TMI Blog2018 (2) TMI 1859X X X X Extracts X X X X X X X X Extracts X X X X ..... different view - Decided in favour of assessee. - I. T. A. No. 2060/Mum/2016 - - - Dated:- 2-2-2018 - SHRI G. S. PANNU, AM AND SHRI RAVISH SOOD, JM For The Appellant : Sh. R. V. Shah, A. R. For The Respondent : Sh. Shishir Dhamija, CIT D. R ORDER PER RAVISH SOOD, JUDICIAL MEMBER The present appeal filed by the assessee is directed against the order passed by the Assessing Officer (for short A.O ) under Sec. 143(3) r.w.s 144C(13), dated. 04.01.2016, wherein the latter had given effect to the directions given by the Dispute Resolution Panel-III, Mumbai (for short DRP ), vide its order dated 14.12.2015, which in itself was passed pursuant to the objections filed by the assessee to the additions/variations made by the A.O in his draft assessment order passed under Sec. 143(3) r.w.s 144C(1) of the Income Tax, 1961 (for short Act ), dated 20.03.2015. The assessee assailing the order of the A.O had raised before us the following grounds of appeal: 1. The ld. Assessing Officer has erred in holding that income received by Appellant constitutes fees for technical services and covered under section 115A of the Income tax Act, 1961 instead of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant company prays that assessment be made u/s 44BB of the Income-tax act, 1961. 8. Appellant craves leave to add, alter, amend, modify or omit any of the aforesaid grounds as the occasion may arise or demand. 2. Briefly stated, the facts of the case are that the assessee, viz. Production Testing Services Inc., Texas, USA is a Foreign company incorporated in USA and is engaged in providing Fracturing Flow Back Services to oil companies. The assessee had e-filed its return of income for A.Y. 2012-13 on 07.09.2012, declaring total income at ₹ 27,97,930/-. 3. The issue involved in the present case lies in a narrow compass. That one B.J Services Company (Middle East) Ltd., a company incorporated in Scotland and having a project office in Mumbai was awarded a contract for Fracturing Flow Back Services by Oil and Natural Gas Commission (for short ONGC ). B.J Services Company (Middle East ) Ltd. in turn sub-contracted the work to the assessee, vide agreement dated. 15.07.2007. That as per the terms of the contract the assessee received an amount of ₹ 2,79,79,273/- from B.J Services Company (Middle East) Ltd. The assessee as per the provisions of Sec. 44BB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable by B.J Services Company (Middle East ) Ltd to the assessee in respect of fees for professional/technical services; and (iii). that even the TDS certificates filed pertained to deduction of tax at source as per the provisions of Sec. 194J on account of fees for technical fees, therefore, vide his Draft assessment order passed under Sec. 143(3) r.w.s 144C(1) brought the amount of ₹ 2,79,79,273/- to tax under Sec. 115A as amount received by the assessee by way of Fess for technical services . 5. Aggrieved with the adjustments/variations made by the A.O in the draft assessment order, the assessee filed its objections with DRPII, Mumbai. The assessee assailed the draft assessment order passed by the A.O under Sec. 143(3) r.w.s 144C(1), on the ground that the amount of ₹ 2,79,79,273/- received from B.J Services Company (Middle East) Ltd had rightly been offered for tax under Sec. 44BB of the Act. The DRP taking cognizance of the fact that a similar issue was adjudicated upon by the DRP in the immediately preceding year, viz. A.Y 2011-12, against the assessee, therefore, by taking support of the observations recorded by the DRP was not persuaded to accept the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4C(13), dated. 04.01.2016. The A.O following the directions of the DRP brought the amount of ₹ 2,79,79,273/- received by the assessee from B.J Services Company (Middle East) Ltd for rendering of Fracturing Flow Back Services to tax as per the provisions of Sec. 115A of the Act . 7. Aggrieved, the assessee had assailed before us the order passed by the A.O under Sec. 143(3) r.w.s 144C(13). The ld. Authorised representative (for short A.R ) for the assessee at the very outset of the hearing of the appeal submitted that the issue involved in the present appeal was squarely covered by the order of the Tribunal in the assessee s own case for A.Y 2011-12 in Production Testing Services Inc. Vs. DCIT (IT), ITA No. 1782/Mum/2016 , dated 27.10.2017 (copy placed on record). It was submitted by the ld. A.R that the Tribunal in the aforementioned case after deliberating at length on the amount received by the assessee from B.J Services Company (Middle East) Ltd for rendering of Fracturing Flow Back Services by the assessee in connection with extraction or production of mineral oil, had concluded that the same was squarely covered by the provision of Sec. 44BB of the Act. It was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Company (Middle East) Ltd. had rendered Fracturing Flow Back Services and various operations at the Oil rigs. We have deliberated on the terms of the contract between ONGC and B.J Services Company (Middle East) Ltd., and after perusing Page 23-24 Para 35 of the said contract find that the contractor, viz. B.J Services Company (Middle East) Ltd. was solely responsible for the manner in which the work assigned to it was performed. We are persuaded to be in agreement with the ld. A.R that as the contents of the aforesaid contract clearly stated that if any Sub-contractor was engaged by the contractor for performing the contract, then he shall be under the complete control of the contractor and there shall be no contractual relationship between any such Sub-contractor and the company, viz. ONGC. We thus, are of the considered view that in the backdrop of the aforesaid clear terms of the contract, now when the assessee who was engaged as a Sub-contractor by B.J Services Company (Middle East) Ltd had nothing to do with the company, viz. ONGC, therefore, the A.O/DRP were wrong in concluding that the amount received by the assessee from B.J Services Company (Middle East) Ltd for render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Sec. 115A and Sec. 44DA. We are of the considered view that as observed by us hereinabove, the assessee had received the amount from B.J Services Company (Middle East) Ltd. and not from ONGC, therefore, the aforesaid contention of the ld. A.R carries substantial force. We thus, also on the said count that the assessee had not received the amount for rendering of services of Fracturing Flow Back Services in extraction or production of mineral oil from the Government or an Indian concern, therefore, hold that the applicability of the provisions of Sec. 115A and Sec. 44DA to the facts of the case of the present assessee would stand excluded. 11. We thus, in the backdrop of our aforesaid observations set aside the order of the A.O assessing the amount of ₹ 2,65,46,753/- received by the assessee from B.J Services Company (Middle East) Ltd. for rendering of Fracturing Flow Back Services at the oil rigs to tax as per the provisions of Sec. 115A of the Act‟. We are persuaded to be in agreement with the ld. A.R that now when Sec. 44BB contemplates special and specific provisions for computing profits and gains of a non-resident in connection with the business of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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