburse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance of ld. CIT(DR) on the decision of Hon'ble Uttrakhand High Court in assessee's own case is concerned, we find that the said decision has dismissed the appeal filed by the revenue. The Hon'ble High Court has set aside the issue to the Ld.AO with respect to permanent establishment or fixed place of profession, which has not been examined by the assessing officer. On the other hand, we find the Hon'ble High Court has held a finding of this tribunal that in respect of fees received by a non-resident assessee for providing service in connection with prospecting for, or extraction or production of mineral oil, such assessee would be covered by section 44BB till assessment year 2011-12. 10. The Tribunal in the case of Baker Hughes Asia Pacific Ltd.(supra), has relied on the decision of Hon'ble Jurisdictional High Court (Uttrakhand) in B.J. Services for rejecting the department's contention that section 44DA inserted by Finance Act 2010 w.e.f. 1.4.2011 in section 44BB is retrospective. Moreover, we find that Hon'ble Supreme Court in the case of ONGC (supra) has set at rest the entire controversy by holding that provisions of various services in connection with the prospecting for, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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