TMI Blog2004 (9) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... on of platforms, decks, pipelines, jackets and various other similar activities. A part of the said work consists of mobilization/de-mobilization and transportation of marine spread to off-shore India (this work is done by the assessee outside India) and the installation of structures and pipelines at Bombay High Oilfield, which is located beyond 12 nautical miles, i.e., in the Continental Shelf and/or Exclusive Economic Zone of India, which is the work carried on by the assessee "inside India". 3. During the assessment year under consideration, the assessee had received monies in respect of contract with Scandia Essar Ple. Ltd., Singapore. The Assessing Officer held that the receipts for work carried out by the assessee were assessable to tax in India. In doing so, the Assessing Officer rejected the assessee s submissions vide letter dated 15-11-1994, that the activities carried on by the assessee as sub-contractor to the main contractor are neither covered under nor similar to the activities specified in the Notification GSR 304(E) (5147)/F. No. 188-(7)/82-TPL, dated 31-3-1983, issued by the Government of India, which extends the provisions of the Income-tax Act to the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for three years only and that period had long elapsed. Nothing had been brought before him the learned CIT(A) to suggest that a fresh Circular or instruction had been issued extending the life of the directions contained in that Circular. Quoting various articles contained in the contract entered into by the assessee, the learned CIT(A) observed that these articles indicate that the assessee was itself aware of the fact that it was covered by the provisions of the Income-tax Act. The case laws relied on by the assessee were held to be distinguishable on facts. Resultantly, the appeal was dismissed. 7. Before us, it has not been denied that the activities under the Notification in question, i.e., Notification dated 31-3-1983 are - ( a ) the prospecting for, or extraction or production of, mineral oils in the Continental Shelf of India or the Exclusive Economic Zone of India; ( b ) the provision of any services or facilities or supply of any ship, aircraft, machinery or plant (whether by way of sale or hire) in connection with any activities as referred to in clause ( a ); and ( c ) the rendering of services as an employee of any person engaged in any of the activities referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of the said business; ( ii )"mineral oil" includes petroleum and natural gas." 10. Thus, income of a non-resident Indian, which is taxable in India, is his income accrued or arisen or deemed to have arisen or received in India. The scope of section 44BB encompasses only receipts paid or payable either in India or abroad, for services rendered in India, and where the services are rendered outside India, the receipt by the non-resident in India. The assessee s contention all through has been that it is a sub-contractor for the Companies which are engaged in the activity of providing services or facilities or supplying ships, aircraft, machinery or plant in connection with any activity for prospecting for or extraction or production of mineral oil. Moreover, it is sub-contractor activities, which are not covered under the Notification in question, which are carried out by the assessee beyond 12 nautical miles from the Indian Coastal Line. Therefore also, these activities are not covered under the Income-tax Act. There is no direct or immediate nexus between the work carried on by the assessee and the activities of the main contractors. That being so, the Notification is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely as a sub-contractor, under the contract. Therefore, the quoted case does not apply hereto. 12. The learned Departmental Representative has also contended that the agreement was signed in India. The income has been received in India. So, it is deemed income. However, we are not able to agree with this averment. The Explanation to section 9(1)( i ) of the Act is the guiding principle applicable. Income deemed to accrue or arise in India has been dealt with in section 9 of the Act. Section 9(1)( i ) provides as under : "9(1) The following incomes shall be deemed to accrue or arise in India: ( i ) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any in India, or through the transfer of a capital asset situate in India." 13. The Explanation ( a ) to section 9(1)( i ) reads as follows: " Explanation - for the purposes of this clause in the case of business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in the total income vis-a-vis section 5 and if it is to be so included, then the question would arise as to how the taxable part thereof is to be computed and at this stage section 44BB steps in. The provisions of section 44BB vis-a-vis the legislative intent only mean that these replace the system of computation of income earlier envisaged by application of the provisions of sections 28 to 41 and sections 43 and 43A but the provisions of section 5, which is the charging section would remain intact and these by no maxim of interpretation, would be superseded by the provisions of section 44BB. 17. It is in respectful consonance with the aforesaid ratio laid down by the said Third Member decision of the Tribunal, that we hold that since the income in question cannot even be construed to be deemed income of the assessee, there is no taxable income to be computed and so section 44BB is inapplicable. 18. In the above circumstances, the order of the learned Commissioner (Appeals) is not sustainable in the eye of law. It is hereby cancelled. Only a part of mobilization/demobilization work, which is attributable to the operations carried out by the assessee in India, ..... 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