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2023 (7) TMI 566 - BOMBAY HIGH COURTTaxation u/s 44BB - Existence of PE - contractual income from GSPC under the contract - drilling services were continued only for a period of 119 days - whether would not be covered under Article 5(5) of the India Singapore DTAA which requires provision of service or facility for a period of more than 183 days in the fiscal year? time of 183 days will begin when the actual services under the contract begins or from the moment the rig enters Indian territory? - when should an enterprise be considered to have rendered services or facilities? HELD THAT:- It is settled law that the use of the expression ‘in connection with’ in Section 44BB expands the horizon of the services or facilities, provided by a non-resident assessee provided they have connection with the exploration, extraction or production of mineral oils. Mr. Agarwal, as noted earlier, in all fairness stated that service or facility provided would be covered by section 44BB. If we have to accept Appellant stand that the date on which the count of 183 days will begin is only when the rig actually begins to perform under the contract, i.e. 3rd December 2010, then (a) there was no need to bring rig into the country in April 2010, (b) there was no need to hold meetings with GSPC in April 2010, (c) the fittings could have been made outside the country and the rig could have been brought into India later, and (d) it will not stop an assessee from saying that in the middle of the contract of drilling the rig broke down, she was off – hire and, therefore, those days should not be added in counting 183 days. Theoretically, it is possible that on 30th March the rig may have a sudden break down and on 2nd April the rig may start working again to escape the requirement of Thus even though the actual contract was entered into with GSPC only on 18th June 2010, and accepting what Appellant states that the drilling work actually commenced on 03rd December 2010, still the fact that as on 27th April 2010 the rig was undergoing necessary upgrades / repairs to meet the GSPC requirements, in our view the rig was already in the contracting state for providing the services or facilities in connection with the exploitation, exploration or extraction of mineral oil as early as on 27th April 2010. Thus when the rig had entered Indian waters and it was undergoing fabrication, upgradation and positioning for the drilling activity for GSPC it can be said that the PE was there in connection with the exploration, exploitation or extraction of mineral oils. No substantial question of law arises
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