TMI Blog2018 (12) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... PER O.P. KANT, A.M. This appeal by the assessee is directed against order dated 09/11/2015 passed by the Ld. Commissioner of Income-tax (Appeals)- 2, Noida [in short the Ld. CIT(A)] for assessment year 2014-15 in relation to order under section 195(2) of the Income Tax Act, 1961 (in short the Act) passed by the Assessing Officer. The grounds of appeal raised by the assessee are reproduced as under: 1. The Ld. Commissioner of Income Tax (Appeals)-2, Noida, has erred in law and in the facts and circumstances of the case in rejecting the contention of the appellant regarding non-taxability of the receipts of DeGolyer and MacNaughton, USA. 2. Without prejudice to the preceding ground, the Ld. Commissioner of Income Tax (Appeals)-2, Noida, has erred in law and in the facts and circumstances of the case in rejecting the alternate contention of the appellant regarding taxability of receipts of DeGolyer and MacNaughton, USA u/s. 44BB of the Income-tax Act, 1961. 3. The Ld. Commissioner of Income Tax (Appeals)-2, Noida, has erred in law and in the facts and circumstances of the case in not directing that the tax deposited by the appellant on sums payable to De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements before 1.4 .2003 and 44DA applicable for agreements after 1.4.2003, are also special provisions for computing income by way of royalties and fee for technical services. Section 44BB is a special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils and applies to a non-resident engaged in the business of providing services or facilities in connection with or supplying plant and machinery on hire used or to be used in the prospecting for or extraction or production of mineral oils. Section 44D, as a special provision, is applicable to an assessee, being a foreign company, earning royalty income or fees for technical services engaged in any kind of business. There is a non obstante clause in section 44D which makes-the provisions of section 28 to 44C inoperative. Thus, section 44 BB seems to be not applicable once section 44 D is applicable. Proviso to section 44 DA also makes section 44 BB inapplicable for the purpose of that section. Under section 44BB, the non-obstante clause is restricted in application only in respect of sections 28 to 41 and sections 43 and 43A. Thus, section 44D has not been made inoperative by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K PLAN FOR THIRD PARTY CERTIFICATION OF ULTIMATE SERVES AND RESERVES OF 68 FIELDS OF ONGC BY M/s D M, USA: Work Plan and Operation M/s D M, USA will manage the assignment by activating a dedicated and integrated team, and will establish internal and external milestones to provide the project deliverables required by ONGC. The project manger will be responsible for all official communications and transmittals between M/ s D M, USA and ONGC, while the individual team members will occasionally interface with ONGC on specific technical issues in full coordination with the project manager. Each team member will be in communication by e-mail, telephone and telefax. Utilizing the data and information management systems in D M's various offices in Dallas and elsewhere, any member of the team can transmit large blocks of data through use of secure FTP sites and laptop computers while maintaining uncompromised confidentially. Professionals of M/s D M, USA are well experienced in reserves evaluation and classification and are specifically familiar with several of ONGC's assets. A summary-level report (certificate) is to be prepared for use in filing with financial or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in estimation of reserves. It can utilise 'it for estimation of reserves on its own later on. The services of the non-resident also involve preparation of technical work plan which is made available to ONGC. The non-resident is also making available definitions for classification of reserves and other discussions supporting the reserves. Once the methodology, definition and process is made available, the services get covered under Article 12 of Indo US, DTAA as taxable category of services within the meaning of Fee for included services which specifically mentions that typical categories of services that generally involve either the development and transfer of technical plants or technical designs, or making technology available include exploration or exploitation of mineral oil or natural gas and Geological surveys. 7. In view of foregoing, it is held that services of the nonresident are exigible to tax as fee for technical services within section 9 (1) (vii) and fee for included services within Article 12 of Indo-USA DTAA. The order of AO is accordingly upheld. The first ground is adjudicated accordingly. 5. Aggrieved with the above findings of Ld. CIT(A), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of mineral oils. Thus section 44BB of the Act applies squarely on the facts of this case. This also simultaneously puts this case out of purview of section 9(1)(vii) of the Act, since the activities pertain to mining . Since it is held that that services are as defined u/s 44BB of the Act, the judgment in the case of R B Falcon Drilling Co. reported in 181 Taxman 62 (UK) has to be followed as in para 6 of this judgment. It has been laid down that the sum paid or payable, whether in or outside India to the assessee or to any person on his behalf on account of provisions of services and facilities In connection with . This case follows the ruling given in the case of Sedco Forex IntI. Inc. Reported in 299 ITR 238 (UK). Furthermore, in a case before the AAR [Western Geco Inti. Ltd. reported In 201 Taxman 101 (AARDethl) It has been held, following the two case law of the Hon'ble Uttarakhand High Court, that once an assessee opts to come u/s 44BB(1) of the Act, the provision Itself deems Its profits and gains as 10% of aggregate of amounts specified in sub-section 2 of section 44BB of the Act, i.e. amount payable or paid whether in or out of India. In view of these rulings, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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