2017 (10) TMI 322

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....two such platforms on 13^th January and 22^nd March of 1983 respectively. Immediately after the submission and acceptance of these tenders, on 31^st March, 1983, a Notification was issued by the Government of India extending the Income Tax Act, 1961 to the Continental Shelf and Exclusive Economic Zone of India with effect from 1^st April, 1983, in respect of income derived by every person inter alia from prospecting for, or extraction or production of mineral oil in the Continental Shelf or Exclusive Economic Zone of India. Fomal contracts were entered into between the Oil and Natural Gas Corporation Ltd.["ONGC"] and the appellant on 16^th December, 1983. For the purpose of this appeal, two clauses are material and are set out below: "13....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ting, extraction or production of mineral oil, was notwithstanding anything to the contrary contained in various sections of the Income Tax Act, liable to pay income tax on a sum equal to 10% of the aggregate of the amounts specified in sub-section (2), which were then deemed to be profits and gains of such business chargeable to tax under the head 'profits and gains of business' or profession. To complete the narration of facts, the work under the two contracts was done during the period 1984-85 to 1987-88. As a result of work done in this period, the Income Tax Department taxed the sub-contractor M/s McDermott International Incorporated after reopening its assessments to tax under Section 148 of the Act. As a result, the sub....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d 10^th March, 1999 stated that though Clause 17.3 did apply on the facts of the case, yet Clause 13.2.8 interdicted the payment of any amounts on account of the sub-contractor's liablity. On the other hand, Justice D.M. Rege, learned Arbitrator, by his separate award dated April, 1999 agreed with Shri Chandrashekhar on all points except one, namely, the effect of Clause 13.2.8 on Clause 17.3. According to him, Clause 13.2.8 would not come in the way of ONGC having to pay amounts paid by the sub-contractor by way of tax because of a change in law. The learned Arbitrator held: "Firtly, the said Cl.13.2.8 is a part of Cl.13 dealing with Contract price payment/Discharge Certificate and was not connected with the subject covered by....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rnment of July, 1987, and that this being the case, Clause 17.3 itself would not be attracted, as there was no change in law under which such tax had to be paid. The tax had to be paid in any case under the provisions of Sections 5 and 9 of the Income Tax Act and accordingly, the claim of the appellant was rejected. However, before concluding the award the learned Umpire held: "35. Before concluding the discussion on the aforesaid point, it would be useful to refer to clause 13.2.7 of the main Contract between the Claimants and the Respondents, it reads thus: "13.2.7. the Company shall not be responsible/obligated for making any payments or any other related obligations under this Contract to the Contractor's sub-co....