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TMI Blog2020 (9) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Indian permanent establishment of company cannot be classified as "Indian Concern" in context of sec.44D r.w.s.115A of I.T. Act, 1961 as the company is incorporated Canada ?" (C) "Whether meaning of an "Indian concern" in section 44D r.w.s. 115 A should be taken as a business carried out in India which may include a business carried on in India even by a nonresident?" (D) "Whether, Appellate Tribunal is justified in law in placing reliance in cases of CIT Vs Craigmore Land and Produce Co. Ltd. [110 ITR 730 MADRAS HC] and CIT vs Dorr Oliver (I) Ltd. [209 ITR 691 Bombay HC], which are related Super Profit tax Act1963 and in no way related to special provision for computing income by way of royalties etc. in the case of foreign companies u/s 44D of I.T. Act1961 ?" 3. The facts, giving rise to this Tax Appeal, are as under: 3.1. The respondent-Niko Resources Limited, a company incorporated in Canada entered into joint venture for business of joint exploration and development of oil and gas field in five fields in Gujarat with Gujarat State Petrochemical Corporation Limited (for short "GSPCL"). 3.2. The respondent-Niko Resources Limited entered into a contract with HUB I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment signed between appellant and HUB provided the technical services including rendering of service of technical or other personnel. Further, fees for technical services were paid directly by appellant to HUB International. For applicability of section 44D, it is necessary that fees for technical services should be received by the foreign company from an Indian concern in pursuance of an agreement entered into with the Indian concern. Ina the appellant's case agreement is clearly signed between HUB and appellant which is not an Indian concern and fees are also directly paid by appellant to HUB. As appellant is not an Indian Company section 44 D will not be applicable. The Assessing Officer's argument that the appellant has been authorized on behalf of joint venture to enter into an agreement with the HUB, and that the expenses are jointly shared by the appellant and GSPCL, and therefore section 44 D will be applicable, is not convincing and is over-stretched. Further, the ITAT Delhi Bench decision relied upon by the appellant is clearly applicable in this case, whereas the decision of advance ruling authority relied upon by the Assessing Officer is not applicable. Therefore, I am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the nonresident company being 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. The assessee has provided drilling services to HUB International in the nature of provision for technical/supervisory staff for exploration and development of oil and gas in India. The observations of the Assessing Officer that the assessee has been authorized on behalf of joint venture into an agreement and that expenditure were jointly shared by the assessee and GSPL and, therefore, section 44 D is applicable, is not correct. In view of the decision of the Madras High Court in the case of CIT Vs Craigmore Land & Produce Co. Ltd., 110 ITR 730, and the decision of the Bombay High Court in the case of CIT Vs Dorr Oliver (I) Ltd., 209 ITR 691, which clearly supports the claim of the assessee that the assessee company cannot be classified as an Indian concern. In these facts and circumstances, we do not find any reason to interfere with the order of the CIT(A). Accordingly, we uphold his order." 4. Similar issue was consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions advanced on behalf of the appellants, Shri Gurukrishna Kumar, learned senior counsel for the Revenue has urged that the opinion of the Attorney General relied upon and the CBDT Circular has no relevance to the present case inasmuch as the agreements between ONGC and the non-resident companies made it abundantly clear that what is paid to the non-resident company are fees for technical services rendered. Though such services may have some connection with the prospecting, extraction or production of mineral oil, the primary service rendered by the non-resident companies on the basis of the agreements is not for prospecting, extraction or production of mineral oil but various ancillary services like training of personnel etc. which may have a somewhat remote connection with the business of prospecting, exploration or production of mineral oils. Learned counsel for the revenue has even suggested that if it is held that the High Court ought to have examined each agreement or contract to find out its real purpose and intent the revenue would have no objection if the matters are remanded for a complete exercise to be made on the above basis. 13. The Income Tax Act does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Section 44D of the Act. We do not see how any other view can be taken if the works or services mentioned under a particular agreement is directly associated or inextricably connected with prospecting, extraction or production of mineral oil. Keeping in mind the above provision, we have looked into each of the contracts involved in the present group of cases and find that the brief description of the works covered under each of the said contracts as culled out by the appellants and placed before the Court is correct. ...........Details of contracts....... The above facts would indicate that the pith and substance of each of the contracts/agreements is inextricably connected with prospecting, extraction or production of mineral oil. The dominant purpose of each of such agreement is for prospecting, extraction or production of mineral oils though there may be certain ancillary works contemplated there under. If that be so, we will have no hesitation in holding that the payments made by ONGC and received by the non-resident assessees or foreign companies under the said contracts is more appropriately assessable under the provisions of Section 44BB and not Section 44D of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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