2019 (2) TMI 1513

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....234B of the Act. 3. Briefly stated, the facts of the case are that the appellant company is a company incorporated under the laws of Italy. During the year under consideration, the appellant is a non resident company and has earned revenue from providing services to ENI India Ltd, a company involved in prospecting, extraction and production of mineral oil. For this purpose, it has entered into the service agreement with ENI India Ltd. The assessee offered revenue to tax in India under the provisions of section 44BB(1) of the Act as it believes that it is engaged in the business of providing of services in connection with prospecting for, or extraction or production of minerals oils to ENI India Ltd. 4. During the course of scrutiny assessment proceedings, the A.O examined the services rendered by the assessee and found that these services are removed from the core activities that are incidental and connected with prospecting for, or extraction or production of mineral oils and in that sense, these services are not covered under the provisions of section 44BB of the Act. The Assessing Officer was of the firm belief that the revenues of the assessee are of the nature of technic....

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.... services. The rule of res judicata does not apply to assessment proceedings under the Income Tax Act. Although the AO, in the earlier assessment year had allowed taxability u/s 44BB, he was justified in applying the correct law in the current assessment year, instead of perpetuating a mistake. The principle of consistency does not operate against law. On the contrary, Sec 44DA is also a specific provision and is not overruled by S.44BB. The CBDT has clarified that even branch of a foreign company is an Indian concern for the section 44BB. The CBDT instruction No 1862 dated 22.10.1990 is of no help to the assessee. The Instruction cannot be applied to take a case Put of the ambit of S. 115A and place it in S.44BB. In view of above and the reasoning given in the impugned order, we are of the considered view that the AO is justified in holding that the assessee's services do not fall in the purview of section 44BB. In view of various judicial pronouncements and various Articles of DTAA, we find merit in the AO's finding that the FTS has to be assessed as business income. Accordingly, we decline to interfere with the AO's finding on this score." 6. Before us, the ld. co....

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....e provision does not create any discrimination between the person who actually does the activity of prospecting for or extraction or production, and the person who renders services in connection therewith, the section cannot be narrowly construed." 19. It would not be out of place to refer to the decision of the co-ordinate bench in assessee's own case in ITA No. 4284/DEL/2013. Though the said decision of the co-ordinate bench was in respect of the order framed u/s 263 of the Act, but the findings are very much relevant to the case in hand. The relevant extract of the said decision of the co-ordinate bench reads as under: "In the instant case, ground for which the DIT assumed jurisdiction u/s 263 of the Act are that provisions of section 44BB of the Act does not cover second leg contract and the said section is not application to sub-contracts engaged in providing technical services to contractors for those undertaking projects in oil exploration, that income received by the assessee was clearly covered u/s 44DA of the Act and hence not taxable u/s 44BB of the Act and that the A.O has not taxed out country receipts and that contract was a composite one and the A.O in the orde....

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.... fiction of mineral oils. Having regard to the above we are of the considered opinion that the fetter assumed by authorities below while interpreting the provisions of Section 44BB of the Act are manifestly it and there is nothing in the said provision so as to disentitle a sub-contractor from invoking the said provision. Accordingly we do not find any fault in the claim of the assessee that revenues received under the charter agreements with CGG for providing two seismic survey vessels are in consideration with prospecting extractions or production of mineral oils and therefore taxable u/s 44BB of the Act." 58. The various other decisions relied on by the ld. counsel for the assessee also support the proposition that the provision of section 44BB of the Act are held to be applicable to the tax payer being a second leg contractor/sub-contractor. Further, it has been held in various decisions including the decision of the Hon'ble Delhi High Court in the case of DIT Vs. OHM Ltd. reported in 352 ITR 406 that the services rendered in relation to extraction and production of mineral oil are taxable u/s 44BB of the Act." 9. Respectfully following the findings of the co-ordinate....

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....ur understanding of the law, as per the provisions of section 234B of the Act, the assessee who is liable to pay advance tax u/s 208 of the Act will be liable to interest u/s 234B of the Act if he fails to pay such tax or advance tax paid by him falls short of 90% of the assessed tax. As per provisions of section 208 r.w.s 209(1) of the Act, advance tax payable has to be computed after reducing from the estimated tax liability the amount of tax deductible/ collectible at source on income which is included in computing the estimated tax liability. Such balance tax liability is the advance tax payable under section 208 of the Act. 26. The Hon'ble Delhi High Court in the case of DIT v. GE Packaged Power Inc. 373 1TR 65, held that no interest under section 234B of the Act can be levied on the assessee-payee on the ground of non-payment of advance tax because the obligation was upon the payer to deduct the tax at source before making remittances to them. The relevant extracts of the decision are reproduced hereunder: "22. This Court, therefore, holds that Jacobs (supra) applies in such situations; Alcatel Lucent (supra) can be explained as a decision turning upon its fac....