TMI Blog2016 (7) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant : Sh. P. Dam Kanunjna, Sr. DR For the Respondent : Sh. Kavish Syal, CA ORDER Per Bench All these appeals are filed by the revenue directed against separate but identical orders of the Commissioner of Income Tax (A)-II, Dehradun dated 16.1.2012. As the issues arising for our consideration are identical in all these cases, for the sake of convenience they are heard together and disposed of by way of this common order. 2. Facts of the case :- For the years under consideration, Oil and Natural Gas Corporation Limited (ONGC) had, entered into following contracts as under: Contract NO./ Purchase order Date of order / agreement A.Y. Payments made 5010032478 29.08.2007 2009-10 1,73,17,818/- 9010010789 12.12.2008 2010-11 1,25,65,908/- Mum/NSE/OPT/ MN/SCON/VA SI/ GCA/NOMI/08- 09/245 14.11.2008 2010-11 16,30,88,322 UK NIR/MM/MH/SCO N/77/NOMI/GCA/ 08-09/PB-6003 04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es rendered by the assessee were technical in nature and were not for a project undertaken by the assessee, as required by explanation 2 to section 9(l)(vii). 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the assessee had deemed PE as per proviso to Article 5(2) of the Indo-UK DT AA by virtue of which the income of the assessee was taxable under the presumptive provisions of sec. 44BB and ignoring the fact that taxability under section 44 BB shall not apply in respect of income referred to in section 44DA in view of the clarificatory proviso to sec. 44BB and sec. 44DA. 4. Whether on the facts and circumstances of the case, the Ld CIT(A) has erred in not 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 into effect in view of the decision of the Hon'ble Supreme Court in the case of Sedco Forex International Drilling vs. CIT, delivered on 17.11.2005. 5. Whether on the facts and circumstances of the case the CIT(A) has erred in deletin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4D would have the same meaning as in Explanation 2 to clause (vii) of section 9(1). The said explanation as quoted above defines 'fees for technical services' to mean consideration for rendering of any managerial, technical or consultancy services. However, the later part of the Explanation excludes from consideration for the purposes of the expression, i.e., 'fees for technical services' any payment received for construction, assembly, mining or like project undertaken by the recipient or consideration which would be chargeable under the head 'salaries'. Fees for technical services, therefore, by virtue of the aforesaid Explanation will not include payments made in connection with a mining project. 1. The Income-tax Act does not define the expressions 'mines' or 'minerals'. The said expressions are found defined and explained in the Mines Act, 1952 and the Oil Fields (Development and Regulation) Act, 1948. While construing the somewhat parimateria expressions appearing in the Mines and Minerals (Development and Regulation) Act, 1957 regard must be had to the provisions of Entries 53 and 54 of List I and Entry 22 of List II of the 7th S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has erred in holding that the income of the assessee was not taxable under the provisions of sec. 44DA r.w.s 115A even though the nature of services rendered by the assessee were technical in nature liable to tax under section 44DA of the I.T. Act., 1961. 3. Whether on the facts and circumstances of the case the Ld. CIT (A) has erred in holding that the income of the assessee was taxable under the presumptive provisions of see 4488 ignoring the fact that taxability under section 4488 shall not apply in respect of income referred to in section 44DA in view of the clarificatory proviso to sec. 4488 and sec. 44DA. 4. Whether on the facts and circumstances of the case the CIT (A) has erred in not 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 into effect in view of the decision of the Hon'ble Supreme Court in the case of Sedco Forex International Drilling vs. CIT. 4.1 In I.T.A.No. 4652/Del/2013, the non-resident / foreign company was engaged in the process of discovering oil an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Mines Act, 1952 which define mines and minerals and the provisions of the Oil Fields (Regulation and Development) Act, 1948 specifically relating to prospecting and exploration of mineral oils, exhaustively referred to earlier, it is abundantly clear that drilling operations for the purpose of production of petroleum would clearly amount to a mining activity or a mining operation. 2. The facts indicate that the pith and substance of each of the contracts/agreements is inextricably' connected with prospecting, extraction or production of mineral oil. The dominant purpose of each of such agreement is for prospecting, extraction or production of mineral oils though there may be certain ancillary works contemplated thereunder. If that be so, we will have no hesitation in holding that the payments made by ONGC and received by the non-resident assessees or foreign companies under the said contracts is more appropriately assessable under the provisions of section 44BB and not section 44D. 4.5 Respectfully following the same, we dismiss the grounds raised by the Revenue in this appeal. Accordingly, the appeal filed by the Revenue for Assessment Year 2010-11 stands dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in place then the income has to be treated as business profits and assessable under section 44 BB) which has not been accepted by the department. 6. Without prejudice, whether on the facts and circumstances of the case the CIT(A) has erred in not holding that the amount received by the assessee was directly related to the exclusion provided under Explanation 2 to section 9(1)(vii) of the Act i.e. assembly, mining or like project undertaken by the recipient and as the project was not undertaken by the assessee but by ONGC, the amount received was to be treated as FTS chargeable to tax under section 440A rather than section 44BB of the Act. 5.1 In I.T.A.No. 4654/Del/2013, the non-resident / foreign company was engaged in Exploration Production (E P) operations of ONGC are handled by Basins and Assets, respectively. A work centre which is primarily engaged in exploration is termed as a basin whereas a work centre which is primarily engaged in production is termed as an Asset. Multidisciplinary teams (MDT s) of various technical personnel work in Assets and Basins to carry out the E P operations smoothly. The non-resident was engaged to provide consultancy services r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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