TMI Blog2011 (7) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... cial, specific and exclusive provision, even where the profits arising from business specified therein fall within the ambit of fees for technical services, the provision should prevail for the purposes of computation - Decided in favour of the assessee Explanation to section 9(1)(i), income of the business in which all the operations are not carried out in India, only such part of income as is reasonably attributable to the operations carried out in India would be the income deemed to accrue or arise in India - Once an assessee opts to come under Section 44BB(1) of the Act, the provision itself deems its profits and gains as 10% of the aggregate of the amounts specified in sub-section (2). Sub-section 2 (a) specifies that that aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational Exploration) Pty. Ltd. (BHP Billiton), a company incorporated under the laws of Australia. The contract relates to carrying out 2D marine seismic data acquisition and processing services in oil and gas blocks located some 350 km south-west of Mumbai and 300 km north-west of Cochin off-shore, the west coast of India. 2. Applicant submits that section 44BB of the Income-tax Act, 1961 (Act) provides special provision for taxation of non-residents engaged in specified activities in the oil and gas sector. The revenues earned by the applicant under the seismic data acquisition and processing contract with BHP Billiton in India are taxable in accordance with section 44BB of the Act. The applicant is of the view that in view of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant under the seismic data acquisition and processing contract with BHP Billiton in India are taxable in accordance with section 44BB of the Income-tax Act, 1961 (Act)? 2. Whether the revenues arising under the contract with BHP Billiton on account of mobilization/demobilization activities attributable to distance travelled by the vessel outside India will be subject to tax in India? 4. The revenue contends that proviso to Section 44BB restricts the applicability of the substantive provisions of Section 44BB in relation to those persons who are either engaged in the business of prospecting for mineral oils or foreign companies who received fees for technical services from an Indian concern. The proviso would be rendered useless if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twood Occeanks Pacific Ltd. [2010 TII-12-HC], R B Falcon Drilling [2009-TII-20-HC] ; Sundowner Offshore International Burmuda Ltd.[2009-T11-07]; etc. 5. In terms of the contract, the applicant is to provide vessels and seismic crew at the area of operations to acquire the 2D geophysical survey in the MB/KK blocks offshore India to BHP Billiton. The vessels are to be equipped with hardware and software to process the seismic data. The survey work is to be carried out 24X7 hours a day, seven days a week and without shut down for holidays. The cost of maintenance of the vessels, catering and accommodation services on board the seismic vessels is to be borne by the applicant. It is therefore obvious that the applicant is engaged in the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receipts in the hands of the applicant qualifies as fees for technical services, as we find that the services provided by the applicant are not technical services. Question No.1 is answered in the affirmative. 6. As regards the second Question, the learned Advocate on behalf of the applicant submits that section 4 of the Act provides that income tax shall be charged in respect of the total income of the previous year. Total income under section 2(45) of the Act means the total amount of income referred to in section 5 computed in the manner laid down in the Act. Unless the income is subjected to tax under section 5, it cannot be computed in the manner provided in the Act. The income can be subjected to tax in India only if it accrues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 8. Section 44BB does not close its doors to an applicant who desires to know which part of its income accrues or arises in India and how much. The applicant can exercise its rights provided it opts to get the income taxed under section 44BB(3) of the Act. The scheme of computation of income under this section does not provide any leeway to apply both the sub-sections (1) and (3) of section 44BB to the income arising from the business activities falling under the ambit of section 44BB(1) of the Act. Even if part of the income falls under Royalties or Fees for technical Services , there is no scope to assess such receipts under these heads, once it is held that the income is from its oil exploration and production activities as envi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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