AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 927
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.... 1.1 Whether on the facts and circumstances of the case, the Hon'ble DRP has erred in not appreciating that the terms services or facilities used therein are not defined and the two terms used are general in nature and therefore, once the payments take the character of FTS as defined u/s 9(1)(vii), they go outside the purview of section 44BB and have to be taxed at rates applicable to FTS u/s 115A/44DA of the Act. 1.2 Whether on the facts and in the circumstances of the case, the Hon'ble DRP has erred in holding that the revenues earned by the assessee on account of provision of services were in connection with prospecting etc of mineral oil and hence eligible for treatment u/s 44BB of the Act, without adjudicating the aspect of eligibility in terms of second limb of the exclusionary proviso (Explanation to section 9(1)(vii) of the IT Act, 1961) i.e. "for a project undertaken by the recipient" in terms of the proposition confirmed by Hon'ble Delhi High Court in CIT V Rio Tinto Technical Services [2012-TII-01-HC- DELINTL] 1.3 Whether on the facts and circumstances of the case, the Hon'ble DRP has erred in holding that the case of the assessee is covered by CB....
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....as to be taxed u/s 115A/44DA of the Act. 4.1 Whether on the facts and in the circumstances of the case, the Hon'ble DRP has erred in not appreciating that since sections 115A/44DA are special provisions for taxation of income in the nature of Royalties and FTS and if a special provision is made respecting a certain matter that matter is excluded from the general provision under the rule of "Generallia specialibus non derogant". 5. Whether on the facts and in the circumstances of the case, the Hon'ble DRP has erred in holding that sections l1SA and 44DA apply only to cases where the income by way of Royalty or FTS is earned by a non-resident by way of royalty or FTS from Government or an Indian Concern and where an income is received by a non-resident from another non-resident, the provisions of section 115A/44DA do not apply. 5.1 Whether on the facts and in the circumstances of the case, the Hon'ble DRP has erred in not appreciating the fact that sections 44DA/11SA enshrine the source rule of taxation and is intended to cover all the payments in the form of Royalties/FTS etc. where the source of such payments lies in India. 5.2 Whether on the facts and in th....
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....ect of services in connection with prospecting for or extraction or production of mineral oils and has to be taxed under the special provisions as envisaged under section 44 BB of the Act. It was also submitted by assesse that the provisions of section 44 DA and 115 A, would apply to a case where the income earned by a non-resident or a foreign company by way of royalty or FTS received from Government or any Indian concerns. Whereas in case of assessee under the contract with BHP payments have been received from another non-resident company and hence cannot be brought under the purview of section 44 DA. 2.4. DRP while dealing with the objections decided the issue in favour of assessee by holding that the income received by assessee during the year under consideration, on account of services rendered should be brought to tax by applying deemed profit rate of 10% under section 44 BB of the Act. 2.5. Ld. AO accordingly passed final assessment order as per the directions of DRP, against which the revenue is in appeal before us now. 2.6. Before us, Ld. CIT DR submitted that services rendered by assessee is not directly associated or even intrinsically linked with prospecting, extrac....
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....herein are more specific than what is contemplated in section 44 DA. 3.4. The submissions advanced by Ld.AR is that the income received by assessee represented income for rendering of services in the nature, as more particularly described in section 44 BB of the Act, whereas Ld. CIT DR advocated that income received would represent "fees for technical services", within the meaning of Explanation 2 to Section 9 (1) (vii) of the Act. It is observed that it is not the case of revenue that assessee has a permanent establishment in India and therefore in our considered opinion section 44 DA would not be of any relevance. 3.5. Now coming to the applicability of Explanation 2 to section 9 (1) (vii) of the Act which defines 'fees for technical services' to mean any consideration received for rendering of any managerial, technical or consultancy services including the provision of services of technical or other personnel but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient. In our considered view this issue has been addressed at length by Hon'ble Supreme Court in the case of Oil and Natural Gas Corporation Ltd vs. CIT (supra....
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....any would be chargeable to tax under the provisions of Section 44BB and not Section 44D of the Act. We do not see how any other view can be taken if the works or services mentioned under a particular agreement is directly associated or inextricably connected with prospecting, extraction or production of mineral oil. Keeping in mind the above provision, we have looked into each of the contracts involved in the present group of cases and find that the brief description of the works covered under each of the said contracts as culled out by the appellants and placed before the Court is correct. The said details are set out below. S. No. Civil Appeal No. Work covered under the contract 4321 Drilling of exploration wells and carrying out seismic surveys for exploratory drilling. 740 Drilling, furnishing personnel for manning, maintenance and operation of drilling rig and training of personnel. 731 Drilling, furnishing personnel for manning, maintenance and operation of drilling rig and training of personnel. 1722 Furnishing supervisory staff with expertise in operation and management of Drilling unit. 729 Capping including subduing....
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....sp; 2008 Expert advice on the device to clean insides of a pipeline. 2795 Feasibility study of rig to assess its remaining useful life and to carry out structural alterations. 925 Engineering analysis of rig. 1519 Imparting training on cased hold production log evaluation and analysis. 1533 Training on well control. 1518 |Training on implementation of Six Sigma concepts. 1516 Training on implementation of Six Sigma concepts. 6023 Training on Drilling project management. 2796 Training in Safety Rating System and assistance in development and audit of Safety Management System. 1239 To develop technical specification for 3D Seismic API modules of work and to prepare bid packages. 1527 Supply supervision and installation of software which is used for analysis of flow rate of mineral oil to determine reservoir conditions 1523 Supply, installation and familiarization of software for processing seismic data. The above facts would indicate that the pith and substance of each of the contracts/agreements is inextricably connected with prospecting, extraction or production of min....