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2010 (7) TMI 57 - AAR - Income TaxAccrual or arising of income in India - Applicability of Section 44BB - Royalty u/s 9(1)(vi) - the applicant has entered into "Bareboat charter" agreements" ('BBC agreement') with various vessel providing companies ('VPC') for provision of requisite seismic survey vessels on global usage basis. BBC agreement is one where the lessor provides only the vessel (without provision of services associated with the vessel) on hire to the lessee. It is also referred to as 'dry lease arrangement' - Held that: - where the agreement was executed outside India and the delivery of the vessel also took place outside India, by reason of the mere presence of the vessel in India without the volition of VPC, the source of income cannot be said to be located in India. To this extent, the hire charges paid by the applicant are liable to be excluded from the taxable profits of the VPC - hire charges realized by VPC during the certain periods are liable to be taxed under the Income-tax, 1961 and the rest of them ought to be excluded - the seismic activities are inseparable part of prospecting of mineral oil and the seismic survey vessel plays a crucial role in such operations undertaken by the applicant. - as the applicant engaged in the business of providing services or facilities in connection with prospecting for or extraction of mineral oil or supplying of plant (including ships) on hire used or to be used in the prospecting or extraction of mineral oil, Section 44BB is squarely attracted - Having regard to the fact that Section 44BB comes into play as held earlier, the receipts cannot be brought within the section 9(1)(vi) of the Act - the consideration received by VPC cannot be held to be 'royalty' income within the meaning of Sectio 9(1)(vi) of the Act.
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