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TMI Blog2012 (8) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... p of specialized equipment to present the sub-surface data in the manner that can help the geologist to draw a conclusion about the existence of hydro-carbon in the concerned area. The applicant was awarded the work of acquisition and processing of 3D land seismic data over 50 sq. kms in a block in Assam by Essar Oil Limited which had entered into a contract in that behalf with the Government of India. The applicant entered into an agreement dated 3.5.2011 with Essar Oil Limited for the purpose of carrying out detailed design, plan and execute acquisition of 3D seismic data in the concerned area and provide related services in accordance with the terms of the contract. In pursuance of the above work being awarded to the applicant, the applicant entered into a Memorandum of Understanding dated 16.3.2011 with Hardson Oil Fields Services Private Limited. Thereunder, the applicant has assigned the work to that sub contractor by work order dated 21.3.2011 followed by a detailed agreement dated 21.3.2011. The work thus commenced and is continuing under the arrangement. The applicant submitted three running bills to Essar Oil Limited. Essar Oil Limited, while releasing the payments withhe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irtue of Explanation 2 to section 9(1)(vii) of the Act from the definition of fees for technical services and consequently, the proviso to section 44BB(1) of the Act was not attracted. In other words, the contention is that the consideration received by the applicant could be assessed only in terms of section 44BB(1) of the Act if the applicant opts for the same. On behalf of the Revenue, it is contended that the consideration received by the applicant was not exempt by Explanation 2 to section 9(1)(vii) of the Act and consequently, the proviso to section 44BB(1) of the Act was attracted since the services rendered are admittedly technical in nature. It is pointed out that the proviso to section 44BB(1) of the Act was amended with effect from 1.4.2011 by including section 44DA in the proviso and since the present contract was entered into only on 3.5.2011, the amended proviso had application. The amended proviso clearly kept out fees for technical services received by a person hit by section 44DA and section 115A of the Act from out of the purview of section 44BB(1) of the Act. The exemption contained in section 9(1)(vii) of the Act applied only to a person who had undertaken the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that though the applicant could be said to be rendering technical services, the compensation therefor received by the applicant, cannot be deemed to be fees for technical services since the consideration is for a mining activity and would come within the exception enacted by Explanation 2 to section 9(1 )(vii) of the Act. The ruling in Geofizyka supported this position. In addition, the definition of mining in the Mines Act and the description of exploration operation contained in the Petroleum guide, the opinion of the Attorney General earlier rendered to the Income-tax Department on whether exploration for natural gas and oil would also form part of mining, were also relied on. It was contended that since the payment received could not qualify as fees for technical services within the meaning of section 9(1)(vii) of the Act, the proviso to section 44BB(1) of the Act was not attracted and consequently, section 44DA or section 115A had no application. In that context, it was submitted that the inclusion of section 44DA in the proviso by the Finance Act, 2010 with effect from 1.4.2011, was of no consequence. 8. On behalf of the Revenue, it was pointed out that whereas se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection with mining. But, after the amendment by the Finance Act, 2010, in respect of fees for technical services, the applicability of section 44BB(1) has to be considered in the context of that amendment. The Ruling in Geofizyka, rendered by this Authority was before the amendment to the proviso. That Ruling also did not deal with section 115A of the Act on the basis of that no argument was advanced on behalf of the Revenue based on section 115A of the Act. The question, therefore, is open for consideration in the context of the amendment to the proviso to section 44BB(1) of the Act. 11. But for the exception contained in Explanation 2 to section 9(1)(vii) of the Act, there cannot be any dispute that what the applicant receives is fees for technical services. The services rendered by the applicant are clearly technical in nature based on specific scientific knowledge and experience. The question then would be whether the consideration received by the applicant under the sub-contract in question, would come under the exception contained in Explanation 2 to section 9(1)(vii) of the Act. The said Explanation, in the latter part uses the specific words "but does not include consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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