TaxTMI 
TaxTMI 
2017 (10) TMI 1426
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....s fees for technical services and covered under section 115A of the Income tax Act, 1961 instead of applying the provisions of section 44BB of the Income-tax Act, which is a special provision for computing profits and gains in connection with the business of exploration etc of mineral oils. 2. Without prejudice to the above Appellant submits that A.O has erred in holding that BJ services has given a sub contract to the Appellant who has agreed to perform the services indirectly for ONGC and wrongly stated that the payments are made by ONGC to Appellant. These observations are factually incorrect and further contrary to the various judicial decisions which were cited by the Appellant, therefore the said order is bad in law and deserves to be quashed. 3. Without prejudice to the above Appellant submits that learned Assessing officer has failed to appreciate that sec. 44BB of the Income tax act overrides all other provisions of the Income tax act, being a special provision specifically for the purpose of assessee engaged in the business of prospecting for, or extraction or production of mineral oils. 4. Without prejudice to the above Appellant submits that Appellant is a non res....
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....pany (Middle East) Ltd. was carrying out Fracturing Flow Back Services and various operations at the Oil rigs pursuant to the contract with ONGC, therefore, the assessee who was sub-contracted the said work by B.J Services was indirectly performing the services for ONGC. The AO further held a conviction that Fracturing Flow Services were technical services that were provided by the assessee for prospecting extraction or production of mineral oil. The A.O further observed that the certificates issued under Sec. 197(1) clearly provided for deduction of tax at source @10% under Sec. 194J on the gross amount payable by B.J Services Company (Middle East) Ltd to the assessee in respect of fees for technical services. The A.O further took note of the fact that even the TDS certificates filed by the assessee pertained to deduction of tax at source on fees for technical fees under Sec. 194J. 4. Thus, the A.O in the backdrop of the aforesaid facts called upon the assessee to show cause as to why the amount of Rs. 2,65,46,753/- received by it from B.J Services Company (Middle East) Ltd may not be treated as fees for technical services and brought to tax as per the provisions of Sec. 115A of ....
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....ng Fracturing Flow Back Services by the assessee was of a specific nature as envisaged under Sec. 44BB, therefore, the computation provisions of Sec. 44BB would prevail over the provisions of Sec. 44DA. It was further stated that the provisions of Sec. 44BB would not apply in a case where the provisions of Sec. 42 or Sec. 44DA or Sec. 115A or Sec. 293A applied for the purpose of computing profits and gains or any other income referred to in those sections. (iii) That as per the assessee the provisions of Sec. 115A were not applicable in its case as the assessee had not entered into an agreement with Government or an Indian concern, but with a non-resident, viz. B.J Services Company (Middle East) Ltd. (iv) That as the income derived by the assessee from the activity of extraction or production of mineral oil at the oil rigs from a Foreign company was liable to be assessed under the provisions of Sec. 44BB of the 'Act', therefore, the amount of Rs. 26,54,675/- (i.e 10% of gross receipts of Rs. 2,65,46,753/-) was rightly offered for tax by the assessee. 6. The DRP after deliberating on the contentions of the assessee was however not persuaded to accept the same. The DRP r....
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....ssed under Sec. 143(3) r.w.s 144C(13), dated. 27.01.2015. The A.O following the directions of the DRP, brought the amount of Rs. 2,65,46,753/- received by the assessee from B.J Services Company (Middle East) Ltd for rendering of Fracturing Flow Back Services to tax as per the provisions of Sec. 115A of the 'Act'. 8. Aggrieved, the assessee had assailed before us the order passed by the A.O under Sec. 143(3) r.w.s 144C(13). The ld. Authorised representative (for short 'A.R') for the assessee at the very outset of the hearing of the appeal relied on the judgment of the Hon'ble Supreme Court in the case of Oil & Natural Gas Corpn. Ltd. v. CIT [2015] 376 ITR 306/233 Taxman 495/59 taxmann.com 1, and submitted that the Hon'ble Apex Court had held that prospecting for or extraction or production of mineral oil is not to be treated as technical services for the purpose of Explanation 2 of Sec. 9(1)(vii), and would rather be covered by Sec. 44BB of the 'Act'. It was submitted by the ld. A.R that as Sec. 44BB contemplates special and specific provisions for computing profits and gains of a non-resident as regards the business of providing services or faciliti....
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.... revenue relied on the Explanation 2 of Sec. 9(1)(vii), and submitted that the same clearly excluded any amount received by an assessee from assembly, mining or like project undertaken from the sweep of 'fees for technical services'. 9. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that the assessee ,viz. Production Testing Services Inc., Texas, USA, which is a Foreign company incorporated in USA, is engaged in providing fracturing flow back services to oil companies. We find that B.J Services Company (Middle East) Ltd., a company incorporated in Scotland and having a project office in Mumbai was awarded a contract for Fracturing Flow Back Services by Oil and Natural Gas Commission (for short 'ONGC'). That B.J Services Company (Middle East) Ltd. in turn awarded the contract to the assessee, vide agreement dated. 15.07.2007. We find that the assessee pursuant to the sub-contract awarded by B.J Services Company (Middle East) Ltd. had rendered Fracturing Flow Back Services and various operations at the Oil rigs. We have deliberated on the terms of the contrac....
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....s technical services for the purpose of Explanation 2 of Sec. 9(1)(vii), therefore, it can safely be concluded that the payments received by the assessee from rendering of Fracturing Flow Back Services for extraction or production of mineral oil would not fall within the realm of 'fees for technical services'. We thus, are of the considered view that as the precondition for invoking of Sec. 115A is in itself found to be missing, therefore, the same would not be attracted to the case of the assessee. We have further given a thoughtful consideration to the contention of the assessee that as it had received the amounts for rendering the services of Fracturing Flow Back Services from B.J Services Company (Middle East) Ltd., which itself was a foreign company, viz. a company incorporated in Scotland ,therefore, the said sums not having been received by the assessee from Government or an Indian concern, therefore, for the said reason also excluded the applicability of the provisions of Sec. 115A and Sec. 44DA. We are of the considered view that as observed by us hereinabove, the assessee had received the amount from B.J Services Company (Middle East) Ltd. and not from ONGC, there....