9911796707
TMI Blog2023 (2) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... er the laws of Malaysia and is a tax resident of Malaysia. As stated by the Assessing Officer, the assessee is engaged in the business of leasing of machines and equipments used for exploration and extraction of mineral oils, providing services on-shore to contract drilling and engineering services for the oil and gas industries. Jaybee Energy (P.) Ltd. (JEPL) an Indian Corporate entity, entered into a contract with M/s. Oil India Ltd. for drilling and exploration of mineral oils in the North Eastern States of India. The assessee, in turn, entered into a contract with JEPL for supply/lease/hire of RIGS to be used by the contractee for drilling and exploration of mineral oils. In the assessment years under dispute, the assessee received certain amounts towards leasing/hiring of the Rigs to JEPL. In the returns of income filed for the impugned assessment years, the assessee offered the income from hiring/leasing of rigs as business profits to be taxed on gross/presumptive basis under section 44BB of the Act at 10%. In course of assessment proceedings, the Assessing Officer, after calling for and examining the contract between Oil Indian and JEPL as well as the contract between the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1983. Subsequently, the provision was amended by Finance Act, 1988 by making it applicable to nonresidents with retrospective effect from 01.04.1983. Section 44BB in its present form reads as under: "Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils. 44BB. (1) Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in the case of an assessee, being a nonresident, 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, 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 44DA 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng plant and machinery on hire used or to be used in prospecting for or extraction or production of minerals oils. 8. The provision says, the receipts from the aforesaid activities can be taxed on a presumptive basis by applying the rate of 10% on gross basis. However, the proviso to section 44BB(1) makes it clear that the provision will not apply in a case where the provisions of section 44 or section 44D or section 44DA or section 115A or section 293A are applicable for computing profits or gains or any other income referred in those sections. 9. Undisputedly, the activity carried on by the assessee falls within the third category, viz., supplying plant and machinery on hire used or to be used in prospecting, or extraction or production of mineral oils. Section 9 of the Act speaks of certain categories of income deemed to accrue or arise in India, whether directly or indirectly through any business connection in India or through any property in India or through or from any asset or source of income in India. Clause (vi) of section 9(1) provides for taxation of royalty by applying deeming fiction. Explanation (2) to section 9(1)(vi) defines the term 'royalty'. The term 'royalty' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Geophysical Pty. Ltd. Vs. CIT, 2020 (3) TMI 969 relied upon by the departmental authorities, the Hon'ble Jurisdictional High Court, while interpreting the provisions contained under section 44BB and 44DA of the Act, have observed that the distinguishing feature between the two provisions is, in section 44BB one does not find any reference to a PE in India and the services contemplated therein are more specific than what is contemplated under section 44DA. As rightly observed by learned DRP, and it is a fact also, section 44BB is a special provision applicable to certain categories of income earned by a non-resident from activities related to the business of extraction/exploration of mineral oils. One of the activities coming under the said provision relates to giving on hire/leasing of equipments to be used in exploration or extraction of mineral oil. In the facts of the present appeal, undisputedly, the assessee has given on hire/lease equipments used or to be used in extraction/exploration of mineral oils. Therefore, in our view, the amounts received by the assessee are fully covered under the provisions of section 44BB and taxable on gross basis at the rate of 10%. 12. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X
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