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TMI Blog2024 (7) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... iance of issuing the initial notice was adhered to, and the appellant was afforded an adequate opportunity to be heard. Consequently, this ground of appeal is dismissed. Income deemed to accrue or arise in India - Addition of salary income in the hands of assessee being earned from the activity within India - assessee contented that the assessee is in employment with Singapore based company, and place of duty is on ship engaged in underwater inspection of platforms, appurtenances, and pipelines in the KG-06 Oil Fields in the Bay of Bengal, specifically within international waters - whether the salary income earned by the assessee is exempt under the Income Tax Act, 1961, given the nature and location of the employment? - HELD THAT:- As per Section 2(25A) of the Income Tax Act, 'India' includes its territorial waters, the seabed and subsoil underlying such waters, the continental shelf, the Exclusive Economic Zone (EEZ), and other maritime zones as defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976. Operations on a foreign ship within the EEZ, especially those not involving direct interaction with the seabed or su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-. The case was selected for scrutiny under CASS. During the course of assessment proceedings, the assessee submitted that, he is an Engineer (Under Water Inspector) working at offshore fields. During the year under consideration, the assessee shown income from other sources and capital gains. The assessee also received salary income from his employer (Oceaneering International GMBH) to the tune of Rs. 61,74,262/- on which TDS of Rs. 18,35,210/- u/s. 192 of the Act was deducted, however, the same was shown as exempt income in the return of income filed by the assessee. 2.1. The assessee was requested to provide details of the offshore sites/rig/ship (including its name, ownership details, its control management, coordinates of its location, etc.), where the work has been performed by him during the year under consideration. He was also asked to explain whether location of these offshore sites/rig/ship was within the part of India as defined in section 2(25A) of the Act? 2.2. The assessee in his reply contested that the place of duty of the assessee is in KG-D6 Oil Fields in Bay of Bengal in International water. The job is in international water, and it is not part of India as def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssentially claimed that as the duty is performed in a sailing foreign ship, the same does not fall within the definition of India. Thus, the salary income is exempt in India being NRI. 9.3.1 The appellant also submitted that the definition of India in the Act covers the areas of Exclusive Economic Zone: however, it does not cover sailing, i.e, operating ships. It is pertinent to note that some of the areas where oil was located came to be included as forming part of India as per the Notification issued under the Territorial Waters Act, 1976 and to those areas the Income Tax Act was applied. However. the Act was applied only to income which is derived in such areas from the activities enumerated in the Notification viz. extraction of oil, exploration of oil and minerals. However, there is no Notification which includes foreign ships into the term India under the Territorial Waters Act read with the Notifications issued thereunder. Even under the Territorial Waters Act, there is no law which includes such operating Ships to for part of India. The role of the appellant is to do periodic inspection, i.c.. under water inspection of the Oil Rig properties by sailing in small vessels call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis that it is received or deemed to be received by him in India. 9.4.1 Irrespective of the status of the appellant, its income received for activity in India is within the scope of total income chargeable to tax in India, his being on foreign vessel is not material if the ship is operating within India. The case law cited by the appellant predates the amendment brought in 2(25A) of the Act and not applicable. 9.5 The appellant's reading of Notification no GSR 304(E), dated March 31, 1983 that Act is applied only to income which is derived in such areas from the activities enumerated in the Notification viz extraction of oil, exploration of oil and minerals is also completely misplaced from the collective reading of clause (c) with clauses (a) and (b) of that notification. It is pertinent to note as the appellant himself claims to be employed in the external inspection of on Rig structure used for extraction of oil, exploration of oil and minerals located within Exclusive Economic Zone of India. It is immaterial which route or what mode of transport he takes to the place of work but what really matters is the fact that he is not deriving his income for merely being on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bent. 3. In upholding the order of the Learned Assessing Officer making addition of salary income of Rs. 61,74,262/-, though the appellant has worked on a sailing foreign ship under the employment of foreign company beyond territorial waters of India. The appellant craves leave to add, amend, alter, edit, delete, modify or change the ground of appeal at the time of or before the hearing of the appeal. On Ground Nos.1 and 2 6. The Ld.CIT(A) has dealt with these grounds in detail and has dismissed these two grounds. For the sake of clarity, we reproduce the relevant part of the Ld.CIT(A) s order hereunder: 7.5 From the above. it is immensely clear that the jurisdictional court has laid down a proposition that in case of the beneficial amendment that has been brought about for the benefit of assessee, shall be applicable from the date such amendment was introduced. From the records. it is seen that the AO passed the draft assessment order u/s. 144C(1) on 03.09.2021 giving the appellant an opportunity to file his objection if any, before the Hon'ble DRP within 30 days. The AO reported that the appellant neither filed his objection before the undersigned nor filed any objection befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, the Ld.Counsel for the assessee contented that the assessee is in employment with Singapore based company, named Oceaneering International GMBH. The assessee s place of duty is on ship engaged in underwater inspection of platforms, appurtenances, and pipelines in the KG-06 Oil Fields in the Bay of Bengal, specifically within international waters. The key-points noted are: 1. The work involves boarding small, remotely operated sub-sea vessels from a foreign ship. 2. The foreign ship operates beyond the territorial waters of India but within the Exclusive Economic Zone (EEZ). 3. The assessee does not visit or work on the Oil Rig properties or platforms. 4. The place of duty is claimed to be on the ship, performing external inspections of Oil Rig structures. 7.2. The Ld.Counsel for the assessee further contented that as per subsection (9) of Section 7 of The Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 (Act No. 80 of 1976), ships of all States enjoy freedom of navigation. Therefore, the foreign ship on which the assessee was employed to carry out specific activities as a part of his employment agreement was considered to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that territorial waters do. Operations on a foreign ship within the EEZ, especially those not involving direct interaction with the seabed or subsoil, are not automatically considered as services rendered within 'India' for tax purposes. 8.3. Notification No. GSR 304(E) specifically extends the Act ONLY in respect of income derived from specified activities. The Ld.CIT(A) has failed to consider the fact that sub-section 9 of section 7 of The Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 gives freedom of navigation to foreign ships and therefore employees working on such ships who are not carrying out activities as specified by the said notification are not deemed to be working in India. 8.4. Section 9(1)(ii) of the Income Tax Act, 1961 states that income earned from services rendered in India is taxable. Since the assessee's duties, which are not covered by Notification No. GSR 304(E), are performed on a foreign ship operating beyond the territorial waters (though within the EEZ) it can be concluded that the services are not rendered in India. 8.5. Judicial pronouncements relied upon by the assessee are considered. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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