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2021 (12) TMI 1360
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....her on the facts and In the circumstances of the case and in law, the CIT(A) has erred in placing reliance on the judgment of the Hon'ble Supreme Court in the case of ONGC vs. CIT (Civil Appeal No. 731 of 2007) by failing to appreciate that the issue of taxability u/s 44BB vs. 44DA of the Act was not there before the Apex Court, and that the case before the Apex Court pertained to the AY 1985-86, and involved the issue of taxability u/s 44BB vs. 44D of the Act. (iii) Whether on the facts and in the circumstances of the case and in law, the CIT (A) has erred in failing to note that the Memorandum to Finance Bill 2010 makes it clear that any service which falls within the ambit of 44DA, even if it is in connection with prospecting for, or extraction or production of mineral oils as stipulated in section 44BB, has to be assessed u/s 44DA of the Act. (iv) Whether on the facts and in the circumstances of the case and in law, the CIT' (A) has erred in ignoring the nature of activities and scope of work in respect of the core pressure & wellbore studies, post stack inversion studies, data processing & maintenance services etc provided by the assessee lead to the infa....
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.... CIT Vs. Halliburton offshore Services Inc. (300 ITR 265). (x) Whether on the facts and in the circumstances of the case and in law, the CIT (A) has erred in holding that receipts on account of service tax are not includible in gross revenue of the assessee for the purpose of computation of profits under the provisions of section 44BB of the I.T. Act, 1961. (xi) Whether the CIT (A) has erred in not appreciating the fact that section 44BB of the Act is a self-contained code providing for computation of profit at a fixed percentage of gross receipts of the assessee and all the deductions and exclusions from the gross receipts are deemed to have been allowed to the assessee. (xii) Whether the CIT (A) has erred in not appreciating the fact that once the receipts are offered to tax u/s 44BB of the Act which provides for computation of profits on gross basis, there is no scope for computing or re-computing the profits by excluding any part of the receipts from the total turnover as the same would amount to defeating the, very purpose of providing for a presumptive scheme of taxation u/s 44BB of the Act and obviating the need for maintaining accounts for individ....
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.... to tax u/s 44BB of the Act. • The appellant wishes to submit that the seismic survey is the nature of 'mining or like project' and squarely covered within the ambit of section 44BB of the Act. The appellant places reliance on the following judicial precedents wherein the revenue from seismic survey activity has been held to be includible in the revenue chargeable to tax u/s 44E5B of the Act: Adjudication 6. The appellant has entered into several contracts earning revenues, details of which is tabulated between Sl. no. 1 to 121 of the table inserted between page 1 to 10 of the assessment order. The assessing officer accepted the revenue mentioned between SI No. 1 to 9 and 11 to 112 as taxable u/s 44BB of the Act. The revenue in respect of the contracts mentioned at serial number 113 to 121 in respect of post-stack inversion study, core pressure and well-bore study, data processing and maintenance services were considered by the AO in the nature of fees for technical services u/s 9(1)(vii) of the Act. The Assessing Officer treated these receipts as per provisions of section 44DA of the Act as 'fees for technical services' as defined in section 9(1) (vii) of the Ac....
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....al of the judgment of Hon'ble Supreme court of India in civil appeal number 731 of 2007 in the case of ONGC Ltd vs. CIT and others it is found that the issue before the Hon'ble court was to decide whether certain services in connection with prospecting, extraction or production of mineral oil is chargeable to tax as "fees for technical services" under section 44D read with Explanation 2 to Section 9(1)(vii) of the Income Tax Act or will such payments be taxable on a presumptive basis under section 44BB of the Act"? The relevant portion of the judgment is reproduced as below: "8. A careful reading of the aforesaid provisions of the Act goes to show that under Section 44BB (1) in case of a nonresident providing services or facilities in connection with or supplying plant and machinery used or to be used in prospecting, extraction or production of mineral oils the profit and gains from such business chargeable to tax is to be calculated at a sum equal to 10% of the aggregate of the amounts paid or payable to such non-resident assessee as mentioned in Sub-section (2). On the other hand, Section 44D contemplates that if the income of a foreign company with which the government ....
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....oject' or 'like projects' occurring in Explanation 2 to Section 9 (1) (ii) of the Income Tax. Act would cover to Section 9(1) (vii) 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. 3. In view of the above opinion, the consideration for such services will not be treated as fees for technical services for the purpose of Explanation 2 to Section 9(1) (vii) of the Income-tax Act, 1961. Payments for such services to a foreign company, therefore, will be income chargeable to tax under the provisions of section 44BB of the Income-tax Act, 1961 and not under the special provision for the taxation of fees for technical services contained in section 115A read with section 44D of the Incometax Act, 1961. 4. A copy of the statement of the case dated 16.3.1990 (without annexures) and a copy of the Attorney General's opinion dated 13.5.90 are enclosed. 5. These instructions may brought to the notice of all the officers in your region. [F. No. 500/6/89-FTD dt.22.10.90 from CBDT]" 10. Before us the opinion of the learned Attorne....
