TMI Blog2017 (10) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 44BB itself and being second leg contractors they are not eligible under section 44BB. On the issue of operation of the amendment to section 44BB and 44DDA, the CIT-(A) has observed that considering the interpretation contained in OHM LTD. [ 2012 (12) TMI 422 - DELHI HIGH COURT] the position of the case would not change specially when the services are squarely covered in consonance with what is envisaged under section 44BB of the Act. We find that the Tribunal in [ 2016 (2) TMI 921 - ITAT DELHI] has also held the services rendered as envisaged under section 44BB of the Act. The Ld. CIT-(A) has followed the decision of the jurisdictional High Court on the issue in dispute and thus, we do not find any error in the finding of the ld. CIT-A. Charging of interest under section 234B - HELD THAT:- Interest u/s 234B 234C is not chargeable, since assessee is a nonresident and as such tax is to be deducted at source by Indian party. The Hon ble High Court in the case of DIT Vs. NGC Network Asia [ 2009 (1) TMI 174 - BOMBAY HIGH COURT] and in the case of DIT Vs. Clifford Chance LLP [ 2009 (7) TMI 1215 - BOMBAY HIGH COURT] has decided issue in favour of assessee. - ITA No. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 44BB. 2.2 The Ld CIT(A) has erred in not appreciating the fact that even in terms of ratio of the judgment in the said of OHM Ltd. [(352, ITR 406 (Delhi) cited by him, the provisions of section 44BB are not applicable where the scope of the services/facilities provided by an assessee is general in nature under section 44DA(1) of the Act. 2.3 The Ld CIT(A) has erred in mechanically following the decisions in the case of M/s OHM Ltd without first adjudicating upon the issue as to whether and how the scope of the services/facilities rendered under the contract is not general in nature and therefore, does not qualify as Royalty u/s 9(l)(vi) of the Act taxable under section 44DA. 3. Whether on the facts and circumstances of the case, the Ld CIT(A) has erred in ignoring the decisions of jurisdictional High Court in the cases of ONGC as Agent of Foramer France and M/s Rolls Royce Pvt Ltd. [2007-ITI-03-HC-UKHAND-INTL]. 4. Whether on the facts and circumstances on the facts, the Ld CIT(A) has erred in reversing the action of the AO who, having held that the assessee's revenues on account of 'equipment rental' under contracts wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that issues-in-dispute raised in the appeals are covered in the favour of the assessee. 4. We have heard the rival submission of the parties and perused the relevant material on record. We find that broadly following two issues have been raised in the grounds of appeal: a): whether the receipt from rental of vessels received from nonproduction sharing companies (i.e. second leg contracts) is in the nature of royalty under section 9(1)(vi) of the Act or it is a receipt chargeable to tax under section 44 BB of the Act. b): whether interest under section 234B of the Act is chargeable in the case of the assessee. 5. Both these issues have been decided in favour of the assessee by the Tribunal (supra). On the first issue, the finding of the Tribunal in the case of the assessee itself, from para-19 to para-24 of the order (supra) is reproduced as under: 19. We have carefully considered the rival contentions. We take up the first ground of appeal of revenue which is against the issue of chargeability of tax on the receipt of rental income from Non PSC companies offered for taxation u/s 44BB of the act by assessee. We have perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under sub-section (3) of section 143 and determine the sum payable by, or refundable to, the assessee. 21. Therefore according to the section it applies to (i) a non resident who is engaged in the business of providing facilities of or services in connection with or (ii) is supplying plant machinery or hire used in (iii) prospecting for or extraction or production of mineral oils (iv) then 10 % of specified amount shall be chargeable to tax. (v) It would be charged to tax under the head profits and gains of the business. (vi) Specified amount is specified u/s 44BB (2) of the act. (vii) There are two explanations to the section which defines what plant is and what is mineral oil. 22. There is no dispute on applicability of this section to the business of the assessee. Only limited issue before us is whether supplying plant or machinery on hire to a company which in turns provides services or facility to the company which is engaged in the specified business is eligible for claim of concessional rate of taxation u/s 44BB of the act or not. This is in common parlance referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44BB. The Hon'ble Supreme Court in ICBS Ltd v CIT [2013] 350 ITR 527 held that the assessee leasing the vehicles to others who use the said vehicles in their business of running them on hire is entitled for higher rate of depreciation on the vehicles given on lease. It was held by the Hon'ble Supreme Court that the lessor need not himself use the vehicles in the business of running them on hire. The rationale of the aforesaid decision of the Supreme Court may be applied in the context of section 44BB in as much as section 44BB does not mandate that the assessee should directly enter into contract with the person engaged in the business of prospecting for or extraction or production of, mineral oils or the services or facilities or plant and machinery on hire should be directly provided to the said person alone. We have already given a finding of fact that the services and facilities provided by the assessee along with plant and machinery are used in offshore drilling operations i.e., the activity of prospecting for or extraction or production of mineral oils. Consequently, the requirements of section 44BB are satisfied in the present case. 24. In view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Taxation) Vs. Clifford Chance LLP in ITA No. 2883 of 2008 (Bom) has been dismissed as stated in ITA No.5823/Del /2011 Assessment Year : 2008-09 in Fugro Geoteam AS V Addl. Director of Income tax: Lew of Interest 8. Interest u/s 234B 234C is not chargeable, since assessee is a nonresident and as such tax is to be deducted at source by Indian party. The Hon ble High Court in the case of DIT Vs. NGC Network Asia (Supra) and in the case of DIT Vs. Clifford Chance LLP (Supra) has decided issue in favour of assessee. The SLP filed from the judgment of the Hon ble Uttrakhand High Court in the case of DIT Vs. Clifford Chance LLP was dismissed by the Hon ble Supreme Court. Therefore, we hold interest u/s 234B 234C is not chargeable. 32. Hence we dismiss the ground no (v) of the appeal of the revenue. 8. In view of the above, respectfully following the finding of the Tribunal (supra) in the case of the assessee itself, we dismiss the grounds raised by the Revenue. 9. In the result, appeal of the Revenue is dismissed. The decision is pronounced in the open court on 31st Oct., 2017. - - TaxTMI - TMITax - Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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