TaxTMI 
TaxTMI 
2011 (3) TMI 111
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....s on a worldwide basis. The seismic data (in processed form) is used to create highly accurate images of the earth's sub-surface which in turn are used by the exploration and production companies for locating potential oil and gas reserves based upon the geology observed. 2. The applicant was awarded a contract by Oil and Natural Gas Corporation Limited (ONGC) to undertake 3D ocean bottom cable (OBC) seismic data acquisition and onboard processing in western offshore region, India, 2007-08. It has established a project office at Mumbai after taking the necessary permission from the concerned authorities in order to undertake the work. The applicant again entered into a contract with ONGC for 3D OBC seismic data acquisition and processing i....
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....k under this contract includes, without limitation, provision of all equipment, materials and supplies in accordance with the terms of this contract. The applicant is to provide and keep available its personnel at the designated survey area of Rava Field, Krishna-Godavari basin in India. As the applicant could not commence the work, this contract was terminated vide letter dated March 9, 2009. Further this contract was amended and restarted vide letter dated March 23, 2009 with completion period by pre-monsoon 2010. 5. The applicant has offered to tax its total income received under the contracts for the financial years 2007-08 and 2008-09 having regard to the provisions of section 44BB of the Income-tax Act, 1961 (hereinafter referred to ....
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....section 44BB of the Income-tax Act, 1961 (the `Act') ?" 7. Although notice was issued to the Revenue, neither did it furnish its comments nor was it represented during the hearing of this case. 8. Shri Percy Pardiwala, learned senior counsel, while arguing the case on behalf of the applicant, has reiterated the stand taken in the application and submitted that the services rendered by the applicant is for prospecting of mineral oil. He has supplied the meaning of the word "prospect" from the Dictionary of Science and Technology wherein it means : "Area which shows sufficient promise of mineral wealth to warrant exploration. Methods of search include aerial survey, magnetometry, geophysical and geochemical tests, seismic probe, electrores....
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....of the Act. Before we delve into this point, we extract below section 44BB of the Act for appreciation : "44BB. Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils.-(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 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, 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 cha....
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....an assessment of the total income or loss of the assessee under sub-section (3) of section 143 and determine the sum payable by, or refundable to, the assessee. Explanation.-For the purposes of this section,- (i) `plant' includes ships, aircrafts, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business ; (ii) `mineral oil' includes petroleum and natural gas." 12. This is a provision for computation in respect of non-resident assessees 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. In the instant case the applicant is a non-res....
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.... utilization of data emerging from it. The services of the nature undertaken by the applicant have a direct and definite bearing on the prospecting/exploration activities and they are integral to the said activities undertaken by petroleum and gas enterprises. It can by no means be said that the geophysical services have nothing to do or are only remotely connected with the exploration of mineral oils. In fact, there is no serious dispute on this aspect." 14. Subsequently, in an another identical case, i.e., Seabird Exploration FZ LLC, In re [2010] 320 ITR 286 (AAR) the same view was taken as that in Geofizyka Torun's case [2010] 320 ITR 268 (AAR) wherein the question raised was answered in the affirmative that the income has to be compute....