TMI Blog2014 (3) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the context in which the expression or the word is used to be in consonance and to further the legislative intent - Mining itself is complex and capital intensive and may require inter play and activities by several persons which may be involved in different parts/aspects of mining and accordingly paid for the part played or activities undertaken by them – thus, the undertaking would be “engaged in mining”. Nature of Activity undertaken - whether the activities of the petitioner could be considered to be an integral part of mining – Held that:- The petitioner had purchased or acquired capital equipment in the form of work over rigs and for this purpose had obtained loan from State Bank of India, Singapore in foreign currency and Indian rupees - the expression “engaged in mining” would not only include the actual winning or extraction of minerals or oils but also activities which are an integral part of mining – Decided in favour of Assessee. Relief of TDS – Held that:- Petitioner contended that they have already paid tax at source - The petitioner claims that no certificate for tax deducted in Form 16A was issued to the State Bank of India, Singapore - Petitioner in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner to clarify whether it was an industrial undertaking under the Act, to which the petitioner responded vide letter dated 11th August, 1994. 5. By letter dated 9th September, 1994, the petitioner was directed to show cause why their application should be approved as the petitioner was engaged in giving on hire the equipments but was not engaged in manufacturing or processing activities. The application was rejected by letter dated 17th October, 1994 on the ground that the petitioner was not an industrial undertaking which only means an undertaking engaged in manufacturing or processing of goods. It was observed that the petitioner was not engaged in manufacture or processing of goods but was only supplying equipment to be used in the manufacturing process. It is obvious that the reasoning given in the letter dated 17th October, 1994 was wrong as it did not take into account the Explanation to Section 10(15)(iv)(c) of the Act which we have reproduced hereinafter. Thereupon, the petitioner made a detailed representation dated 1st March, 1995 referring to their earlier letter dated 17th November, 1994 explaining that the petitioner was engaged in the process of drilling of oil a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10(15)(iv)(c) was available for money borrowed and debt incurred before 1st June, 2001. The record pertaining to exemption under the said Section was very old and as per the record available no case pertaining to exemption for work over rigs was found. 8. Section 10(15)(iv)(c) of the Act along with Explanation applicable at the relevant time read as under:- 10. In computing the total income of a previous year of any person, any income falling withinin any of the following clauses shall not be included:- 1 to 14 15. . (i) . (ii) . (iii) . (iv) Interest payable (a) . (b) . (c) by an industrial undertaking in India on any moneys borrowed or debt incurred by it in a foreign country in respect of the purchase outside India or raw materials or components or capital plant and machinery (to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regarding to the terms of the loan or debt and its repayments.); (Explanation:- For the purposes of this sub-clause, the expression Industrial Undertaking means any undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the definition clause in a particular enactment which has not been made applicable to the Act. We have no doubt in our mind that extracting mineral oil could be covered within the meaning of mining activities. An industrial undertaking having oil fields and excavating or winning oil from oil fields would be engaged in mining. (The question whether extraction of gas is mining is not an issue in the present case and has not been examined). 11. The expression used in the Explanation as noticed above is that a person who was engaged in mining was treated as an industrial undertaking for the purpose of clause (c) to Section 10(15)(iv) of the Act. The word engaged is rather ambiguous as was observed by the Supreme Court in Regional Provident Fund Commissioner vs. S.K. Manufacturing Co.. AIR 1962 SC 1536. In the said case, it was held that while dealing with a provision/clause capable of two constructions, it might not be easy to make a choice particularly, when both constructions would lead to some anomaly. While interpreting the expression a person engaged in any business , it was held that it shall mean to be engaged mainly or usually in that business. This was a common sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tends to broaden the meaning attached to the activities specified in the Explanation to mean and include the said activities which would be continuous and should be integral and directly associated with mining. 15. It is necessary and important to give wide interpretation while interpreting the expression engaged in .. mining as it would further the legislative intent and the purpose behind enacting Section 10(15)(iv)(c) of the Act. Mining activities are normally capital intensive and involve specialization. An undertaking may deal with specific aspects of mining, which are integral and necessary for extracting minerals, ores or oil. A narrower interpretation could be contrary and negate the legislative purpose behind using the expression engaged . A narrow interpretation that the undertaking must extract minerals/oils and an undertaking though involved and exclusively dealing with a part of mining, would not be treated as an undertaking engaged in mining would be contrary to the legislative intent and purpose which can be gathered and is luminescent from the wide scope and ambit of the Explanation. A word or expression used in a legislative provision should be interpreted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for : i) Water Shut off. ii) Gas Shut off. iii) Improving production by stimulations i.e. acidizing, fracturing etc. C. Repairs of Well for: i) Casing leaks. ii) Bad cement jobs. D. Services job : i) Bottom Clearing ii) Transfer of well to new horizon. iii) Fishing operations. E. Any other job that may come up during work over/servicing of wells. 19. The contract also stipulates that completion job includes preparation of well for production after the well has been cased, cemented and serviced. Each productive horizon is to be completed by making permanent contact between it and bore well by installing tubing and the appropriate equipment for controlling fluid flow etc. Looking at the nature of the contract undertaken and for which the petitioner had obtained the loan, we have no doubt in our mind that the petitioner was engaged in mining i.e. the activities of the petitioner were integral to and directly related to mining of oil. 20. Learned counsel for the respondents has relied upon Industrial Fuel Marketing Co. vs. Union of India AIR 1983 Calcutta 253 in which reference was made to Mines and Minerals (Regulation and Development) Act, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the exception. It was accordingly held that the consideration/fee was taxable as fee for technical service. The said decision does not deal with or answer the question or issue raised in the present writ petition as language of the Explanation to Section 10(15)(iv)(c) is entirely different. We have held that the expression engaged in mining would not only include the actual winning or extraction of minerals or oils but also activities which are an integral part of mining. 22. The last question relates to the relief. As per the petitioner, they have already paid tax at source of Rs.2,11,836/-, Rs.3,15,329/- and Rs.2,28,921/- on 1st/8th March, 1995, 25th September, 1995 and 19th March, 1996, respectively. Therefore, in all Rs.7,56,086/- stands paid as tax at source on the payments made to State Bank of India, Singapore. The petitioner claims that no certificate for tax deducted in Form 16A was issued to the State Bank of India, Singapore. On 19th September, 1996, the Court passed an interim order and on further payments upto 5th October, 1998 no tax at source was deducted. Petitioner in terms of the interim order has given an undertaking that in case the writ petition sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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