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2011 (7) TMI 103 - AAR - Income TaxDTAA between India and Norway - Applicability of section 44BB - Royalty or fees for technical service - The consortium agreement between the applicant and the others was recognized by ONGC since the payments were to be made direct by ONGC to the applicant and the other three companies for the work done by each one of them - It has taken up the stand that the receipts of the applicant are covered under section 9(1)(vii) of the Income-tax Act, being fees for technical services and the applicant was not liable to be taxed under section 44BB of the Act especially in the context of the proviso thereto - Same is the position with regard to the claim of the applicant that the service tax received by it and made over by it to the Government, cannot be treated as part of its income under section 44 BB of the Act especially in terms of the contract by which the liability to pay service tax was on ONGC - since there is no case that ONGC is not involved in prospecting, exploration and extraction of oil and the services being provided by the applicant are services in connection with that activity whether in view of the developments that took place after 1st January, 2010, the income of the applicant should be assessed only in the context of Article 25 of the India-Norwegian Treaty - No dispute is raised by the Revenue regarding the claim of the applicant that though the company was registered in Cayman Islands the managerial control over it passed to Norway when the applicant got listed in the Oslo Stock Exchange - tax liability of the applicant to be taxed in India is governed by Article 23(4) of DTAA read with its non-obstante clause fixing the limit. This would be the position from 1st January 2010 the amount collected as Service Tax by the applicant to be made over to the State, cannot be treated as consideration for the service rendered by the applicant to ONGC - The consideration fixed under the contract between the parties as the sum to be paid has to be taken as the amount based on which the fictional income has to be ascertained - The very object of introducing the fiction, namely, to avoid all complications in determining the liability of an assessee coming under that provision otherwise, would itself be defeated, if an exercise is to be undertaken in each case to ascertain the liability of an assessee as if in the course of a regular assessment. Such an exercise is not warranted or permissible on the scheme of section 44BB of the Act - Held that: service tax said to be included in the consideration received by the applicant from ONGC must also go into computation while calculating the consideration for the service or facility provided by the applicant under section 44BB of the Income-tax Act or Article 23(4) of the India-Norway DTAA - Ruling is given
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