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2016 (4) TMI 317 - HC - Income TaxFees for technical services - establishment of permanent establishment ("PE") in India - Assessee's contention that services in question fell within the scope of "construction, assembly, mining or like project" - Held that:- Prospecting for or extraction or production of mineral oil could be termed as 'mining operations' and consequently provided that expression "mining projects” or like projects" as occurring in Explanation 2 to Section 9(1)(vii) of the Act would also cover "rendering of services like imparting of training and carrying out drilling operations for exploration or exploitation of oil and natural gas". And, after examining various contracts involved in the appeals before the contracts were inextricably connected with prospecting, extraction or production of mineral oil and, accordingly, proceeded on the basis that consideration for such services was not fees for technical services. Even though there may be certain ancillary works contemplated under the contracts in question but since the dominant purpose of each of such contract is for prospecting, extraction or production of mineral oils, the income from such services were to be computed under Section 44BB of the Act. Question as whether the Tribunal erred in law in holding that the activity of 2D/3D seismic survey carried on by the appellant in connection with exploration of oil, was in the nature of "fees for technical services" in terms of Explanation 2 to section 9(1)(vii) of the Act – must be answered the affirmative, that is, in favour of the Assessee and against the Revenue. We accept the contention advanced on behalf of the Assessee that since it is clearly engaged in business of providing services in connection with prospecting for mineral oils, its income - if it falls within the ambit of Section 44DA(1) of the Act - would be taxable under Section 44BB(1). Tribunal was right in finding that the consderation received by the Assessee from BG and RIL was fees for technical services, in our view, the Tribunal’s decision to remit the matter to the AO for determining whether the Assessee had a PE in India and whether the consideration received by it was connected with that PE, would have to be sustained. Accordingly the second question - Whether on the facts and circumstances of the case, the Tribunal erred in law in holding that income of the appellant, in the nature of "fees for technical service" was liable to tax in India under section 44BB of the Act only if the appellant had Permanent Establishment ("PE") in India in the relevant assessment year – is answered in the negative, that is, in favour of the Revenue and against the Assessee.
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