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TMI Blog2015 (12) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of well testing equipments and services was not in the nature of FTS squarely covered under section 9(1)(vii) of the I.T. Act, 1961. 2. Whether the CIT(A) has erred in holding that the income of the assessee was taxable under the provision of section 44BB even though the nature of services rendered by the assessee were technical in nature and has not adjudicated the aspect of eligibility in terms of second limb of the exclusionary proviso i.e. "for a project undertaken by the recipient" as confirmed in Delhi High Court Decision in Rio Tinto. 3. Whether on the facts and circumstances of the case, the CIT(A) has erred in holding that the income of the assessee was taxable under the presumptive provisions of see 44BB and ignoring the fact that taxability U/S 44BB shall not apply in respect of income referred to in section 44DA in view of the clarificatory proviso to see 44BB and see 44DA. 4. Whether on the facts and circumstances of the case, the CIT(A) has erred in interpretation of the legislative intent behind the scheme of taxation envisaged in 9(l)(vii) r.w. 44DA and 44BB and the insertion of second proviso to sub-section (1) of Section 44DA and a reference to Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the CIT(A) has erred in appreciating the fact that proviso to section 44DA brought about by the Finance Act 2011 was only clarificatory in nature and its application has to be read into the main provisions with effect from the time the main provision came in to effect in view of the decision of the Hon'ble Supreme Court in the case of Sedco Forex International Drilling vs. CIT. 12. Whether the facts and circumstances of the case the CIT(A) has erred in holding that interest U/S 234B was not chargeable in this case by relying upon the decision of / Hon'ble Uttarakhand High Court in t he case of Maersk (334 ITR 79) where as the department has contested the issue and has filed SLP before the APEX Court against in the case of Jacobs Civil incorporated / Mitsubishi involving similar issue." 3. The appellant M/s. Expro Gulf Ltd.., by filing the cross appeal in C.O. No.71/Del/2013, sought to set aside the impugned order dated 08.11.2012 passed by Ld. CIT(A) II, Dehradun for the Assessment Year 2009-10 on the grounds inter alia that: "1. That the Ld. Commissioner of Income-tax, Appeals-II, Dehradun [CIT(A)) erred in not upholding the claim of the appellant that its natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany engaged directly in oil exploration. 6. During the year under assessment the assessee has also executed contract of hire of offshore supply vessel with M/s. Haliburton Offshore Services Inc. which is not a production sharing contract company, thus it is a second leg contract. 7. From the terms and conditions of contact it is clear that the assessee is providing well testing equipment and services through wire line testing, surface testing etc. using a full slim hole DST string or with a production test incorporation a wire line retrievable down hole shut in tool. Thus, the service provided under all the three contracts relate to well testing by weenie of similar procedures. So, in view of the above procedure, the issue of taxability has been determined to be taxed as FTS and confirmed to be so in the case of Precision Energy Services for Assessment Year 2007-08 and also in the case of assessee for the Assessment Year 2008-09 where the same contracts were performed and part of the revenues from those contracts are continued to be received in the present year under consideration. So, it is clear that the assessee has been rendering technical services and as such, its income is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's own case qua the Assessment Years 2008-09 and 2010-11 has been decided by ITAT Delhi Bench 'B', New Delhi vide order dated 12.02.2015. Ld. A.R. vehemently contended that the present case is covered by the order passed by the Tribunal in assessee's own case in I.T.A.No.5561/Del/2011 and 4650/Del/2014 (supra). For ready reference, the submissions of the Revenue in respect of provisions of Section 44BB and its non applicability to the case in hand are extracted as under: "Rule is that where the main provision is clear, its effect cannot be cut down by the proviso. But where it is not clear, the proviso, which cannot be presumed to be a surplus age, can properly be looked into, to ascertain the meaning and scope of the main provision. In support of the above proposition, reliance is placed on the decision of Hon'ble Supreme Court in the case of Hindustan Ideal Insurance Co. Ltd. Vs LIC of Indi 1963 AIR S.C.1083. 1. Proviso to Section 44BB is not inserted per majorem cautelam as canvassed by and on behalf of the applicant but it explains and clarifies the main provision as the terms "Services or facilities "used therein are not defined and the two terms used are too ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng operations. The services provided by such applicants would not come within the exclusionary part of the Explanation (2) to Section 9 (1) (vii) of the Act as no mining or like project is undertaken by such applicants 5. Section 44D has been made inoperative in respect of agreements after the 3151 Day of March 2003 and with this two streams for taxation of persons engaged in providing services of technical nature is evident, one for those having a PE in India (Section 44DA) and the other who do not have a PE [Section 9 (1) (vii) read with section 115A]. 6. Board's Circular No 649 dated 31-3-1993 also clarifies what situation would govern the aspect of taxability of fee for technical services where there is a treaty existent and where there is none. In view of the above, the income of the assessee covered U/S 9(l)(vii) of the Income-tax Act, 1961 and therefore, the assessee is not entitled for confessional benefit under section 44BB of the Income-tax Act, 1961. The issue of taxability of receipts in respect of the above contracts as fees for technical services u/s 9(1)(vii) had come up before the DRP when the AO has determined receipts for A.Y 2008-09 as FTS, the DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the income in question is taxable as FTS u/s 9(1)(vi) of the Act. The ITAT, Delhi Bench reversed this order of the DRP in the case of Precisions Energy Services Ltd. of assessment year 2007-08 in I.T.A. No. 5286/Del/2010 and held that under the fact and circumstances of the case, the income is taxable u/s 44BB of the Act. The reason is that the scope of work as per the contracts requires, the assessee to provide a rig based surface well, testing equipment along with operating personnel. Thus the order of the DRP in the case of M/s. Precision Energy Services Ltd. is no more a good law. Hence, we have reversed this impugned order of the DRP." 19. Hon'ble High Court of Uttarakhand in I.T.A. No. 35 of 2015 in assessee's own case by following the judgement of Hon'ble Supreme Court in Civil Appeal No.731/2007 on identical issue has held that the amount representing work like drilling and exploration of well is covered by Section 44BB of the Act and as such, liable to be reckoned u/s 44BB of the Act. 20. In view of what has been discussed above and in consonance with the view taken by the Coordinate Bench of ITAT (supra) and by applying the ratio of judgement dated 06th Aug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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