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2016 (3) TMI 421 - AT - Income TaxAddition to gross receipts - offer to tax revenues only on a pro-rata basis - Held that:- As far as the issue of inclusion of ₹ 3,04,18,274/- in gross receipt for the purposes of computing is concerned, we are of the considered opinion that the contention of the assessee is incorrect. Gross payments are intricately linked to the services/works rendered by the assessee and arise due to the execution of contract in India, under the terms and conditions of the contract between the assessee and Siem Offshore Inc. The vessel was hired by the contract and it was only for this purpose that the vessel and the crew were involved in the said contract. Thus, it is improper on the part of the assessee to offer to tax its revenues only on a pro-rata basis based upon the number of days the vessel was stationed within 200 nautical miles from the Indian shore line. As the contract for the provision of crew was a continuing contract, it cannot be said that revenues were not earned for the period the vessel was out of the territorial waters of India. Hence, the entire contract amount is to be considered for the purpose of calculating the gross receipts and all receipts received against the execution of the contract would come under the purview of gross receipts. Thus, gross amounts for the months of November 2007, December 2007 and January 2008 are to be included in the gross receipts. We accordingly uphold the action of the Assessing Officer and the Ld. CIT (A) on this issue and decline to interfere. - Decided against assessee Revenues earned - taxed as Fees for Technical Services (FTS) or under the provisions of section 44BB - Siem Offshore Inc had leased a vessel under a time charter agreement to Electromagnetic Geo Services AS ('EMGS') to assist EMGS in its exploration of seabed and subsoil (EMGS has entered into a contract with Oil and Natural Gas Corporation Ltd) - Held that:- Specific services are contemplated only under section 44BB and, therefore that being special provision, the same will prevail over all other provisions dealing with royalty/FTS. In no other section dealing with royalty/FTS, specific services are provided. In this regard, one may also refer to section 293A of the Act which empowers the Central Government to grant exemptions in relation to participation in the business of prospecting for or extraction etc. of mineral oil. In fact separate notifications have been issued by the Government in exercise of its power conferred u/s 293A to give relief to the assessees in connection with the business of exploration and extraction of mineral oil. Considering the pressing requirement of the oil industry, sections 42 and 293 A were inserted in the Act in view of the high expenditure involved in the business of oil exploration. When viewed in the back drop of this objective, we find that section 44BB has been couched in such a manner so as to encompass within its ambit all services connected with oil exploration. Thus, in our opinion, if a non-resident is engaged in the business of providing services or facilities in connection with the prospecting for extraction or production of mineral oil, then 10% of the aggregate of the amounts received/accrued will be deemed to be the profits and gains of such business chargeable to tax in terms of provisions of section 44BB of the Act. Thus on the facts of the case and respectfully following the ratio of the judgment of the Hon’ble Apex Court in ONGC vs. CIT & Anr. [2015 (7) TMI 91 - SUPREME COURT] it is our considered opinion that the revenues of the assessee should be taxed under the provision of section 44BB of the Act. - Decided in favour of assessee
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