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TMI Blog2023 (7) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Year 2011-12. 2. Appellant is a Company incorporated in Singapore and is tax resident of Singapore. Appellant was engaged in the business of providing Jack up drilling unit and platform well operations services. During the year under consideration, Appellant had entered into an agreement dated 18th June 2020 with Gujarat State Petroleum Corporation Ltd. (GSPC) for providing Jack up drilling Unit and platform Well operations at the Block KG-OSN-2001/3 offshore India, pursuant to exploration contract awarded by Government of India to the GSPC. 3. During the year under consideration, Appellant earned contractual income of Rs. 64,88,90,227/- from GSPC under the contract. The Assessing Officer (AO) observed that the activities carried out b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's case that though rig had entered the territorial waters some time in April 2010, it was undergoing necessary upgrades / repairs to meet the requirements of GSPC. As per the contract with GSPC and after this upgrades and repairs were completed actual drilling began only on 3rd December 2010 and therefore, the time would start from 3rd December 2010. This would mean only 119 days during Assessment Year 2011-12. 7. Ms. Nagraj, per contra, submitted that Article 5(5) is very widely worded. It says if an enterprise provides services or facilities in the Contracting state for a period of more than 183 days in the fiscal year in connection with the exploration, exploitation or extraction of mineral oils then, the moment the rig enters the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with the exploration, extraction or production of mineral oils. Mr. Agarwal, as noted earlier, in all fairness stated that service or facility provided would be covered by section 44BB. 9. The AO in his Assessment Order dated 26th May 2014 has in paragraph 6 extracted the explanation offered by Appellant. Paragraph 6 reads as under: "6. In response to the above the assessee has offered its explanation vide letters dated 06/03/2014 and 27/03/2014. The main contentions of the assessee are as under : i. The company is incorporated and registered in Singapore and is a tax resident of it. ii. It is engaged in the business of providing offshore drilling services for the purpose of prospecting for, exploration, exploitation and extracti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days the revenue was offered to tax due to lack of appropriate tax advice and a mistake of law without considering the provisions of Indo-Singapore DTAA. xiii. Further, the income offered for A.Y. 2009-10 & 2010-11 was in connection with a single contract whereas the contract for current A.Y. is a different one." 10. In paragraph 7(iv) of the Assessment Order, the AO has also extracted the minutes of the meeting held on 27th April 2010 between GSPC and Appellant and the same reads as under : "iv. The fact that the during the in between period of actual start of operations and arrival of rig in India, the rig was getting prepared for undertaking the work of GSPC is evident from the minutes of meeting held on 27/04/2010 between GSPC a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d / modified to support tree conductors. GSPC will furnish the information that GSPC has on the previous design by Premium Drilling. h) GSPC will furnish the 4 slot template drawings along with the drawings of the existing 6 slot template to Aban." 11. If we have to accept Mr. Agarwal's stand that the date on which the count of 183 days will begin is only when the rig actually begins to perform under the contract, i.e. 3rd December 2010, then (a) there was no need to bring rig into the country in April 2010, (b) there was no need to hold meetings with GSPC in April 2010, (c) the fittings could have been made outside the country and the rig could have been brought into India later, and (d) it will not stop an assessee from saying that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly after the aforesaid fabrication, upgradation and enabling operations were carried out that further drilling operations were commenced from 3.11.2010 and continued till the end of the financial year. Thus, the assessee was having in PE in India to carry on business from the day when it commenced in India operation to fabricate, to upgrade to prepare, to position and to enable the Rig to perform the drilling activity. 9. Hence, when the rig had entered Indian waters and it was undergoing fabrication, upgradation and positioning for the drilling activity for GSPC it can be said that the PE was there in connection with the exploration, exploitation or extraction of mineral oils. The operation on the Rig to upgrade it, to prepare, and to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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