TaxTMI 
TaxTMI 
2025 (11) TMI 465
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.... case are that, the Assessee being a Company incorporated under the laws of Singapore, engaged in the business of engineering, design and consultancy services, supporting mining, oil and gas extraction and offshore exploration activities, and renting of jack up rigs for drilling operations in India. The Assessee had entered into a Charter Agreement dated 15/10/2019 with Jidnal Drilling and Industries Ltd., for giving on hire the drilling unit (jack up drilling rig) for re-hiring it to ONGC on charter hire basis for the purposes of oil and gas drilling operations in the offshore waters of India only. During the year under consideration, the Assessee had derived rig hire charges of Rs. 65,12,35,200/- which were offered to tax u/s 44BB of the ....
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....of Section 44BB of the Act, therefore, the provisions of Section 9(1)(vi) cannot be made applicable. Thus, sought for allowing the Appeal. 6. Per contra, the Ld. Department's Representative relying on the orders of the Lower Authorities, sought for dismissal of the Appeal. 7. We have heard both the parties and perused the material available on record. The Hon'ble High Court of Delhi in a case similar to the Assessee in CIT, International Taxation Vs. UMW Sher (L) Ltd., [2024] 160 taxmann.com 695 (Delhi), vide order dated 04/03/2024, observing that rigs were given on hire by the Assessee therein to M/s Jaybee Energy Pvt. Ltd. in respect of a drilling contract awarded by M/s Oil India Ltd., held that since giving rigs on hire fo....
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....rcumstances of the case, Ld. ITAT erred in allowing the appeal of the assessee by ignoring the fact that in the instant case the Assessee, M/s UMW Sher (1) Ltd. is not engaged in prospecting the exploration of oil as the contract of such prospecting/exploration was not with it and therefore, is beyond the scope of section 44BB? 2.5 Whether on the facts circumstances of the case, Ld. ITAT erred in holding that the income of the assessee from non PSC partner was a business receipts earned in connection to mineral exploration whereas in the instant case, the receipts in hands of the non-resident is clearly not a business receipts and accordingly such receipt is clearly not a business receipt and accordingly such receipt are not liable....
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....icer at the time of framing the draft assessment orders has treated it as FTS, learned DRP is of the view that the receipts are in the nature of royalty under section 9(1)(vi) of the Act. 7. It was in the aforesaid backdrop that the assessee appears to have contended that Section 44BB of the Income Tax Act. 1961 ['Act'] stood attracted. We note that Explanation 2 to Section 9(1)(vi) of the Act while defining the word "royalty" provides as under- "Explanation 2-For the purposes of this clause, "royalty" means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head "Capital gains) for- (i)..................... ....