TMI Blog2011 (3) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... C and Cairn Energy is to be computed by applying the provisions of section 44BB of the Act. - AAR No. 873 of 2010 - - - Dated:- 15-3-2011 - BALASUBRAMANYAN J. P. K. (CHAIRMAN), KHOSLA J., SHRIDHAR V. K. (MEMBERS) Percy Pardiwala, Senior Advocate (Nitiesh Joshi, Jignesh Sshah and Mohit Gandhi, with him) for the Applicant. JUDGMENT Ruling The authority of the ruling was pronounced by J. Khosla (Member).- Global Geophysical Services Limited is the applicant-company incorporated under the laws of Cayman Islands and therefore it is a non-resident. The applicant is engaged in the business of seismic data acquisition and processing for exploration companies on a worldwide basis. The seismic data (in processed form) is used to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 3D processing of seismic data acquired in the areas in the western offshore is to obtain accurate high resolution imaging with geological objectives prescribed under the ONGC contract. The ONGC contract was initially entered into with a validity period up to May 31, 2009. However, the ONGC contract was extended for data acquisition activity up to December 31, 2009, and for data processing activity up to February 28, 2010 since the applicant could not complete the contract within the stipulated period. 4. The applicant has also entered into a contract with Cairn Energy in November, 2008 for acquisition of 4D OBC marine seismic data of the east coast of India. The scope of work under this contract includes, without limitation, provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of reimbursement of all type of expenditure to be made to the applicant. The DDIT has further directed the applicant to file its return with the tax authorities in Dehradun as per the Central Board of Direct Taxes Notification No. 1680E, dated August 28, 2007. 6. Against this background, the applicant submits the following question for a ruling of this Authority : "Whether on the facts as set out in the annexure II to this application, the income derived by Global Geophysical Services Limited (the `applicant') under the contracts with Oil and Natural Gas Corporation Limited (`ONGC') and Cairn Energy India Pty Limited (`Cairn Energy') is to be computed by applying the provisions of section 44BB of the Income-tax Act, 1961 (the `Act' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in order to identify the existence of hydro-carbons, underneath. Seismic surveys paint the picture of the sub-surface in order to better target oil and gas reserves. The results help in assessing the potential for tapping oil and gas at a particular spot. Seismic surveys are conducted to gather data to understand the size and location of oil fields so that the risk involved in exploratory drilling could be reduced. Hence, such services are aimed at increasing the exploration success of oil and gas exploration companies by assisting them in maximizing the production from existing reservoirs. 11. Now let us examine how far the activities of the applicant do attract the computation specified in section 44BB of the Act. Before we delve in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils outside India. (3) Notwithstanding anything contained in sub-section (1), an assessee may claim lower profits and gains than the profits and gains specified in that sub-section, if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB, and thereupon the Assessing Officer shall proceed to make an assessment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 44BB demanding computation of its income in accordance with this provision. 13. This Authority had the occasion to deal with an identical issue in Geofizyka Torun's case [2010] 320 ITR 268 (AAR) wherein a graphic picture of exploration is given in the middle passage of paragraph 14 of the ruling which is extracted below (page 277) : "The seismic survey and data acquisition, as stated by the applicant, is a prelude and a very critical component of the oil and gas exploration activity. Without seismic data acquisition and interpretation, it is impracticable to carry out the activity of prospecting which is a step in aid to exploration. It would be difficult to locate hydro-carbons without conducting seismic survey and the uti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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