TaxTMI 
TaxTMI 
2017 (7) TMI 731
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the Assessing Officer restored. 3. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. Brief facts of the case are as under :- The assessee is a Foreign Company, incorporated in Singapore and is tax resident of Singapore. The assessee is engaged in the business of providing Jack up drilling unit and platform well operations services. During the year under consideration the assessee company had entered into an agreement dated 18.06.2010 with Gujarat State Petroleum Corporation Ltd (GSPC) for providing Jack up drilling Unit and platform Well operations at the Block KG-OSN-2001/3 offshore India, pursuant to exploration contract awarded by Government of India to the GSPC. During the year under consideration the assessee company has earned contractual income of Rs. 64.88,90,227/- from M/s GSPC pursuant to the abovementioned contract. The Assessing Officer observed that the activities carried out by the assessee as per contract are covered by the provisions of section 44BB of the I.T. Act, and till last year the assessee consistently offered the revenue for taxation u/s. 44BB. However, no income has been offered for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ract with GSPC the assessee is required to provide Jack Up Drilling Rig services for KG-OSN-2001/3 Block (Deen Dayal Field) off Andhra Pradesh Coast which are clearly connected with prospecting for, or extraction or production of mineral oils, and accordingly falls under the ambit of section 44BB of the Income Tax Act. ii. The Drilling Rig' (Deep Driller 1) of the assessee was brought into India on 26/04/2010 for undertaking the above said drilling services which is evident from the bill of entry submitted during the course of assessment proceedings. iii. The Claim of the assessee regarding commencement of operations from 03.12.2010 cannot be accepted as the rig was brought into India in April and it was undergoing necessary upgrades/repairs to meet the requirements of the GSPC as proposed in the bid. iv. The fact that during the in between period of actual start of operations and arrival of rig in India, the rig was getting prepared for undertaking the work of GSPC is evident from the minutes of meeting held on 27/04/2010 between GSPC and Deep Drilling l Pte. Ltd. (Aban Offshore) the main points of which are as under: a) Aban informed that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2010 it was in India for 340 days hence the requirements of the treaty of rig being 183 days in India is satisfied and the assessee is deemed to have a PE in India as per provisions of the DTAA. ix. Having held that the assessee has a PE in India the provisions of section 44BBof the Act will come into play and 10% of the gross revenue received from GSPC will be the taxable income of the assessee in India. x. It is reiterated that for A.Y, 2010-11 the assessee had offered the revenue received from GSPC for a contract of the same nature u/s 44BB of the Act for taxation in India, wherein the period of operation was 4 days only. The Assessing Officer further observed that the assessee was also asked to submit the invoice vise revenue received from the GSPC, and the assessee vide letter dated 27.03.2014 has submitted the details asunder: Invoice Number Invoice date Invoice amount in USD Invoice amount in INR Description DD1/GSPC/01/10-11 03.12.2010 1103000.00 5,03,24,375 Mobilization Fee DD1/GSPC/02/10-11 01.01.2011 3274700.72 14,71,37,125 Drilling Revenue DD1/GSPC/03/10-11 01.02.2011 3362271.45 15,13,38,685 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ering services under the contract shall be excluded for calculating existence of PE in India was before the Uttarakhand High Court in case of DIT(IT) v. R & B Falcon Offshore Ltd. [(2014) 223 Taxman 266] wherein it has been held as follows : " Accordingly to the Tribunal, the word „used‟ has been sufficiently explained in the Agreement requiring no further explanation and, for that matter, there is no scope of entering into the Income Tax Act, inasmuch as, the word „used‟ has been used in conjunction of „ an installat6ion or structure for exploration or exploitation of natural resources and only if so used for a period of more than 120 days in 12 month period‟ and, thereby, made it absolutely clear that the Agreement meant user of installation and structure for exploration or exploitation of natural resources and not merely being ready for use." On carefully examining the detailed submissions made by the AR, I am of the considered view that appellant doses not have „PE‟ in India as the total number of days for which the rig has been deployed in India was only for 119 days which is less than the minimum number of 183 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....racting State." Reading of the above makes it clear that an enterprise shall be deemed to have a permanent establishment in contracting state to carry on business through that permanent establishment if it provides services or facilities in that state for a period of more than 183 days in connection with the exploration, exploitation or extraction of minerals oils in that state. In the present case we note that the drilling rig of the assessee was brought into India on 26.04.2010. Thereafter as evident from the minutes of meeting held on 27.04.2010 between GSPC as mentioned in page 4 of the A.O's order the Rig was undergoing necessary fabrication, upgradation & positioning to meet GSPC requirements and as proposed in their bid. Even at the cost of repetition we may gainfully refer to the said extract of the minutes of the meeting as under: - a) Aban informed that the Rig DDI is currently in anchorage in Kakinada and is undergoing necessary upgrades/repairs to meet GSPC requirements and a proposed in their bid. b) Aban was informed that they will have to arrange for suitable AHTS (two or three) to correctly position the Rig as per the requirement of GSPC and for....