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TMI Blog2021 (2) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... ected with prospecting, extraction or production of mineral oil petroleum products and these services are to achieve dominant purpose by rendering services for micro seismic acquisition, processing and interpretation of micro-seismic data in two observation wells during hydro-fracturing operations carried out in wells at Bakrol oil fields. Consequently, services rendered by the non-resident company fall within the purview of presumptive provision of section 44BB of the Act and the addition made by the AO and confirmed by the ld. CIT (A) is not sustainable, hence ordered to be deleted. Consequently, the appeal filed by the assessee is allowed. - ITA No.1686/Del./2017 - - - Dated:- 17-2-2021 - Shri R.K. Panda, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri K.V.S.R. Krishna, CA For the Revenue : Shri Prakash Dubey, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Selan Exploration Technology Ltd. (hereinafter referred to as the assessee ) by filing the present appeal sought to set aside the impugned order dated 30.11.2016 passed by the Commissioner of Income-tax (Appeals)-41, New Delhi qua the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case and arguments addressed by the ld. Authorized Representatives of the parties to the appeal, the short question arises for determination in this case is :- as to whether payment made by the assessee to M/s. ESG Solutions for rendering services for microseismic acquisition, processing and interpretation of micro-seismic data in two observation wells during hydro-fracturing operations carried out in the wells at Bakrol oil field is in the nature of fee for technical services covered u/s 115A of the Act or it is inextricably connected with processing, extraction or production of mineral oil u/s 44BB of the Act? 7. Undisputedly, as per agreement letter of award to Engineering Seismology Group Canada Inc. (M/s. ESG Solutions), deductee had been engaged for micro-seismic acquisition, processing and interpretation of micro-seismic data in two observation wells during hydro-fracturing operations carried out in wells at Bakrol oil field. Ld. CIT (A) held these services not directly covered under the services and facilities mentioned in section 44BB(2)(a) of the Act rather the services are in the nature of analysis and interpretation of data which are back-end s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essions mining projects or like projects occurring in Explanation 2 to Section 9(1) of the Act would cover rendering of service like imparting of training and carrying out drilling operations for exploration of and extraction of oil and natural gas and hence payments made under such agreement to a non-resident/ foreign company would be chargeable to tax under the provisions of Section 44BB and not Section 44D of the Act. We do not see how any other view can be taken if the works or services mentioned under a particular agreement is directly associated or inextricably connected with prospecting, extraction or production of mineral oil. Keeping in mind the above provision, we have looked into each of the contracts involved in the present group of cases and find that the brief description of the works covered under each of the said contracts as culled out by the appellants and placed before the Court is correct. The said details are set out below. S.No. Civil Appeal No Work covered under the contract 1. 4321 Drilling of exploration wells and carrying out seis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Opinion on hydrocarbon resources and foreseeable potential. 18. 7227 Opinion on hydrocarbon resources and foreseeable potential. 19. 7230 Opinion on hydrocarbon resources and foreseeable potential. 20. 6016 Opinion on hydrocarbon resources and foreseeable potential. 21. 6008 Evaluation of ultimate resource potential and presentations outside India in connection with promotional activities for Joint Venture Exploration program. 22. 1531 Review of sub-surface well data, provide repair plan of wells and supervise repairs. 23. 733 Repair of gas turbine, gas control system and inspection of gas turbine and generator. 24. 741 Repair and inspection of turbines. 25. 737 Repair, inspection and overhauling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for analysis of flow rate of mineral oil to determine reservoir conditions. 44. 1523 Supply, installation and familiarization of software for processing seismic data. The above facts would indicate that the pith and substance of each of the contracts/agreements is inextricably connected with prospecting, extraction or production of mineral oil. The dominant purpose of each of such agreement is for prospecting, extraction or production of mineral oils though there may be certain ancillary works contemplated thereunder. If that be so, we will have no hesitation in holding that the payments made by ONGC and received by the non-resident assessees or foreign companies under the said contracts is more appropriately assessable under the provisions of Section 44BB and not Section 44D of the Act. On the basis of the said conclusion reached by us, we allow the appeals under consideration by setting aside the orders of the High Court passed in each of the cases before it and restoring the view taken by the learned Appellate Commissioner as affirmed by the learned Tribunal. 9. Following the decision rende ..... X X X X Extracts X X X X X X X X Extracts X X X X
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