2025 (8) TMI 209 - AT - Income Tax

Seismic Data Services Classified Under Section 44BB, Not Fees for Technical Services Under Section 44DA

ITAT Dehradun held that receipts from provision of seismic data acquisition and related services are not fees for technical services under Section 44DA ... Computing taxable income u/s 44BB - reimbursement of service tax received by the assessee and Receipts on account of GST Includible in the revenues chargeable to tax under section 44BB - HELD THAT:- Assessee’s own case for Assessment Year 2011-12 [2023 (6) TMI 345 - ITAT DELHI (LB)] wherein held revenue received by the assessee company during the year under consideration on account of provision of facilities and services of seismic data acquisition, planning and carrying out of pre-survey study, taking marine data and confirming prospects, maintenance/ upgradation / support of software licenses, etc, is not in the nature of fees for technical services as the same is covered by the exclusion provided in Explanation (2) to Section 9(1) (vii) of the Act being consideration received for “mining or like projects” and the same, therefore, is not taxable under Section 44DA of the Act. The said services or facilities provided by the assessee actually are inextricably connected with prospecting for, or extraction or production of, mineral oils as held in the case of ONGC [2015 (7) TMI 91 - SUPREME COURT] under the similar facts and circumstances and the revenue received for the same accordingly is taxable under Section 44BB of the Act Also that the amount received by the Assessee in the present case as reimbursement of service tax is not including in the gross turnover for the purpose of computing taxable income u/s 44BB. Decided in favour of assessee. ISSUES: Whether income covered by section 44DA is excluded from the scope of section 44BB for the Assessment Year 2022-23 following the amendment by the Finance Act, 2010 effective from 01.04.2011.Whether the Assessing Officer was correct in taxing the assessee's revenues under section 44DA and estimating income by applying a 25% rate of profit on gross receipts in absence of books of accounts and expense details.Whether reimbursement of service tax received by the assessee forms part of gross turnover for computing taxable income under section 44BB. RULINGS / HOLDINGS: The Tribunal upheld that income covered by section 44DA has been specially excluded from section 44BB as per the Finance Act, 2010 amendment, and the assessee's income from services connected with mineral oil extraction is taxable under section 44BB, not section 44DA.The Tribunal found no error in the Commissioner of Income Tax (Appeals) reversing the Assessing Officer's application of section 44DA and the 25% presumptive profit rate, relying on precedent that the nature of services provided falls under section 44BB.The Tribunal held that the amount received as reimbursement of service tax is not includible in gross turnover for computing taxable income under section 44BB, following the ratio laid down by the Special Bench and relevant High Court decisions. RATIONALE: The Tribunal applied the legal framework established by the Finance Act, 2010 amendment excluding section 44DA income from section 44BB, and relied on the Special Bench decision in the assessee's own case for Assessment Year 2011-12, which interpreted the scope of section 44BB in relation to services connected with mineral oil extraction.The Tribunal followed authoritative judicial pronouncements, including decisions of the Hon'ble Uttarakhand High Court and the Hon'ble Delhi High Court, which held that reimbursement of service tax is not part of gross receipts under section 44BB.No contrary judicial precedent or change in circumstances was presented by the Revenue to overturn the Special Bench's ruling; thus, the Tribunal affirmed the correctness of the Commissioner of Income Tax (Appeals) order.