TaxTMI 
TaxTMI 
2021 (10) TMI 1333
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....eating the consideration received by the Appellant as fees for technical services under section 9(1 )(vii) of the Income-tax Act, 1961 ('the Act'). 2. On the facts and in the circumstance of the case and in law, the Ld. AO and the Ld. CIT(A) erred in concluding that the receipts in connection with services provided by the Appellant to Leighton India Private Limited ('Leighton India') as listed at SI. No. 23 and 24 of the scope of work in the contract are in the nature of fees for technical services. 3. On the facts and in the circumstance of the case and in law, the Ld. AO and the Ld. CIT(A) erred in not appreciating that the receipts referred in Ground No. 1 and 2 above should be taxed as per the provisions of section 44BB of the Act and not under section 44DA of the Act." 2. The facts in brief are that Intecsea Asia Pacific Sdn Bhd ('Intecsea AP' the Appellant') is a company incorporated under the laws of Malaysia and is engaged in the business of providing engineering services to companies engaged in the business of prospecting/ extraction/ mining of mineral oils, natural gas etc. During the AY 2015-16, the Appellant had provided engineering cons....
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....ey data and provide design updates 3. Appraisal of data & design brief preparation 4. Pipeline protection/stability design 5. Pipeline free span analysis 6. Offshore pipeline crossing design 7. Pipeline cathodic protection design 8. Pipe lay feasibility study 9. Pipeline segment head insulation design 10. Pipeline purchase specification, material requisitions/RFQ for PS items. 5. As per the scope of work of contract the assessee is engaged in the work of progress reporting, preparation for project completion schedule, preparation of specifications, review and approval of detailed design, supervision, review of additional engineering, design and engineering of submarine pipeline, pre-engineering survey, review survey data and provide design, appraisal of data and stability design, etc. For pipeline design, pro control optimization flows modeling, etc., software are used and work is done using computer simulators like PIPESIM/OLGA. Based upon this information, models are created which are further given as input to the execution partner/developer/depaihnent. In present contract the assessee has been hired to pr....
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....pletion of shallow water facilities first and deep water facilities at a later stage as compared to earlier single completion of total project. Suggest selection of chemicals & its dosages; 7. Provide a budget estimate for the offshore installation contractor for the remaining offshore work and the total project completion cost including drilling and well completion; 8. Preparing the bid document defining the scope and responsibilities for appointing an installation contractor for the deep water works; 9. Review of the bid document prepared by Technip KTI for appointing an installation contractor for the deep water works; 10.Evaluation of offers received from the installation contractors for shallow and deep water works; 11. Provide offshore construction supervision during installation & commissioning of the shallow and deep water facilities works; 12. Attend meetings related to project issues including interface issues. 13.Balance engineering, if any, related to pipelines. 14.Review of additional engineering required to comply with requirement of r Flare Tower, DPDU/Glycol dehydration unit & its associated pow....
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....the above discussion, it is held that the receipts on account of PMC services provided by the appellant to ONGC are very much the fees for technical sendees and not excluded from the purview of section 9(l)(vii) of the Act as per Explanation 2 of the said section as these services are not provided for any construction, assembly, mining or like projects. Hence, I find no infirmity in the order of the AO in treating these receipts from ONGC under section 44DA of the Act. 5.18 Further, on examination of the scope of work in the agreement between the appellant and M/s Leighton India, it is found that the scope of work in the case of Leighton India is as under: " The Consultant scope of work shall include the entire Design & Engineering of submarine pipeline (rigid, coiled and flexible) responsibility for both the Season (I & II) related but not limited to the following - 1. Providing inputs for pre-engineering survey 2. Review Survey Data and Design Brief Preparation 3. Appraisal of Data & Design Brief Preparation 4. Pipeline Steady State Hydraulic Analysis 5. Pipeline Wall Thickness Selection/Confirmation 6. Pipel....
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....ese services are in the nature of Managerial services and therefore the receipts on account of these two services provided to M/s Leighton India are required to be included in the receipts to be taxed u/s 44 DA of the Act. 5.21 In view of the above discussion, it is held that the receipts on account of services provided to M/s Leighton India ( as per SI No. 1 to 22 of scope of work) are in respect of the Design and Engineering of submarine pipeline and, therefore, taxable under section 44 BB of the Act. Remaining receipts, on account of services provided as per SI No. 23 & 24 of the scope of work, are to be taxed u/s 44 DA of the Act. 5.22 In view of the above discussion, it is held that the entire receipts of the Appellant in the case of ONGC are taxable under section 44DA the Act. Receipts from M/s Leighton India is taxable under section 44BB and section 44DA of the Act, as per the discussions between Para 5.21 above. The Grounds of Appeal No. 1, 2 & 3, are therefore, partly allowed." 8. We have heard both the parties and also perused the relevant finding of the impugned order as well as material preferred to before us. During the relevant assessment year the....
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....he works or services mentioned under a particular agreement is directly associated or inextricably connected with prospecting, extraction or production of mineral oil." 9. Ld. Counsel Shri Ajit Jain before us submitted that the the scope of services covered under the ONGC ruling were similar to those rendered by the Appellant. The Appellant also relied upon the Instruction issued by Central Board of Direct Taxes No 1862 dated 22 October 1990, wherein the question whether prospecting for, or extraction or production of, mineral oil can be termed as 'mining operations, was referred to the Attorney General of India for his opinion. The Attorney General has opined that such operations are mining operations and the expressions 'mining project' or 'like projects' occurring in Explanation 2 to Section 9(1) (ii) of the Income Tax Act would cover rendering of services like imparting of training and carrying out drilling operations for exploration or exploitation of oil and natural gas. 10. Further, relying on the provisions of section 44BB of the Act, he submitted that the services or facilities provided to ONGC and Leighton India were in connection with prospectin....
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....rine Geology Services LLP, UK In Re [(2016) 73 taxmann.com 107] (AAR); • Pride Offshore International LLC vs ADIT [(2015) 59 taxmann.com 23] (ITAT Delhi) 13. Thereafter Ld. Counsel drew our attention to the relevant facts and the findings of the Ld. CIT(A) and the agreements entered with ONGC and Leighton India submitted that the issue stands squarely covered by the decision of the Hon'ble Supreme Court in the case of ONGC and the receipts ought to have been taxed u/s 144BB of the Act. 14. Ld. DR on the other hand submitted that in view of the amendment vide Finance Act 2010 and the decision of Hon'ble Delhi High Court in the case of Paradigm Geophysical Pty Limited cannot be treated as same. 15. From the perusal of the services and the nature of scope of work, we find that duties carried out by the appellant on contract with ONGC in fact has mining activity which was excluded from the definition of FTS u/s 9(1)(vii) as they are essential to the development and exploration of the oil and gas fields of ONGC. These services ostensibly is to be regarded as exclusion to FTS under section 9(1)(vii) and such activities need not itself be of mining or like nature so ....