9911796707
TMI Blog2018 (12) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... in the facts and circumstances of the case in rejecting the alternate contention of the appellant regarding taxability of receipts of DeGolyer and MacNaughton, USA u/s. 44BB of the Income-tax Act, 1961. 3. The Ld. Commissioner of Income Tax (Appeals)-2, Noida, has erred in law and in the facts and circumstances of the case in not directing that the tax deposited by the appellant on sums payable to DeGolyer and MacNaughton, USA, be refunded to it. 4. The appellant craves permission to add, alter and /or amend any ground(s) of appeal before or at the time of hearing. " 2. Briefly stated facts of the case are that the assessee credited a sum of USD 5,62,500/-to the account of DeGolyer and MacNaughton, USA (non-resident) towards third-party certification of Ultimate Reserves and Reserves of 68 fields of ONGC. The assessee applied for an order under section 195(2) of the Act to the Income Tax Officer (International Taxation), Dehradun (in short the 'Assessing Officer') for allowing it to release payments to the non-resident i.e. DeGolyer and MacNaughton, USA without deduction of tax at source therefrom. However, the Assessing Officer vide order dated 28/12/2013, directed the ONG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 28 to 44C inoperative. Thus, section 44 BB seems to be not applicable once section 44 D is applicable. Proviso to section 44 DA also makes section 44 BB inapplicable for the purpose of that section. Under section 44BB, the non-obstante clause is restricted in application only in respect of sections 28 to 41 and sections 43 and 43A. Thus, section 44D has not been made inoperative by section 44BB. Further, proviso to section 44 BB excludes applicability of section 42, section 44 D, section 44 DA and section 115A and section 293A." 4. The Ld. CIT(A) also examined the articles of the DTAA with reference to the technical knowledge, experience, skill know-how or process etc. provided by the non-resident to the assessee. The relevant part of the order of the Ld. CIT(A) is reproduced as under: "6.32 It is noted that the scope of the work and work plan contained in the contract states that it is technical work and is a service contract which is carried out by the non-resident as a contractor. 6.33 The contract under which payment have been released to the non-resident relates to third party certification of ultimate reserve and reserves of 68 fields of ONGC. The contract was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laptop computers while maintaining uncompromised confidentially. Professionals of M/s D&M, USA are well experienced in reserves evaluation and classification and are specifically familiar with several of ONGC's assets. A summary-level report (certificate) is to be prepared for use in filing with financial or regulatory agencies." 6.35 Since the contract above is a service contract, the service provided are technical in nature and the recipient himself is not engaged in activity of mining (mineral oil), under domestic law, therefore, the services provided by the non-residents become taxable under section 9(1)(vii)of the Act. 6.36 The question then arises is whether the services are also taxable within Article 12 of under India-USA DTAA, a question which leads to point of determination whether the technical services provided by the non-resident are also resulting into making available certain technical knowledge, experience, skill, know-how or processes. 6.37 In this regard, it is important to turn 10 the contractual document again. It stipulates as below; "Report Description Upon completion of this study M/ s: D&M, USA will prepare a final report that presents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xigible to tax as fee for technical services within section 9 (1) (vii) and fee for included services within Article 12 of Indo-USA DTAA. The order of AO is accordingly upheld. The first ground is adjudicated accordingly." 5. Aggrieved with the above findings of Ld. CIT(A), the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 6. Before us, the Ld. Counsel of the assessee drawn our attention to the order of the Tribunal in ITA No. 1522/Del/2012 in the case of the assessee and same non-resident for assessment year 2012-13 and submitted that the issue in dispute is squarely covered by the said order. He also submitted that subsequent to the impugned order passed by the Ld. CIT(A), the Tribunal in the case of the assessee itself for assessment year 2011-12 in ITA No. 1332 /Del/2016 has also allowed the identical issue in dispute in favour of the assessee. The Ld. Counsel submitted that no technical knowledge has been provided to the assessee by way of services rendered by the non-resident and thus payment made by the assessee does not fall under fee for technical services in terms of DTAA between the India and the USA. 7. The Ld. DR on the other ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee opts to come u/s 44BB(1) of the Act, the provision Itself deems Its profits and gains as 10% of aggregate of amounts specified in sub-section 2 of section 44BB of the Act, i.e. amount payable or paid whether in or out of India. In view of these rulings, the entire payments by ONGC to the NRC may be subjected to tax @ 10% of the gross payments as mandated u/s 44BB of the Act. This decision that the Ld. CIT(A) is challenged by the revenue. Before going into the merits of the revenue in appeal, we take up the assessee's appeal. 8. It is not in dispute that the services in question were rendered outside India. 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 In ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