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....petroleum except pursuant to a Petroleum Exploration License (PEL) granted under the Rules and no person can mine petroleum except in pursuance of a Petroleum Mining License (PML) granted under the Rules. It is pointed, out that under Rule 7 of the Rules of 1959 a petroleum mining license (PML) entitles the licensee to carry out construction and maintenance in and on such land, works, buildings, plants, waterways, roads, pipelines etc. as may be necessary for full enjoyment of the PML. On the said basis it is argued that rendering any service in connection with prospecting and extraction is an integral part of mining and. that the expression "mining" in the Explanation 2 to Section 9(1) of the Income Tax Act, in the absence of any definition under the Income Tax Act, has to be understood as per the provisions of the Oil Fields (Regulation and Development) Act, 1948 read with the Petroleum and Natural Gas Rules, 1959. 12. Opposing the contentions advanced, on behalf of the appellants, Shri. Gurukrishna Kumar, learned senior counsel for the Revenue has urged, that the opinion of the Attorney General relied upon and the CBDT Circular has no relevance to the present case inasm....
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....plated under an agreement, executed with a nonresident assessee or a foreign company, with mining activity or mining operations that would be crucial for the determination of the question whether the payments made under such an agreement to the non-resident assessee or the foreign company is to be assessed und.er Section 44BB or Section 44D of the Act. The test of pith and substance of the agreement commends to us as reasonable for acceptance. Equally important is the fact that the CBDT had accepted the said, test and had in fact issued a circular as far back as 22.10.1990 to the effect that mining operations and the expressions "mining projects" or "like projects" occurring in Explanation 2 to, Section 9(1) of the Act would cover rendering of service like imparting of training and carrying out drilling operations for exploration of and extraction of oil and natural gas and hence payments made under such agreement to a non-resident/foreign company would be chargeable to tax under the provisions of Section 44BB and not Section 44D of the Act. We do not see hour any other view can be taken if the works or services mentioned under a particular agreement is directly associated or inext....
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....nture Exploration program. 22. 1531 Review of sub-surface well data, provide repair plan of wells and supervise repairs. 23. 733 Repair of gas turbine, gas control system and inspection of gas turbine and generator. 24. 741 Repair and inspection of turbines. 25. 737 Repair, inspection and overhauling of turbines. 26. 736 Inspection, engine performance evaluation, instrument calibration and inspection of far turbines. 27. 1522 Replacement of choke and kill consoles on drilling rigs. 28. 1521 Inspection of gas generators. 29. 1515 Inspection of rigs. 30. 2012 Inspection of generator. 31. 1240 Inspection of existing control system and deputing engineer to attend to any problem arising in the machines. 32- 1529 Inspection of drilling rig and verification of reliability of control systems in the drilling rig. 33. 2008 Expert advice on the device to clean insides of a pipeline. 34. 4 2795 Feasibility study of rig to assess its remaining useful life and to carry out structural alterations. 35. 925 Engineering analysis of rig. 36. 1519 Imparting training on....
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....hat determines taxability under section 44 BB and 44DA of the Act. 13. On examination of several sources available on the public domain it was found that post-Stack inversion transforms a single seismic data volume into acoustic impedance through integration of the assessment data, well data and a basic stratigraphic interpretation. The data input to the post stack inversion project typically consists of a set of wells containing sonic and density logs, optional check shots, formation markers and aviation service, a series of interpreted horizons and a seismic data volume. It generates acoustic impedance volumes from 2D or 3D seismic. 14. On perusal of the material on wellborn analysis it is found that "Wellbore study" is done to avoid drilling related failures. Many drilling related failures are caused by unstable boreholes, poor hole cleaning or stuck BHA and casing, Wellbore study identifies the wellbore instability, along with the mode of failure and is critical in correcting and reducing the cost associated with it. A range of measures based on wellbore acoustics and seismic as well as laboratory measurements assess the significance of the surroundings and reduces the ri....
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.... processing seismic data. 2. Contract of supply, supervision and installation of software which is used for analysis of flow rate of mineral oil to determine reservoir conditions. ....................... 8. In the case in hand also the software is supplied and maintained were related to various activities of exploration including for reservoir navigator, up-gradation of the Geo log multimin etc. 9. In view of the above, respectfully following the decision of the Hon'ble Supreme Court, in the case of ONGC versus CIT (supra) and the decision of the Tribunal (supra) in the case of the assessee itself, we hold that the services provided with assessee falls within the ambit of section 44BB of the Act." 19. In view of the above discussion and respectfully relying upon the decision of Hon'ble Supreme Court in the case of ONGC versus CIT (supra) and the decision of Ld ITAT, Delhi in the case of Paradigm Geophysical Pty limited (ITA No. 2753/Del/ 2016) it is held that the receipts of the Assessee on account of post-stack inversion study, core pressure and wellbore study, data processing and maintenance services were taxable under section 44 BB of the A....