TMI Blog2014 (9) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument of revenue is not the basis on which either the AO or the CIT(A) have come to a conclusion, that the provisions of Section 44BB do not apply - the claim of the assessee that the income in question is to be determined by applying the provision of Section 44BB is to be upheld – Decided partly in favour of assessee. - ITA No. 5652 /Del/ 2011 - - - Dated:- 29-8-2014 - Shri H. S. Sidhu And Shri J. S. Reddy,JJ. For the Appellant : Shri S. D. Kapila, And Shri O.P. Sapra, Advocates, Shri Devesh K Shah, R.R. Maurya, And Ms. Sweta Karia, CA For the Respondent : Shri Sanjeev Verma, DR ORDER Per J. S. Reddy,A.M: 1. This is an appeal filed by the assessee directed against the order of the CIT(A), Dehradun dated 19.09.2011 for the A.Y. 2005-06. 2. The assessee is a company incorporated and registered in Singapore. The assessee is engaged in the business of providing services and facilities in connection within prospecting for, or extraction or production or extraction of mineral oils. 3. During the Financial Year 2004-05 relevant to the A.Y. 2005-06, the assessee has entered into contract with Engineers India Ltd. for transportation of coated materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation Sub contractor for the coated material from MDL s Alcock Yard at Mumbai High North Field . A finding to this effect has also been given by the ld. AO in the last paragrapth on second page of the assessment order. 6.2. The authorities cited by the ld. AR lay down the principle that if the activities for earning income have a proximate nexus to the prospecting for, production or extraction of mineral oils then Sec. 44BB of the Act applies. In this case the appellant is merely providing specialized services in transporting equipment/material on behalf of M/s EIL, who in turn are the main contractors to M/s ONGC. Thus, the appellant has failed to establish a direct nexus with production, extraction and exploration of mineral oils and would thus not qualify as a case falling within section 44BB of the Act. The following authorities are being relied upon to arrive at the above conclusions:- (1) ARB Inc. Vs. JCIT, 93 ITD 520 (Del) (2) ONGC vs. IAC, 29 ITD 422 (Del) (3) ONGC vs ACIT, Circle-1, Dehradun, 9 SOT 8 (Delhi-SMC) 4. CIT Vs. ONGC Ltd., 179 Taxman 257 (Uttrakhand). 6.3 In view of the above finding of the fact and the principles laid down in the cases ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of cargo barge at MDL s Alcock yard transporting approximately 2100 metric tons coated pipes, risers, riser bends from MDL s Alock yard to Mumbai High North Field till the completion of laying of linepipes and risers and riser bends. 3. Load-out of coated pipes, risers riser bends on Cargo Barge mobilized by the bidder from MDL s Alock Yard. 4. The fabrication work (i.e. supports etc.) of sea fastening (materials as available shall be supplied as FIM to contractor) as per the Engineering requirement. 5. Supply of wooden duncans as per the requirement 6. Sea-fastening of coated pipes, risers, riser bends at Cargo Barge mobilized by the bidder. The sea-fastening material as available shall be supplied by EIL at the MDL s Alock Yard to the bidder. 7. Lashing slings 9 Nos. and turn buckles 15 Nos. are only available and the same shall be handed over to contractor. Balance slings/Turn Buckles, if required, shall be supplied by contractor. 8. Getting clearance from all statutory bodies at the Mumbai Ports for the cargo barge and the coated materials. 9. Berthing of cargo barge at offshore site till the unloading of last pipe at the pipe lay barge of installa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verned by the provisions of Double Taxation A voidance Agreement (DT AA) between India and UAE. The AO carefully considered the DTAA and came to the conclusion that the assessee is not eligible to claim the benefits of the agreement for Avoidance of Double Taxation executed between India and UAE. Therefore, the assessee would be governed by Domestic Indian Taxation Law i.e. Income Tax Act 1961. 3.1 During the course of the assessment proceedings, the Assessing Officer noticed that the assessee has received payments amounting to US$ 62,54,591/- i.e. ₹ 27,41,04,186/-. These payments were received under various heads such as material, mobilization, installation etc. The AO considered these payments received by the assessee in the light of the agreement of the assessee with Engineers India Ltd., as also to the original bidding documents of ONGC. The AO also observed that the assessee has claimed that its income is taxable u/s. 44BB of the Act. However, the AO was of the opinion that considering the various clauses of the agreement relating to the scope of services rendered by the assessee, the assessee is also providing technical services. The AO further observed that the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections. (2) The amounts referred to in sub-section (1) shall be the following, namely:- (a) 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, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India; and (b) the amount received 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 the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal was not quashed by the High Court what was quashed was an appeal of the Revenue filed for another assessment year. 15. We have considered the case law of NPCC (Supra). There is a factual difference in the scope of work of NPCC and the scope of work of the assessee. In that case, the assessee was engaged in successful installation of offshore platform. Such work was held as neither providing services nor providing machinery on hire. In the case of one hand, the scope of work demonstrates that the assessee has provided services in relation to extraction or production of mineral oil. Thus, this case relied upon by the ld. D.R. is not applicable to the case on hand. 16. Ld. Departmental Representative further relied on the decision of the Hon ble Delhi High Court in the case of Director of Income-tax Vs. Rio Tinto Technical Services [2012] 17 Taxmann.com 70 (Delhi) from the preposition that the term technical services takes into its fold a number of activities i.e. the term is of wide connotation. He further relied on the decision of the Hon ble Delhi High Court in the case of PGS Geophysical As Vs. Additional Director of Income Tax in ITA No. 612 of 2012 for the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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