TMI Blog2016 (5) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of DTAA overrides the provisions of IT Act in the matter of ascertainment of taxability under the Income Tax Act. At this juncture, it is worth to mention the decision of the Hon’ble Supreme Court in the case of GE India Technology Centre Pvt. Ltd. [2010 (9) TMI 7 - SUPREME COURT OF INDIA] wherein the Hon’ble Apex Court has decided that there was no obligation for withholding tax on any person making payment to a non-resident, if the payment made to non-resident is not chargeable under the provisions of the I.T. Act. After considering the totality of the facts of the case in hand, in our considered opinion, the revenue could not prove that there was transfer of Technology by M/s. RPS Energy Ltd to the assessee nor it has been proved that the impugned transactions have made available technical expertise skill or knowledge by processing the data provided by the assessee. Nor it has been proved that the assessee can apply independently and without assistance and undertake such survey independently excluding RPS Energy Ltd. in future. Assuming that M/s. RPS Energy Ltd., rendered services as defined u/s. 9(1)(vii) Explanation 2 of the Act, yet it does not satisfy the require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of Fees for Technical Services as per Article 13 of India-UK DTAA. The claim of the assessee was based on the fact that the non-resident recipient RPS Energy did not make available technical knowledge, skill know-how to the assessee and hence it is not liable to tax in India. 8. This claim of the assessee was out-rightly rejected by the A.O who was of the opinion that since the services are utilized in India, the remittances are liable for tax deduction as per the Act and also in the light of Tax treaty with UK. Drawing support from the provisions of Section 9(1)(vii) read with Explanation 2 of the Act, the A.O strengthen his view that services rendered by RPS Energy Ltd. are in the nature of technical services. The A.O further rubbished the contention of the assessee that RPS Energy Ltd did not make available technical knowledge, skill and know-how to the assessee. 9. After considering various clauses of the agreement between the assessee and RPS Energy Ltd., the A.O observed that RPS Energy Ltd., has to carry out the 3D Seismic interpretation including basin modeling, culminating in prospect generate along with GRV calculations, play fairway mapping and risking of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 1407/Ahd/2009. Per contra, the ld. D.R. heavily relied upon the orders of the revenue authorities. 14. We have heard the rival contentions, carefully perused the orders of the authorities below and have given a thoughtful consideration to the agreement between the assessee and M/s. RPS Energy Ltd. We have also gone through the relevant Article of the Indo-UK DTAA. 15. The assessee has made a remittance of ₹ 1,09,61,353/- during the year under consideration to RPS Energy Ltd., UK. The said remittances had been made for providing 3D Seismic Data Interpretation Services. The assessee has availed these services for conducting exploration work in Mumbai Shallow Offshore Block MBOSN- 2005/2, which is located in Tapti-Daman Sector of Mumbai Offshore Basin along with west coast of India which covers an area of 1191 sq. km. A perusal of the related documentary evidences shows that the objective of the project was to carry out a 3D Seismic interpretation which included the basin modeling, culminating in prospect generation along with GRV calculations, play fairway mapping and risking of prospects for exploratory drilling. 16. Before proceeding further, let us first se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set. All deliverables (USB Drives, DVD, paper plots etc.) must confirm to the highest industry standards. 05.0 DATA AVAILABILITY AND PROJECT SCHEDULE Company shall make arrangement to provide relevant data for interpretation after LOA. 3D processed data will be handed over / collected on mutual understanding. All relevant information data required for interpretation will be available at the project office of AWEL, Ahmedabad, Gujarat, India. After interpretation of the data, Contractor will arrange for packing, insurance and other formalities and safe transportation / handover the final interpreted data at Company's designated premises. The processed data will be provided in the following formats and storage media: a) 3D seismic data in SEG -Y format. b) All relevant information on CD /DVD/ USB Drive c) All other geo-scientific data / information available for interpretation. Representative of Company may be associated with the interpretation jobs periodically during the execution of the work. All technical co-ordination including Quality Control (QC) check etc., shall be done by Company's representatives. A detailed proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... studies All maps and sections will be finalised after scrutinizing results along with company's representative (s) who would be associated at the time of interpretation. Note: The Contractor can also propose an alternate workflow based on experience of interpretation in similar geological regimes to comprehensively evaluate the block bringing out drillable prospects. Finally integrating 3D seismic data interpretation and other Geoscientific data, a final interpretation will include: Structural Model of the block vis-a- vis regional structural setting. Geological Model of the block vis-a- vis regional geological setting. Velocity Model. Multi-Attribute Analysis. Identification of drillable prospects and their Ranking. (a) The contractor will evaluate the hydrocarbon prospectively of identified prospects from generation, migration and entrapment point of view. Based on the overall assessment, the contractor will recommend drilling locations and will also rank the identified prospects for exploratory drilling based on their overall merits, recommend future exploration development programmed strategy. (b) Volu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise the Company's Representative of the shipping and packing details. 12.2 Ownership of Data 12.2.1 All Data shall be the property of the Company from the date of its creation or development. No Data created or developed by the Contractor under this Contract shall become the property of the Contractor; provided that the risk and responsibility for the loss of, or damage to, any Data shall remain with the Contractor until delivery of such Data to the Company. 12.2.2 All Data shall be fit for the purposes specified in the Contract. 12.2.3 All items created or developed by the Contractor outside the Contract shall remain the property of the Contractor, provided that the Company shall have the right to use any such item where it is provided to the Company as part of the Services. 17. A perusal of the above clauses clearly shows that the initial data were provided by the assessee itself, it has to be understood that 3D Seismic is an exploration technique used in the search for oil and gas underground structures. This technique is in analogous to ultra sound technology used in the medical field. Sound from a shot hole is recorded from geophones and interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble the aforesaid technology with the aid of which they were able to collect the data, which was passed on to the assessees as a technical service. In other words, Fugro has rendered technical service to the assessees. They have not made available the technical knowledge with which they rendered technical service. There is no transmission of technical knowledge, expertise, skill, etc., from Fugro along with technical services rendered by them. The assessees are completely kept in dark about the process and the technologies which the Fugro adopted in arriving at the information/data which is passed on to the assessees as technical service. The assessee is unable to make use of the said technical knowledge by itself in its business or for its own benefit without recourse to Fugro. In fact, the question whether along with rendering technical services, whether the technical knowledge with which that services was rendered was also made available to the assessees/customers is purely a question of fact which is to be gathered from the terms of the contract, the nature of services undertaken and what is transmitted in the end after rendering technical services, if along with technical serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. The said data is certainly made use of by the assessees. Not only the said data and information was furnished in the digital form, it is also provided to the assessees in the form of maps and photographs. These maps and photographs which were made available to the assessees cannot be construed as Technology made available. Fugro has not devised any technical plan or technical design. Therefore the question of Fugro transferring any technical plan or technical design did not arise in the facts of these cases. The maps which are delivered are not of kind of any developmental activity. As such, earlier the information which is furnished to the assessees by way of technical services in the digital form is also given in the form of maps. Therefore the case on hand does not fall in the second part of the aforesaid clause dealing with development and transfer of plans and designs. Therefore the second substantial question of law is also answered in favour of the assessees and against the Revenue. Conclusion Though Fugro rendered technical services as defined under Section 9(1)(vii) Explanation 2, it does not satisfy the requirement of technical services as contained in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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