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TMI Blog2016 (5) TMI 1481X X X X Extracts X X X X X X X X Extracts X X X X ..... has a Permanent Establishment (PE) in India and the profit in question is attributable to such PE. Admittedly NRC does not have PE in India. Under these circumstances the receipt of the non resident cannot brought to tax in India under the Indo-USA DTAA. Hence this ground of the assessee has to be allowed. The amount deposited by the assessee on the sums payable to DeGolyer and MacNaughton, USA should be refunded. - Decided in favour of assessee - ITA No: 1522/Del/2012, ITA No: 1600/Del/2012 - - - Dated:- 16-5-2016 - Shri J. Sudhakar Reddy And Ms. Suchitra Kamble, JJ. Assessee by: Shri Gaurav Jain, Advocate, Bhavata Kumar, Advocate Department by: Shri Anuj Arora, CIT DR ORDER J. Sudhakar Reddy, These cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ITO). The ITO, vide order dated 30.5.2011 and Corrigendum thereto dated 4.7.2011, directed ONGC to deduct tax @ 10% plus surcharge and education cess on the gross contractual payments including the payments arising on account of all types of expenditures to be made to the non-resident, considering the payments to be made under the contract as fees for technical services . The Indian tax liability of the non-resident has been borne by ONGC as per the contract with the non-resident. Accordingly, tax amounting to ₹ 22,51,135/- on the payment of USD 4,25,000/- released to the non-resident on 20.6.2011, was deposited by ONGC in Government account on 7.7.2011. 3. Thereafter ONGC filed an appeal before the Ld. CIT(A). The first appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned in Explanation 2 to Sec. 9 (1) (vii) of the Act. The pertinent issue for consideration is whether at all, the work performed by the NRC, has a proximate nexus with the extraction of mineral oils. 7. The Ld. CIT(A) held as follows : It is seen that the NRC is providing an independent certification of oil reserves in 62 fields managed by M/s. ONGC. This activity would not amount to passing on any technical knowledge or experience or skill to ONGC for the activity to qualify as FTS. What emerges most clearly on a reading of the contract is that the services provided by the NRC to ONGC are to be used exclusively for the purposes of prospecting for or exploration of mineral oils. Thus section 44BB of the Act applies squarely on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. The payment in question cannot be construed as fees for technical services under India-USA DTAA, as no technical knowledge, skill, know how etc. was made available to the assessee. The issue in question is no more res integra in view of the following judgments :- 1. DIT vs. Guy Carpenter Co. Ltd. (2012) 346 ITR 504 2. CIT vs. De Beers India Minerals (P) Ltd. 346 ITR 467 9. Thus the amount paid by ONGC to the NRC can be brought to tax only under article 7 of the Indo-USA DTAA as business profit, provided the NRC has a Permanent Establishment (PE) in India and the profit in question is attributable to such PE. Admittedly NRC does not have PE in India. Under these circumstances the receipt of the non resident cannot brought to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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