TaxTMI 
TaxTMI 
2017 (4) TMI 354
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....on the assessee had entered into the following projects: - (i) Project with Leighton Contractors (India) Pvt. Ltd. for charter hire of Barge Regina 250 and Cargo Barge VML1 with manpower (for ONGC project). The assessee was of the view that the receipts/income of US $15,78,307/- was not exigible to tax since the period of contract was less than nine months under Articles of the India-UAE DTAA; (ii) Project with M/s. MPSEZ Ltd. for charter hire of Cargo Barge VML 3. The revenue/income of US $1,89,965/- was not offered to tax. The Barge was chartered at Abu Dhabi, used for transporting material from Mussafah Jetty Abu Dhabi to West Coast of India and barge was delivered back at Abu Dhabi. The assessee contended that this is business income under Article 7 of the India-UAE DTAA and since VMGL did not have a PE in India, this income/revenue is not liable to be taxed in India. 2.1.2 According to the assessee, in notes to computation of income and in its submissions put forth, since none of the above two projects exceeded a period of nine months under Article 5(2)(h) of the India-UAE DTAA and the profits earned by it from the project in India are business profits under Article 7 of th....
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....with the assistance of the learned D.R. and the material on record. 5.1 Aggrieved by the order of the CIT(A)-58, Mumbai dated 04.03.2016 for A.Y. 2010-1, Revenue has preferred this appeal raising the following grounds: - "1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in holding that the Assessee has no PE in India and income of the Assessee cannot be taxed under section 44BB of the I.T. Act, 1961? 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the Assessee preferred against decision of the AO of taxing income of the Assessee at Rs. 75,93,303/- u/s. 44BB of the I.T. Act, 1961? 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the activities ancillary to main project avidity forms part of project itself. 4. The Appellant prays that the order of the CIT(A) be set aside on the above ground(s) be set aside and of the Assessing Officer be restored. 5. The Appellant craves to amend or alter any ground or add a new ground which may be necessary." 5.2.1 In its grounds raised (supra), Revenue assails the impugned order ....
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.... "14. We have carefully considered the rival submissions. Sec. 44BB of the Act deals with provision for computing profits and gains in connection with the business of exploration, etc. of mineral oils. Sec. 44BB of the Act seeks to provide a presumptive determination of profits and gains of businesses referred therein. It is applicable in the case of an assessee, being a non-resident, which is engaged in the business of providing services or facilities in connection with or supplying of plant and machinery on hire or to be used in prospecting for or extraction or production of mineral oils. In the instant, the case set-up by the assessee is that it has hired out two tug boats and a barge to M/s. Aracadia Shipping Ltd. and M/s. Leigthton Contractors India Pvt. Ltd. respectively to be used in the prospecting for or extraction or production of mineral oils. At pages 9 and 10 of Paper Book assessee has placed certificates issued by M/s. Aracadia Shipping Ltd., wherein it is confirmed that the two tug boats hired from the assessee have been used for the anchor handling operations at Bombay High Offshore field (basin field) and at Bombay High Offshore field (D1). In the context of the us....
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....f Sec. 44BB of the Act. In our considered opinion, the factum of the vessel being used for the business of operation of prospecting for or extraction or production of mineral oils is enough to cover it within the scope of Sec. 44BB of the Act and that the phraseology of Sec. 44BB of the Act does not envisage only direct use of the plant and machinery in the prospecting for or extraction or production of mineral oils. In this context, we may refer to the decision of the Authority for Advance Ruling (AAR) in the case of Lloyd Helicopters International Pty Ltd., 249 ITR 162 (AAR) wherein even the income derived from providing of helicopter to facilitate operation of extraction and production of mineral oil was held to be eligible for assessment Sec. 44BB of the Act. In the instant case, it is not in dispute that the assessee is indeed engaged in the business activity of providing facilities and/or services in connection with prospecting for or extraction or production of mineral oils and, therefore, hiring of barge JU-251 is done in the course of such business by the assessee. The ratio of the decision of Delhi Bench of Tribunal in the case of M/s. SBS Marine (supra), which has been r....
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....plying plant and machinery on hire used, or to be used, in the prospecting for or extraction or production of, mineral oils' A plain reading of the above expression only provides that the assessee should be engaged in the business of supplying plant and machinery on hire and such plant or machinery are used or to be used in the prospecting for or extraction or production of, mineral oils. The activity for which the plant or machinery are used or to be used is the only criteria and that activity is prospecting for or extraction or production of, mineral oils. There is no requirement under section 44BB that the services or facilities or supplying of plant and machinery should be provided only to the main person who is engaged in prospecting for or extraction or production of, mineral oils i.e., ONGC in the present case. In other words, the applicability of section 44BB is not only restricted to the assessee (first leg contractors) who has directly entered into a contract with the person who is engaged in prospecting for or extraction or production of, mineral oils i.e., ONGC in the present case. The revenue's argument is that the words 'used or to be used' are used in terms of the 'P....
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.... need not himself use the vehicles in the business of running them on hire. The rationale of the aforesaid decision of the Supreme Court may be applied in the context of section 44BB in as much as section 44BB does not mandate that the assessee should directly enter into contract with the person engaged in the business of prospecting for or extraction or production of, mineral oils or the services or facilities or plant and machinery on hire should be directly provided to the said person alone. We have already given a finding of fact that the services and facilities provided by the assessee along with plant and machinery are used in offshore drilling operations i.e., the activity of prospecting for or extraction or production of mineral oils. Consequently, the requirements of section 44BB are satisfied in the present case. 24. In view of the above, there is no merit in the contentions of the revenue that the assessee is not an eligible assessee under section 44BB since it has not directly entered into contract with the ONGC and it is not undertaking the activities specified in section 44BB itself and being second leg contractors they are not eligible under section 44BB." There....