TMI Blog2016 (8) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... UNTANT MEMBER For The Assessee : Sh. Amit Arora, CA For The Revenue : Sh. P Dam Kanunjana, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This the appeal filed by the revenue against the order of the ld CIT(A)-II, Dehradun, dated 04/09/2014 for the Assessment Year 2011-12 and assessee has filed cross objection in the above appeal. 2. The revenue has raised the following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the revenues received by the assessee, on account of the provision of slick-line services, wire-line services, well-testing services etc., including provision of technical personnel, to various entities was taxable u/s 44BB of the Income Tax Act, 1961 ('the Act') as opposed to Section 44DA read with Section 9(l)(vii) of the Act. 2. Whether on the facts and in the circumstances of the case, the Ld CIT (A) has erred in ignoring the effect of the amendment brought in vide Finance Act, 2010 w.e.f. 01.04.2011, in terms of which income covered by section 44DA has been specifically excluded from the scope of section 44BB for Asstt Years 2011-12 (the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses incurred in providing the services. 6. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that interest u/s 234B of the Income Tax Act, 1961 ('the Act') was not chargeable in this case by relying upon the case of M/s Maersk [334 ITR 79] a. The Ld. CIT (A) has erred in not appreciating the fact that the case of M/s Maersk was distinguishable on facts as it dealt with a case where the employer failed to deduct tax at source despite the specific provisions of the Act in terms of which the employer was mandatorily required to deduct tax from the salary paid to the employee. In the said case, the Hon'ble Court held that an employee is not liable to pay advance tax on salary because u/s 192 there is an obligation on the employer to deduct tax at source. The case does not lay down a general proposition of law that interest u/s 234B is not chargeable in all cases, particularly in cases where the Non-Resident assessee/payee/deductee has played a role in inducing non-deduction or short-deduction on the part of the payer/deductor. b. The Ld. CIT (A) has erred in failing to take note of the observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and according to the Assessing Officer the assessee is rendering such services through its permanent establishment in India, he computed the income of the assessee on estimate basis deeming profit rate of 25% of the gross receipts as business income. The contention of the assessee was that the above income received by the assessee is from providing services and facilities in connection with exploration, exploitation and production of mineral oil. Therefore, the income of the assessee is taxable under the head Profit and Gains of Business and Profession under the Presumptive tax scheme provided u/s 44BB of the Income Tax Act. The ld Assessing Officer rejected the contention of the assessee and framed assessment on a total income of ₹ 36510770/- against the returned income of ₹ 14604309/-. Assessee preferred appeal before the ld CIT(A) who in turn held that that services rendered by the appellant has direct nexus with oil extraction and therefore following the decision of Hon ble Delhi High court in case of OHM Ltd. 352 ITR 406 (Del), he held that gross receipt of the assessee shall be dealt with u/s 44BB of the Act and not characterized as fees for technical services o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7th Schedule to the Constitution to understand the exclusion of mineral oils from the definition of minerals in Section 3(a) of the 1957 Act. Regard must also be had to the fact that mineral oils is separately defined in Section 3(b) of the 1957 Act to include natural gas and petroleum in respect of which Parliament has exclusive jurisdiction under Entry 53 of List I of the 7th Schedule and had enacted an earlier legislation i.e. Oil Fields (Regulation and Development) Act, 1948. Reading Section 2(j) and 2(jj) of the Mines Act, 1952 which define mines and minerals and the provisions of the Oil Fields (Regulation and Development) Act, 1948 specifically Page 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. Viewed thus, it is the proximity of the works contemplated under an agreement, executed with a non-resident assessee or a foreign company, with mining activity or mining operations that would be crucial for the determination of the question whether the payments made under such an agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. 7. 1528 Analysis of data to prepare job design, procedure for execution and details regarding monitoring. 8. 1532 Study for selection of enhanced Oil Recovery processes and conceptual design of Pilot Tests. 9. 1520 Engineering and technical support to ONGC in implementation of Cyclic Steam Stimulation in Heavy Oil Wells. 10. 2794 Assessment and processing of seismic data along with engineering and technical support in implementation of Cyclic Steam Stimulation. 11. 1524 Conducting reservoir stimulation studies in association with personnel of ONGC. 12. 1535 Laboratory testing under simulated reservoir conditions. 13. 1514 Consultancy for optimal exploitation of hydrocarbon resources. 14. 2797 Consultancy for all aspects of Coal Bed Methane. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the device to clean insides of a pipeline. 34. 2795 Feasibility study of rig to assess its remaining useful life and to carry out structural alterations. 35. 925 Engineering analysis of rig. A1 Mansoori Specialized Engineering 36. 1519 Imparting training on cased hold production log evaluation and analysis. 37. 1533 Training on well control. 38. 1518 Training on implementation of Six Sigma concepts. 39. 1516 Training on implementation of Six Sigma concepts. 40. 6023 Training on Drilling project management. 41. 2796 Training in Safety Rating System and assistance in development and audit of Safety Management System. 42. 1239 To develop technical specification for 3D Seismic API modules of work and to prepare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law against the revenue in the light of the aforesaid judgment of the Hon'ble Apex Court. 11. We, therefore, by considering the totality of the facts as discussed hereinabove are of the confirmed view that the AO was not justified in holding that the income of the assessee arising from performance of A1 Mansoori Specialized Engineering associated drilling activity through the provisions of oilfield equipment on hire along with operating personnel, used the exploration/prospecting/extraction of mineral oil were fees for technical services under Section 9(1)(vii) of the Act and was chargeable to tax @ 20% of the gross revenue u/s 115A of the Act and not taxable u/s 44BB of the Act. 7. In view of the above decision of coordinate bench in assessee s own case and further, for AY 2013-14 ld Assessing Officer has accepted this position in view of the decision of the Hon ble Supreme Court dated 01.07.2015 in case of ONGC Vs. CIT has taxed the income of the assessee u/s 44BB of the Act. In view of the above, we dismiss the appeal filed by the revenue. 8. The cross objection filed by the assessee is stated to be supportive and therefore not pressed by ld AR hence, dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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