Oil and gas service receipts taxed under presumptive regime where work was integral to exploration and production operations.

Services connected with seismic data processing, field development consultancy, and assistance in oil and gas operations were treated as integrally connected with prospecting for, exploration of, and production of mineral oils. Applying the pith-and-substance test and the dominant purpose of the contracts, the receipts were brought within the presumptive regime under section 44BB of the Income-tax Act, 1961 rather than characterised as fees for technical services under section 9(1)(vii) read with section 44DA and section 115A. The analysis followed the settled position already applied in the assessee's own case, and the receipts were assessed under section 44BB.

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Issues: Whether the amounts received by the non-resident for rendering services connected with seismic data processing, consultancy for field development, and assistance in oil and gas operations were taxable under section 44BB of the Income-tax Act, 1961, or as fees for technical services under section 9(1)(vii) read with section 44DA and section 115A of the Income-tax Act, 1961.

Analysis: The services were found to be integrally connected with prospecting for, exploration of, and production of mineral oils. The activities were not viewed in isolation but by their pith and substance and dominant purpose, which was to facilitate oil and gas exploration and related development operations. Applying the settled legal position already affirmed in the assessee's own case, the receipts from such contracts were treated as business income assessable under the presumptive regime of section 44BB and not as fees for technical services under section 9(1)(vii) or section 44DA.

Conclusion: The issue was decided in favour of the assessee and against the Revenue; the receipts were held taxable under section 44BB of the Income-tax Act, 1961.

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