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2021 (12) TMI 1360 - AT - Income TaxTaxable income to tax u/s 44BB v/s Section 44DA read with section 9(l)(vii) - services provided by the assessee in respect of core pressure & wellbore studies, post stack inversion studies, data processing & maintenance services etc which are prima facie backend activities in the nature of technical services - Assessee argued as Activities are in the nature of ‘mining or like project’ and thus not in the nature of ‘fees for technical services. The services provided by the appellant, were used in the exploration/exploitation of mineral oils - HELD THAT:- As respectfully relying upon the decision of Hon’ble Supreme Court in the case of ONGC [2015 (7) TMI 91 - SUPREME COURT] it is held that the receipts of the Assessee on account of post-stack inversion study, core pressure and wellbore study, data processing and maintenance services were taxable under section 44 BB of the Act. Contention of the revenue that the amounts have to be taxable u/s 44DA - We hold that to invoke the provisions of Section 44DA, the revenue has to prove that the receipts are indeed or in the nature of FTS taxable u/s 9(1)(vii). Reimbursement of equipment lost in hole - revenue or capital receipt - HELD THAT:- As the name signifies lost in hole means destruction and loss of capital assets like drilling equipment which are provided by the assessee to oil exploration and. production companies. Therefore, the revenue received on account of loss of equipment does not form income in the hands of the assessee rather it is a mere reimbursement of the cost of equipment destroyed in the process of oil extraction. As reliance on the decision of the Hon’ble Uttarakhand High Court in the own case of the assessee [2009 (7) TMI 51 - UTTARAKHAND HIGH COURT] wherein the Hon’ble Court held that the receipts on account of equipment lost in hole being in the nature of capital receipts cannot, be included in the revenues chargeable to lax u/s 44BB - We find considerable cogency in assessee's submission as above. Hence, we hold that the Assessing Officer has erred in including the sum received by the assessee as reimbursements for determining the taxable income of the assessee. - Decided against revenue.
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