TMI Blog2016 (7) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... ME COURT ], speaking for the Hon’ble Apex Court, their Lordships categorically held that payments for providing various services in connection with prospecting, extraction or production of mineral oil would be assessed u/s 44AB and not u/s 44D of the Act. On the basis of aforesaid discussion, we are inclined to hold that the issue is squarely covered in favour of the assessee and the DRP was not justified and correct in directing the AO to assess income of the assessee from non-resident company on account of provision of technical person for executing contract with ONGC shall be taxed applying due profit rate of 10% u/s 44BB of the Act. - Decided against revenue. - ITA No. 1156/DEL/2014, ITA No. 1157/DEL/2014 - - - Dated:- 11-7-2016 - SH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices in connection with prospecting, extraction and production of oil would be assessed u/s 144BB and not u/s 44DA of the Act. 4. Per contra, the ld. CIT-DR strongly supported the impugned order and vehemently contended that the DRP was not justified in directing the AO to apply the deemed profit rate of 10% u/s 44BB of the Act. However, the ld. CIT-DR further submitted that if the assessee is contending that the issue is covered in favour of the assessee, then the ld. AR should be directed to file a chart showing which ground of the Revenue is covered by which order of the Hon ble Supreme Court, High Court or the Tribunal. 5. On careful consideration of the above submissions, first of all, we may point out that the main grievance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Pride Foramer, viz senior tool pusher, barge manager, rigs superintendent, chief electrician, rigs safety training advisor, The contract with ONGC also recognized the oil drilling activity which was carried out, required crew and the rig had to be managed by the technical personnel. The list of personnel and crew are available in the contract in Annexure B, Therefore the operation of highly specialized offshore of personnel provided by the assessee, In view of the above, the activities are an integral part of the drilling operation in connection with prospecting etc of mineral oil. This view has also been confirmed by the Hon'ble AAR in the case of Bourbon Offshore Asia Pte Ltd. (2011) 200 Taxman 408. 4.3.1 The provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation of oil and natural gas. As such, these activities would be outside the ambit of FTS u/s 9( 1 )(vii). The relevant part of the instruction is reproduced hereinbelow: 2. The question whether prospecting for or extraction production of mineral oil can be termed as 'mining' operations, was referred to the Attorney General of India for his opinion. The Attorney General has opined that such operations are mining operations and the expressions 'mining project' or 'like project' occurring in Explanation 2 to section 9 (1) (vii) of Income tax Act would cover rendering of services like importing of training and carrying out drilling operations for exploration or exploitation of oil and natural gas. 3. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt company of foreign company. On the wording of these sections, the income cannot be brought within their purview, because they only speak of income by way of fees for technical services received from Government or an Indian concern. On this short ground, the contention of the Revenue that the income derived by the applicant is independently assessable under section 11SA or 44DA of the Act, has to be rejected. Since, income derived by the applicant, is from an activity in connection with the prospecting for mineral oils and from a foreign company, the applicant would be entitled to claim to be assessed under section 4488(1) of the Act. The ruling, therefore, on question no 3 is that the income derived by the applicant are to be computed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s grounds no. 1.1 and 1.2 are accordingly disposed of. 7. In view of the above, we observe that the DRP after considering the relevant decisions of the Hon ble High Court including the decision of the Jurisdictional High Court of Delhi in the case of DIT Vs. OHM Ltd [supra] held that section 44BB of the Act being a more specific provision shall prevail over the general provisions of the Act and that the services rendered by the Subcontractor at the off shore rigs of a contractor is part and parcel of activities for extraction etc of mineral oils and would be covered u/s 44BB of the Act. We respectfully note that in the case of ONGC [supra], speaking for the Hon ble Apex Court, their Lordships categorically held that payments for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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