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2023 (6) TMI 345 - AT - Income TaxTaxability of reimbursement of various expenses - 'reimbursements' from various entities on account of the provision of facilities and services of seismic data acquisition, planning and carrying out of presurvey studies, taking marine data and confirming prospects, maintenance/upgradation/support of software licences, etc. ('services') - taxable u/s 44DA or u/s 44BB - Difference of opinion between the Learned AM and Learned JM of ITAT, C Bench, New Delhi - matter referred third member of ITAT for consideration and disposal u/s. 255(4) - Assessee is a non-resident company having permanent establishment in India. Third member concluded that revenue received by the assessee-company during the year under consideration on account of provision of facilities and services of seismic data acquisition, planning and carrying out of pre-survey study, taking marine data and confirming prospects, maintenance/ upgradation/support of software licences, etc., is not in the nature of fees for technical services as the same is covered by the exclusion provided in Explanation 2 to section 9(1)(vii) of the Act being consideration received for "mining or like projects" and the same, therefore, is not taxable under section 44DA and revenue received for the same accordingly is taxable under section 44BB of the Act. And amount received by the assessee as reimbursement of service tax is not includible in gross turnover for the purpose of computing taxable income under section 44BB of the Act. HELD THAT:- As decided by Learned third member revenue received by the assessee company during the year under consideration on account of provision of facilities and services of seismic data acquisition, planning and carrying out of pre-survey study, taking marine data and confirming prospects, maintenance/ upgradation / support of software licenses, etc, is not in the nature of fees for technical services as the same is covered by the exclusion provided in Explanation (2) to Section 9 (1) (vii) of the Act being consideration received for “mining or like projects” and the same, therefore, is not taxable under Section 44DA of the Act. The said services or facilities provided by the assessee actually are inextricably connected with prospecting for, or extraction or production of, mineral oils as held in the case of ONGC [2017 (10) TMI 322 - SUPREME COURT] under the similar facts and circumstances and the revenue received for the same accordingly is taxable under Section 44BB of the Act. Whether, the amount received as reimbursement of ‘service tax’ includible in gross turnover for the purpose of computing taxable income u/s 44BB ? - This issue is squarely covered in favour of the assessee by the decision of the Hon’ble Uttarakhand High Court in the case of Director of Income-tax International Taxation Vs. Schlumberger Asia Services Ltd. [2019 (4) TMI 1177 - UTTARAKHAND HIGH COURT] wherein it was held that the amount reimbursed to assessee (service provider) by ONGC (service recipient), representing service tax paid earlier by assessee to Government of India, not being an amount paid to assessee on account of providing services and facilities in connection with prospecting for, or extraction or production of, mineral oils in India, would not form part of aggregate amount referred to in clauses (a) and (b) of sub-section (2) of Section 44BB of the Act. Thus amount received by the assessee in the present case as reimbursement of service tax is not including in the gross turnover for the purpose of computing taxable income u/s 44BB. In the light of the decision of the learned third member the captioned cross appeals are decided in favour of the assessee.
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