2016 (7) TMI 826

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.... these appeals were heard together and involve common issue, these are being disposed off by this common order for the sake of convenience and brevity. 2. The assessee has raised as many as 14 grounds of appeal. However, the only effective grievance of the Revenue has been mentioned in Ground No. 1 which reads as under: "1. Whether on the facts and the circumstances of the case the Hon'ble Dispute Resolution Panel ('DRP') has erred in directing the Assessing Officer to apply the deemed profit rate of 10% u/s 44BB of the Income Tax Act, 1961 ('The Act') on the revenues earned by the assessee from a non-resident company on account of provision of technical personnel for executing contracts with M/s. ONGC." 3. We have heard the rival ....

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.... these issues are covered in favour of the assessee. Thus, the request of the ld. CIT-DR for directing the assessee is rejected. 6. Further, from the order of the DRP dated 18.12.2013 passed u/s 144C(5) of the Act, we observe that the DRP granted relief to the assessee with the following observations and conclusion: " 4.3 On careful consideration of the mat e I we find that under the provisions of section 44BB of the Act the presumptive rate of taxation is applicable to 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" (emphasis supplied).The activities being p....

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....s engaged in prospecting etc. of mineral oil or is directly a member of the Production Sharing Contract as is sought to be made out by the AO. The above view has been confirmed by the Hon'ble ITAT Mumbai in Micoperi S.P.A. Milano vs. Oy. CIT (2002) 82 ITO 369. The legislature u/s 44BB inserted w.e.f. 01.04.1983 has provided a special provision of deemed profit in connection with the business of exploration of mineral oils considering the special nature of the business, which should not be denied to the assessee on grounds which are extraneous to the said section. 4.3.2 As pointed out by the Ld. AR, the case of the assessee is covered under Instruction No. 1862 dated 22.11.1990 wherein on the basis of the opinion of the Attorney Gener....

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....on-resident or foreign company by way of royalty or FTS is received from Govt. or an Indian concern, whereas in the case of the assessee, the payments have been received from another nonresident company and hence cannot be brought under the purview of section 44DA of the Act. In fact, on identical facts the Hon'ble AAR in Spectrum Geo Ltd., In re (2012) 209 Taxman 397 held that the income derived by the applicant from an activity in connection with prospecting etc for mineral oil from another foreign company would be subject to tax u/s 4488 and not under section 44DA/ 115A of the Act. The relevant portion of the ruling is extracted below: "12. The inquiry now is whether the income derived by the applicant from performing its co....

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....(an Indian resident), while in the case of the assessee the counter of party is Pride Foramer, a French company ( non- resident in India). 4.3.5 As submitted by the Ld. AR, the Hon'ble Jurisdictional High Court in DIT vs. OHM Ltd. (2012) 212 Taxman 440 (Delhi) has held that section 4488 of the Act being a more specific provision shall prevail over the general provisions of the Act and that the services rendered by the sub-contractor at the offshore rigs of a contractor is part and parcel of activities for extraction etc of mineral oils and would be covered u/s 4488 of the Act. 4.3.6 In view of the above, considering the facts of this case, the statutory provisions and clear legal pronouncements of the Hon'ble ITAT/ AAR/ High C....