TMI Blog2016 (10) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... y connected with PE or fixed place of profession will fall outside the scope of section 44DA and will be assessable under section 44BB(1) of the Act for the simple reason that proviso to section 44BB(1) does not contain section 44DA for these years. Reopening of assessment - Held that:- A.O. had reason to believe that income has escaped assessment. Second proviso to section 147 of the Act allows the Ld. A.O. to assess or reassess such income other than the income involving matters which either subject matters of any appeal, reference revision, which is chargeable to tax and has escaped assessment. In our view the reopening of the assessment has been carried on by the assessing officer to reassess the income that has been alleged to have been received outside India, which was not included while computing the taxable income. In such a scenario-'we held the reopening to be valid. This ground of appeal raised by the assessee stands dismissed. Revenue alleged to have been earned outside India which were not offered to tax by the assessee, as the same were attributable to activity outside India - Held that:- This view of the assessee cannot be accepted as the entire payment was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the nature of services rendered by the assessee were technical in nature. 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 provision of section 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 sec. 44BB 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 in to the main provisions with effect from time 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 v. Commissioner of Income-tax. 5. Whether on the facts and circumstances of the case, the CIT (A) has erred in holding that the AO was not right in estimating the income of the assessee @ 25% since the assessee failed to produce the books of account during the assessment proceedings. B I.T.A. No. 114 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The under mentioned grounds of appeal are without prejudice to one another. (1) That there was no justification on the part of the Ld. AO in disallowing part of the material cost amounting to ₹ 10,02,689/- and at any rate, without prejudice, the disallowance as made is very excessive. (2) That the Dispute Resolution Panel (DRP)/AO had erred in disallowing the provisions of expenses amounting to ₹ 85,32,43,703/- against the claim of ONGC. At any rate, without prejudice, the disallowance as made is very excessive inasmuch as DRP/AO had ignored submissions made by the Appellant for applying section-44BB of the Act without prejudice to the main submissions in consequence whereof the total income assessed is more than provisions contained in section 44BB of the Act. (3) That the Ld. AO has erred on facts and under the law in not considering and adjusting the brought forward loss of assessment year 2008-09 against the income of this year. (4) That the Ld. AO had erred in law and on facts in not giving credit for the tax paid by the Appellant. (5) That provisions of section 234B for levying interest were not applicable to the case of the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 408 and not attributable to Permanent Establishment. 3.4 During the course of assessment, assessee submitted that outside operating revenue not to be subjected to tax in view of the Hon'ble Supreme Court decision, although in the Return of Income, appellant had offered entire revenue i.e. Inside and Outside India. Ld. AO accepted the contention of the assessee and relying upon the decision of Supreme Court treated the income earned outside as exempt from Tax. Assessment for the aforesaid return of A.Y 05-06 was completed under section 143(3) of the act vide order dated 30th March 2007 (hereafter referred to as original assessment ) assessing the income on deemed basis under section 44BB at ₹ 2,35,95,260/-. 3.5 Subsequently, AO has issued the notice under section 148 of the Act dated 31st March 2010 which was received by the assessee on 3rd April 2010. In response to the above notice, assessee submitted Return of Income which was revised as per the assessment order in the original assessment along with the Original Return of Income along with audited Profit Loss Account and Balance Sheet on 26th April 2010. 3.6 The assessee received the notice dated 8th Novembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sertion of Proviso to subsection (1) of section 44 BB was inserted. 5.2 Moreover, we find that Hon'ble Supreme Court in the case of ONGC Ltd. v. CIT, 2015 (7) TMI 91 has set at rest the entire controversy by holding that provisions of various services in connection with the prospecting for, or extraction or production of mineral oils, is taxable on presumptive basis u/s. 44BB of the Act. The services carried on by assessee are in connection with the prospecting for mineral oils and, therefore, following the decision of Hon'ble Supreme Court, the findings of Ld. CIT (A) are upheld. 5.3 In the decision, Hon'ble Supreme Court has held that, where the dominant purpose of agreement is for prospecting, extraction or production of mineral oil, though there may be certain ancillary works contemplated there under, the payments received by a non-resident assessee or foreign companies under the such contracts are assessable under the provisions of section 44BB and not section 44D of the Act. The relevant extract of the decision by the Hon'ble Court is as under; The above facts indicate that the pith and substance of each of the contracts/agreement is inextricably c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed earlier section 44DA was inserted in proviso to section 44BB(1) by the Finance Act, 2010 with effect from 1.4.2011 and simultaneously inserted second proviso to section 44DA applicable from assessment year 2011-12 according to which provisions of section 44BB(1) will not be applicable in respect of income referred to this section. On combined reading of proviso to section 44BB(1) and second proviso to section 44DA-It is clear that the fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil though effectively connected with PE or fixed place of profession will fall not under section 44BB(1) and will be assessable under section 44DA of the Act. To make it more clear the fee for technical services can be divided in following categories: (i) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil having business PE or fixed place of profession-(section 44DA); (ii) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil without having business PE or fixed place of profession-(section 115A); (iii) O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gree with the findings of the Ld. CIT(A) that the issue now stands settled with the decision of Hon'ble Uttarakhand High Court in the case of Sedco Forex Intl. Inc. v. CIT [2008] 299 ITR 238. It is neither the case of the assessee that separate payments are being made for various services rendered by the assessee, nor is the case that separate parts of the contract are executed at different places, as it was in the case of Ishikawajma Harima Heavy Industries Ltd. v. DIT [2007] 288 ITR 408. We are therefore of the considered view that the ratio laid down by Hon'ble Supreme Court in Ishikawajma Harima Heavy Industries Ltd. (supra) cannot be applied to the facts of the present case before us. 8.2 As we have held while deciding the appeal raised by the revenue that the entire receipts accruing to the assessee on behalf of the contract with ONGC shall be treated as receipts for the purpose of computing income under section 44BB of the Act, we dismiss this ground raised by the assessee. 8.3 Accordingly the appeal raised by the assessee stands dismissed. 9. In the result, the appeals filed by the assessee as well as revenue for Assessment Year 2005-06 are hereby dismissed ..... 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