TMI Blog2011 (1) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable in the facts and circumstances of the case - The appeal of the revenue is allowed - ITA NO. 1891/MUM/2008 - - - Dated:- 28-1-2011 - ORDER Vijay Pal Rao, Judicial Member This appeal by the revenue is directed against the order dated 31.12.2007 of CIT(A) for the assessment year 2000-01. 2. Only ground raised by the revenue in this appeal is as under : "on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that 10% of the business operation i.e. operation connected with mobilization is carried out in Indian jurisdiction and hence only 10% o f US $1,00,000 is taxable in India and accordingly directing the AO to include US $1,00,000 with the total receipt and compute the income under section 44AB of the Act" 2.1 Facts of the case are that the assessee company is incorporated in Cayman Island and entered into a charter agreement with Neptune Exploration and Industries Ltd (NEPL) to give on hire a rig called Noble Jimmi Puckett for carrying out its operations under the contract being awarded to the hirer by ONGC. Under the said agreement the hirer has to pay the assessee a sum of US$10 lakhs towards mobilization fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of moving the rig from Sharjah to Bombay high. Since the assessee has not at all mobilized the rig as the same was already in the Bombay High under the existing agreement with the same hirer M/s Neptune Exploration and Industries Limited. The learned DR further contended that the mobilization charges received by the assessee in connection with the business in India and therefore as per the provisions of section 44BB, the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with extraction or production of, mineral oils in India is taxable in India. The mobilization fees received by the assessee in connection with the plant and machinery given on hire to be used for extraction or production of, mineral oils in India. Therefore, even if, the said payment was received by the assessee outside the India the same shall be deemed to be profit and gains of such business chargeable to tax in India. He has submitted that the provisions of section 44BB has specifically provided that if any amount paid or payable in or outside India if the same is on account of providing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed only that part of income as is reasonably attributable to the operation carried out in India. In assessee's case the activities/operation of moving the rig from Sharjah to India were carried out side the India, therefore, mobilization fees cannot be accrued or arisen in India as per the provisions of section 9(1)(i) of the Act. He has further contended that the provisions of section 44BB provided only modes of computation of profit or the gains of the non-resident engaged in the business of services or facilitates for the exploration of mineral oils and the said provision does not override the provisions of section 5(2) which is a charging section. He has relied upon the following decisions: 1 ACIT v. Jindal Drilling ITA No.6452/Bom/91 2 Saipem SPA v. DCIT 88 ITD 213(Delhi) TM 3 DCIT v. Sonat offshore drilling Inc (Approved by the Bombay High Court (ITA No. 508 of 2007) vide order dated 16th Sept 2008) ITA No.7414/Bom/94 4 Transocean offshore Inc v. DCIT ITA No.05/Del/2003 5 Mc Dermott ETPM Inc v. DCIT 92 ITD 385 (Mum.) 6 R and B Falco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was responsible at its own costs for any addition, modification or upgradation and supply of equipments as per the requirement of ONGCL and to provide the rig and equipment required to operate under the said contract with the ONGC. The assessee represented in the agreement that Rig is in efficient operating condition and is capable of drilling exploratory, development oil and gas wells and for workover operations, including high angle wells, short drift side track, longdrift side track, drain hole and multilateral hole drilling. Further, it is to be noted that before entering into the agreement dated 3.12.1998 which is a subject matter of this appeal, there was a agreement already subsisting between the assessee and NEPL dated 12.11.1997 and was already in progress on the date when new agreement was signed. The rig in question had been working in India at the time of signing of the agreement in question and working in India as per the agreement between the same parties which has been referred as current agreement in the agreement in question. Therefore, it is clear that at the time of the signing of the agreement dated 3.12.1998, the rig in question was very much in India and wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 44BB and sections 5 and 9. 2.8 In the case in hand, the entire business operation is conducted in India and therefore, the income which is paid outside India is deemed to have accrued in India through business connection as the operations are carried out in India. Thus, there would be no apportionment of income by application of section 9(1) or the explanation (1)(a) to section 9(1)(i). As far as the applicability of section 44BB is concerned, the CIT(A) has also upheld the applicability of the section in the case of the assessee. Therefore, there is no issue before us regarding the applicability of the provisions of section 44BB. As regards, the decisions relied upon by the assessee, first of all it is to be noted that all these decisions are in respect of mobilization fees for the initial mobilization of the rig/machinery/equipments from outside India to the working site at India. Moreover, there are divergent views taken by the different benches of this Tribunal. Some of the decisions are in favour of the assessee and some are in favour of the revenue. Without going into the controversy of the issue of overriding effect of the provisions of sections 5, 9 and 44BB, we are of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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