9911796707
TMI Blog2018 (2) TMI 1859X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitutes fees for technical services and covered under section 115A of the Income tax Act, 1961 instead of applying the provisions of section 44BB of the Income-tax Act, which is a special provision for computing profits and gains in connection with the business of exploration etc of mineral oils. 2. Without prejudice to the above Appellant submits that A.O has erred in holding that BJ services has given a sub contract to the Appellant who has agreed to perform the services indirectly for ONGC and wrongly stated that the payments are made by ONGC to Appellant. These observations are factually incorrect and further contrary to the various judicial decisions which were cited by the Appellant, therefore the said order is bad in law and deserves to be quashed. 3. Without prejudice to the above Appellant submits that learned Assessing officer has failed to appreciate that sec. 44BB of the Income tax act overrides all other provisions of the Income tax act, being a special provision specifically for the purpose of assessee engaged in the business of prospecting for, or extraction or production of mineral oils. 4. Without prejudice to the above, Appellant submits that Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Company (Middle East) Ltd. The assessee as per the provisions of Sec. 44BB offered an amount of Rs. 27,97,927/-(10% of the total receipts of Rs. 2,79,79,273/-) for tax during the year under consideration. That out of the tax deducted at source of Rs. 29,48,539/-under Sec. 194J and 194C on the aforesaid amount, the assessee after adjusting its tax liability claimed a refund of Rs. 17,95,792/-. However, the A.O during the course of the assessment proceedings, being of the view that as B.J Services Company (Middle East) Ltd. was carrying out Fracturing Flow Back Services and various operations at the Oil rigs pursuant to the contract with ONGC, therefore, the assessee who was sub-contracted the said work by B.J Services Company (Middle East) was indirectly performing the services for ONGC. The A.O further held a conviction that Fracturing Flow Back Services were technical services that were provided by the assessee for prospecting extraction or production of mineral oil. The A.O observed that the certificates issued under Sec. 197 clearly provided for deduction of tax at source @10%/15% on the gross amount payable by B.J Services Company (Middle East ) Ltd to the assessee in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DRP was not persuaded to accept the contentions of the assessee. The DRP referring to the nature of services involved in Fracturing Flow Back Services provided by the assessee, observed that the same were highly technical services. That after examining at length the process involved in extraction or production of mineral oil the DRP concluded that the payments received by the assessee for rendering of the Fracturing Flow Back Services to the oil companies could safely be characterized as fees for technical services. The DRP further agreed with the view of the A.O that as the certificates under Sec. 197(1) as well as the TDS certificates furnished during the course of the assessment proceedings were for deduction of tax at source in respect of fees for technical services under Sec. 194J which were consistently accepted by the assessee, therefore, the view that the amounts received by the assessee were in the nature of fees for technical services stood fortified. The DRP further being of the view that the contention of the assessee that as it had carried out Fracturing Flow Back Services on behalf of B.J Services Company (Middle East) Ltd, therefore, the same was not to be const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 44BB of the Act. It was submitted by the ld. A.R that the Tribunal in its aforesaid order had clearly held that the provisions of Sec. 115A and Sec. 44DA would not be applicable to the case of the assessee. The ld. Departmental Representative (for short 'D.R') fairly conceded to the factual position as was so averred by the ld. A.R. 8. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present case has been sought to adjudicate as to whether the amount received by the assessee from M/s B.J Services Company (Middle East) Ltd for rendering of Fracturing Flow Back Services at the oil rigs would fall within the purview of Fees for Technical Services and thus liable to be brought to tax as per Sec. 115A of the Act, or would be covered by the special and specific provisions contemplated under Sec.44BB for computing the profit and gains of a non-resident engaged in 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 miner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y (Middle East) Ltd for rendering Fracturing Flow Back Services were indirectly received from ONGC. We thus set aside the aforesaid observations of the A.O/DRP and hold that the amount under consideration was received by the assessee from B.J Services Company (Middle East) Ltd. 10. We further find that pursuant to the judgment of the Hon‟ble Supreme Court in the case of ONGC Vs. CIT (2015) 376 ITR 306 (SC), it stands settled as on date that prospecting for extraction or production of mineral oil is not to be treated as technical services for the purpose of Explanation 2 of Sec. 9(1)(vii), and would rather be covered by Sec. 44BB of the „Act‟. We are of the considered view that after the aforesaid judgment of the Hon‟ble Supreme Court, the issue that prospecting for extraction or production of mineral oil is not to be treated as technical services for the purpose of Explanation 2 of Sec. 9(1)(vii) stands settled and is no more found to be res integra. We are of the considered view that Sec. 115A(b) clearly presupposes existence of „fees for technical services‟, which further as per the Explanation (a) contemplated therein refers to Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident 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, therefore, the Fracturing Flow Back Services rendered by the assessee in connection with extraction or production of mineral oil would squarely be covered by the provisions of Sec. 44BB. We thus, set aside the order of the A.O and direct him to assess the amount of amount of Rs. 2,65,46,753/- received by the assessee from B.J Services Company (Middle East) Ltd as per the provisions of Sec. 44BB." We thus are of the considered view that the issue involved in the present case is squarely covered by the order passed by the Tribunal in the assessees own case for A.Y 2011-12, wherein it was concluded that the amount received by the assessee from rendering of Fracturing Flow Back Services from M/s B.J Services Company (Middle East) Ltd was rightly offered by the assessee for tax as per the provisions of Sec. 44BB of the Act. We thus finding ourselves to be in agreement with the view taken by the Tribunal and finding no reason to take a different view, therefore, conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
