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2024 (2) TMI 791 - HC - Income TaxApplicability of Section 9(1)(vii) read with Section 44DA - HELD THAT:- Issue stands conclusively answered by the Supreme Court in its judgment rendered in Oil and Natural Gas Corporation vs. Commissioner of Income Tax & Anr. [2015 (7) TMI 91 - SUPREME COURT] Applicability of Section 44BB - Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils - essence of the contract was duly captured by the Income Tax Appellate Tribunal [2022 (7) TMI 1507 - ITAT DELHI] as held the scope of work clearly envisages that the assessee has to render certain services in connection with the mining activity carried on. Thus, once the activity carried on by the assessee falls within the expression "mining or like projects ", it goes out of the purview of FTS as defined under Explanation 2 to section 9(l)(vii) of the Act. That being the factual and legal position, the amount received by the assessee cannot be treated as FTS under section 9(l)(vii) of the Act. That being the case, the provision of the Act being more beneficial in such a scenario, as per section 90(2) of the Act, will be applicable. Therefore, there is no need for us to examine the applicability of the term 'FTS' under India — France Tax Treaty. Thus, once the amount received by the assessee does not fall within the definition of FTS under section 9(1)(vii) of the Act, by default, section 44DD would not apply to such payment. A reading thereof would clearly and in our considered opinion qualify the pith and substance test and be viewed as being inextricably linked to the primary contract as propounded by the Supreme Court in Oil and Natural Gas Corporation and the principles reiterated by the Division Bench of this Court in Director of Income Tax vs. OHM Ltd. [2012 (12) TMI 422 - DELHI HIGH COURT] as held the amendment made by the Finance Act, 2010, with effect from April 1, 2011, in both the sections, cannot have the effect of altering or effacing the fundamental nature of both the provisions or their respective spheres of operation or to take away the separate identity of section 44BB. We do not, therefore, see how these amendments can assist the Revenues contention in the present case, put forward by the learned senior standing counsel. We, therefore, agree with the Authority for Advance Rulings that in the present case the profits shall be computed in accordance with the provisions of section 44BB of the Act and not section 44DA. We thus find that since the terms of the contract are not questioned or assailed before us they would clearly fall within the scope of the expression “in connection with” as appearing in Section 44BB of the Act. We, consequently find no ground to interfere with the view as expressed by the ITAT. We, additionally note that the ITAT while holding in favour of the assessee before this Court had also relied upon on its own order [2018 (12) TMI 1069 - ITAT DELHI]. We are informed by Mr. Chawla that the same has attained finality since no appeal was preferred by the Department.
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