TMI Blog2005 (7) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department and against the appellants. - - - - - Dated:- 22-7-2005 - Judge(s) : P. C. VERMA., P. C. PANT. JUDGMENT The judgment of the court was delivered by P.C. Verma J.- These appeals, preferred under section 260A of the Income-tax Act, 1961, are directed against the consolidated judgment and order dated April 20, 2000, passed by the Income-tax Appellate Tribunal, New Delhi to the extent it disallows the claim in respect of exemption from double taxation of the appellants for the assessment years 1989-90 and 1990-91. These appeals have been filed by Sedco Forex International Incorporation and Sedco Forex International Drilling Incorporation, as agents of their employees. The appellants are non-resident foreign citizens employed by Sedco Forex International Inc. (for brevity, hereinafter SFII) and by Sedco Forex International Drilling Incorporation (for brevity hereinafter SFIDI). Both the companies are incorporated in the Republic of Panama. Both these companies have entered into a contract with Oil and Natural Gas Corporation Ltd. (ONGC) for drilling operations in offshore areas of India within its exclusive economic zone. The appellants are residents of Fran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of, mineral oils, a sum equal to ten per cent, of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head 'Profits and gains of business or profession': Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections. (2) The amounts referred to in sub-section (1) shall be the following, namely:- (a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India; and (b) the amount received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) for the granting of relief in respect of income on which have been paid both income-tax under this Act and income-tax in that country, or (b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country, or (c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country, or investigation of cases of such evasion or avoidance, or (d) for recovery of income-tax under this Act and under the corresponding law in force in that country, and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement." The Government of the Republic of India has entered into agreements with the Government of France, the Government of the United Kingdom of Great Britain and Northern Ireland, the Government of Canada, the Government of the USA and the Government of Italy, of which the appellants are residents, which have been notified under section 90. A perusal of the entire agreements shows that provision has been made in terms of the language of section 90. There are separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions are cumulative (mutually inclusive). In other words, non-fulfilment of even a single condition would disentitle the benefit of the AADT. As to the second condition, i.e., sub-clause (b) mentioned above, it must be established that the remuneration is paid by or on behalf of the employer who is not a resident of that other State. Both the companies, namely, SFII and SFIDI, the employers are neither residents of India nor residents of the "other State" (i.e., U.K., France, Canada, U.S.A., Italy). The said employer is a resident of Panama. As such, the condition as required under sub-clause (b) also get fulfilled. The main controversy between the parties is regarding the non-fulfilment of condition as mentioned in sub-clause (c) quoted above, i.e., remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall not be taxed in that other State only if, he further establishes that the remuneration is not deductible in computing the profits chargeable to tax in his State. The simple meaning of the said condition is that the assessee has to show in India that the remuneration received by him is chargeable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case are lacking is that they have not furnished any document or statute that the amount they have received through SFII and SFIDI for their work in India is chargeable to tax in their State. In the case of Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC) it is held that an assessee, who has shown exemption from tax under Mauritian law, from payment of tax, can claim the benefit of the Indo-Mauritius Agreement for Avoidance of Double Taxation. But in the present case, the appellants have not shown any document or statute that the remuneration received by them, exempted or otherwise, was chargeable to tax in their State which was a Contracting party to the AADT. Section 44BB contains special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. Under the said section, in the case of an assessee being non-resident engaged in the business of providing services or facilities in connection with or supplying plant and machines on hire for use or to be used in the prospecting of or extraction or production of mineral oils, a sum equal to 10% of the aggregate of the amounts specified shall be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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