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TMI Blog2011 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... Electro Magnetic (MMT/TEM) data acquisition, processing and interpretation services in respect of an offshore exploration block MB-OSN-2004/2 in India. The applicant states that these MMT/TEM survey is electromagnetic geophysical method of imaging the earths subsurface. Data acquired through such surveys is further processed using specialized software to get the information about existence of hydrocarbons underneath. The entire process starting from conducting the survey and then processing and interpretation of data acquired through survey is driven towards assisting the oil and gas clients in their exploration operations. The services are part of the exploration/prospecting activities for mineral oil and clearly fall under the ambit of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The services extended by the applicant fall under Explanation 2. It is submitted that the income by way of fees for technical services chargeable under section 9(1)(vii) has to be computed under Sec. 44DA in a case like this where the service provider has a Permanent Establishment in India. It is contended that the exclusion clause in Explanation 2 does not apply in the case of the applicant because it is not undertaking a mining or like project. Such project is undertaken by someone else and certain technical services are rendered by the applicant to the business enterprise that takes up the project. In short the Revenue contends that section 44 BB would come into play only if the applicant goes out of the purview of section 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswered in the affirmative. 5. As regards the second Question, the learned Advocate on behalf of the applicant submits that section 4 of the Act provides that income tax shall be charged in respect of the total income of the previous year. Total income under section 2(45) of the Act means the total amount of income referred to in section 5 computed in the manner laid down in the Act. Unless the income is subjected to tax under section 5, it can not be computed in the manner provided in the Act. The income can be subjected to tax in India only if it accrues or arises in India or is deemed to accrue or arise in India. Thereafter, under Explanation to section 9(1)(i), income of the business in which all the operations are not carried out in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eek such a splitting up it has to go under section 44BB(3) of the Act. 7. Section 44BB does not close its doors to an applicant who desires to know which part of its income accrues or arises in India and how much. The applicant can exercise its rights provided it opts to get the income taxed under section 44BB(3) of the Act. The scheme of computation of income under this section does not provide any leeway to apply both the sub-sections (1) and (3) of section 44BB to the income arising from the business activities falling under the ambit of section 44BB(1) of the Act. Even if part of the income falls under „Royalties or „Fees for technical Services, there is no scope to assess such receipts under these heads, once it is held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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