TaxTMI 
TaxTMI 
2005 (12) TMI 46
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....nue. 2 Brief facts of the case are that ONGC as an agent of M/s. Foramer France (non-resident) submitted a return of income-tax for the assessment year 1985-86 on February 28, 1986, declaring a total income of Rs. 8,34,750 and for the assessment year 1986-87 on December 1, 1986, declaring a total income of Rs. 12,66,980. The Assessing Officer observed that the non resident company M/s Foramer France had entered into a contract with the ONGC for supply of supervisory staff and personnel having expertise in operation and management of drilling rigs "Sagar Jyoti" and "Sagar Pragati" in the assessment year 1985-86 and for operation and management of drilling rig "Sagar Ratna" in the assessment year 1986-87. The Assessing Officer after going ....
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....ncome- tax Appellate Tribunal's earlier decision allowed the appeal of the assesses company. Thereafter, the Revenue Department preferred a second appeal before the Income-tax Appellate Tribunal. The Tribunal also dismissed the appeal of the Revenue and held that the contract entered between the ONGC and the assesses-company cannot be termed as merely contract for providing services by their technicians. Therefore, it was not a contract for technical services and accordingly held that the fee received by the company in terms of the consideration was liable to be taxed under section 44BB and not under section 44D read with section 115A of the Act. 3 The following question of law arises for our determination "Whether the Foramer France ....
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....d in exhibit "A" during operation of the unit for a consideration of US$ 3,450.00 (fees) per day except as they may be I adjusted in accordance with the terms thereof. These rates shall remain during the term of the contract and the contract may be extended by at the same fees, terms and conditions. 4. Clause 2.2 provides for deduction from the fee for each day of such ort deployment in the event if a member of the crew as listed in exhibit "A" is not deployed on duty. 5. Clause 4.1 as found on the internal page 6 of the agreement pro vides that the contractor shall be responsible for payment of compensation to the personnel furnished by him including cost of personnel taxes and ,iinge benefits and all the said personnel shall remain ....
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....clause 4.8, it has been provided that contractor shall use pre cautions in accordance with good oil-field practices, to drill a hole, which will not deviate from the limits specified by owner for that hole. Measurement of those angles shall be made by contractor by methods acceptable to owner at intervals as may be directed by owner. Owner may furnish any special device(s) necessary to undertake such measurements. Contractors shall deliver to owner or owner's designated representative the data pertaining to all like measurements made by contractor and all records resulting therefrom. 10. Clause 4.10 provides that upon request of owner, if the said well has to be completed as a producing well, contractor, shall immediately thereafter equi....
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....equired, through its personnel listed in exhibit A to the said agreement, to carry out, inter alia, the drilling operations specified in clauses 4.3 to 4.10 of the said agreement." 7 Thus, it is clear that clauses 4.3 to 4.10 of the contract were to be per formed by the assesses-company through its personnel listed in exhibit A, which has been stated in the affidavit that the personnel which have been hired on fee by the ONGC were carrying out the drilling operations Explanation 2 to section 9(1)(vii) of the Income-tax Act, 1%1, reads as under "Explanation 2 : For the purposes of this clause, 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or c....