TaxTMI 
TaxTMI 
2016 (5) TMI 1171
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee noticed that during the year under consideration, assessee has made remittances to RPS Energy Ltd., U.K., a non-resident, without withholding of tax in terms of Section 195 of the Act. The nature of remittance is as under:- Amount of remittance Date of remittance Nature of remittance 6069250 4892103 04-01-2011 03-03-2011 FEES FOR 3D SEISMIC DATA PROCESSING CHARGES i.e. FEES FOR TECHNICAL SERVICES 5. The A.O was of the firm belief that the remittances are in nature of Fees for Technical Services and, therefore the assessee ought to have deducted tax in accordance with Section 195 of the Act. 6. Assessee was served a show cause notice to explain why it should not be treated as an assessee in default within the meaning of section 201(1) and why tax deductible should not be recovered with interest u/s. 201(1A) of the Act. 7. Vide submission dated 16.01.2013, assessee filed a detailed reply in the light of the provisions of Section 4, section 5 and section 90 of the Act. The main contention of the assessee was that the services of M/s. RPS Energy Ltd. are not in the nature of Fees for Technical Services as per Article 13 of India-UK DTAA. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate Authority was also convinced that the services rendered by M/s. RPS Energy Ltd are of the nature of technical services. The report submitted by M/s. RPS Energy Ltd enabled the assessee company to take crucial decision in exploration of oil out of the vast area of 1191 sq. km. 13. Aggrieved by this, the assessee is before us. The ld. counsel for the assessee reiterated what has been stated before the lower authorities. . The ld. counsel took us to the various relevant clauses of the agreement between the assessee and RPS Energy Ltd., the ld. counsel also drew our attention to the relevant Article of Indo-UK DTAA. In support of his contention, the ld. counsel relied upon the decision of the Hon'ble High Court of Karnataka High Court in the case of De Beers India Minerals Pvt. Ltd. 346 ITR 467. Our attention was also drawn to the decision of the Co-ordinate Bench, Ahmedabad in the case of Dholera Port Ltd. in ITA No. 1407/Ahd/2009. Per contra, the ld. D.R. heavily relied upon the orders of the revenue authorities. 14. We have heard the rival contentions, carefully perused the orders of the authorities below and have given a thoughtful consideration to the agreement between t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te of the art hardware and leading seismic data interpretation software presently in use globally. The selected bidder will carry out seismic data interpretation as per the plan that will be provided by the company. 04.0 GENERAL REQUIREMENT The Contractor should possess seismic data interpretation facilities consisting of computers, software, tape drives, plotters, printers and other required peripheral equipment. A competent team of seismic data interpreters should deliver an output of high quality in a professional and efficient manner. The selected bidder will be solely responsible for the quality for all aspects of the data interpretation. However, all technical co-ordination including Quality Control (QC) check etc., shall be done by the QC team of Company. The Contractor shall submit a detailed interpretation report in triplicate (print as well as soft copy on USB hard Drive and DVD) in respect of each data set. All deliverables (USB Drives, DVD, paper plots etc.) must confirm to the highest industry standards. 05.0 DATA AVAILABILITY AND PROJECT SCHEDULE Company shall make arrangement to provide relevant data for interpret....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ities derived from seismic data to provide indirect pressure profile at proposed drilling location. Large structural reversals are envisaged in the Early Eocene to Late Paleocene (Panna formation) sandstone and shales. There are expected to be over pressure as has been reported in nearby areas. 1) Attribute analysis and their interpretation with specific reference to subtle stratistructural traps which will necessarily include but not be limited to the following. * Sweetness-attributes in conjunction with coherency for channel facies & isolated /stacked sand body identification * Spectral decomposition for delineating thin sandstone reservoirs embedded in shales deposited in shallow marine environments * The integration of sequential horizon slicing, attribute extraction, seismic fades characteristics, and available wireline information for reconstruction of the depositional sequence, identification of reservoir units, and the analysis of reservoir geometry within seismic data * Velocity modeling studies All maps and sections will be finalised after scrutinizing results along with company's representative (s) who wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her Deliverables: a) xyz data e.g. Horizon, Fault contour data file. b) Any other intermediate data file generated for final report. c) Interpretation project file in appropriate format. d) Velocity estimates. e) All lime and depth maps generated during the course of the study in 'cgm' or similar format. f) Back up of database + work flows + data sets. 12.0 DATA 12.1 Delivery of Data The Contractor shall deliver to the Company or to any other party designated by the Company, all Data, promptly on obtaining such Data. In the event of suspension or termination of the Contract, the Contractor shall immediately deliver to the Company all undelivered Data. The Contractor shall not retain copies of such Data unless it shall have first obtained the Company's written consent. The Contractor shall take all possible measures to ensure that no magnetic medium (tape, disk or other) will be passed through, or otherwise come into the vicinity of, any form of magnetic device during transport of the Data. Prior to the transport of any Data by the Contractor, the Contractor shall advise the Company's Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erty of the assessee from the date of its creation. 20. On identical set of facts, the Hon'ble High Court of Karnataka in the case of De Beers India Minerals Pvt. Ltd. 346 ITR 467 had the occasion to interpret the relevant Articles of India-Netherlands DTAA. In this case, the Hon'ble Karnataka High Court held as under:- "The test is whether the recipient of the service is equipped to carry on his business without reference to the service provider, if he is able to carry on his business in future without the technical service of the service provider in respect of services rendered then, it would be said that technical knowledge is made available." The facts of the case and observations made by the Hon'ble Karnataka HC are as under: (Para 18) In terms of the contract entered into with Fugro, they have given the data, photographs and maps. But they have not made available technical expertise, skill or knowledge in respect of such collection or processing of data to the assessees, which the assessee can apply independently and without assistance and undertake such survey independently excluding Fugro in future. The Fugro has not made availa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....It is a case specific. That information pertains to 8 blocks. The assessees can make use of the data supplied by way of technical services and put its experience in identifying the locations where the diamonds are found and carrying on its business. But the technical services which is provided by Fugro will not enable the assesses to independently undertake any survey either in the very same area Fugro conducted the survey or in any other area. They did not get any enduring benefit from the aforesaid survey. In that view of the matter, though Fugro rendered technical services as defined under Section 9(1)(vii) Explanation 2, it does not satisfy the requirement of technical services as contained in DTAA. Therefore the liability to tax is not attracted. Accordingly the first substantial question of law is answered in favour of the assessees and against the Revenue. (Para 27) Therefore the assessees not being possessed with the technical know how to conduct this prospecting operations and reconnaissance operations, engaged the services of Fugro which is expert in the field. By way of technical services Fugro delivered to the assessees the data and information after s....