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2012 (4) TMI 280 - ITAT DELHI
CGG Veritas Services, SA Versus Additional Director of Income-tax, (International Taxation)
Exploration, extraction and production of mineral oil - AO has brought to tax income of the assessee u/s 9(1)(vii) instead of u/s 44BB(1) - Held that:- the assessee suffers no risks even if project of prospecting for or exploration for mineral oil does not succeed. The assessee could not demonstrate that the project is owned by it. The job of the assessee is well defined by the contract. Obviously, it cannot be said that the project is undertaken by the assessee even if it is assumed that services provided by the assessee amount to 'mining or like project'. Hence, first exception to definition of FTS as contained in Explanation 2 to section 9(l)(vii) is not available to the assessee. The second exception is also not available as receipts are not taxable under the head salary. Therefore, receipts are in nature of FTS and hence because of proviso to section 44BB(l), provisions of section 44BB(1) are not applicable.
On combined reading of proviso to section 44BB (1) and second proviso to section 44DA it is clear that the fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil though effectively connected with PE or fixed place of profession will fall not under section 44BB(1) and will be assessable under section 44DA of the Act -admittedly the receipts are not connected with PE in India and hence the fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil will be assessable u/s 115A of the Act.
Holding 25 per cent of the gross receipts from Eni as profits earned on the project and in failing to provide credit to the appellant in respect of taxes deducted at source by ONGC and Eni as per the provisions of section 195 of the Act assessee contested that entire project has to be executed by the assessee by employing vessels, whether owned or chartered equipped with specialized instruments all the terms of contract are similar to that of ONGC with only difference that Eni is a non-resident company Held that:- the amount received by the assessee will be assessable in the nature of fee for technical service and will be assessable u/s 115A (1)(b) of the Act - income from fee for technical services has been assessed in the hands assessee, the assessing officer is directed to allow credit of TDS against the tax payable by the assessee - the AO has charged interest treating the same as mandatory without examining the case in the light of judicial pronouncements - direct the assessing officer to examine accordingly as stated.
Levy of interest u/s 234B - Held that:- assessing officer has charged interest treating the same as mandatory without examining the case in the light of judicial pronouncements to the effect that if amount was subject to TDS, whether any interest was still chargeable under these sections - assessing officer is directed accordingly.