M/s. Fugro Geoteam AS, New Delhi V. ADIT, Dehradun

CO 194/DEL/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1415 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUJ ARORA
• Assessee Lawyers: SURAJ NANGIA CAS
• Keywords: Depreciation; Permanent establishment
• Section: 143(3); 142(1); 234B; 148; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B: NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5928/DEL./2013 (ASSESSMENT YEAR : 2010-11) ADIT, INTERNATIONAL TAXATION, VS. M/S. FUGRO GEOTE AM AS, DEHRADUN. C/O M/S. NANGIA & CO., CAS 75/7, RAJPUR ROAD, DEHRADUN 248 001. (PAN : AADFC8178) CO NO.194/DEL/2014 (IN ITA NO.5928/DEL./2013) (ASSESSMENT YEAR : 2010-11) M/S. FUGRO GEOTEAM AS, VS. ADIT, INTERNATIONAL TA XATION, C/O M/S. NANGIA & CO., CAS DEHRADUN. SUITE 4A, PLAZA M 6, JASOLA, NEW DELHI-110 025. (PAN : AADFC8178) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI AMIT ARORA & SURAJ NANGIA, CAS REVENUE BY : SHRI ANUJ ARORA, CIT DR DATE OF HEARING : 15.10.2015 DATE OF PRONOUNCEMENT : 24.11.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : 2 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJEC TION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME-TAX (APPEALS)-II, DEHRADUN DATED 26.08.2013 FOR THE ASS ESSMENT YEAR 2010-11. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVI DING GEOPHYSICAL SERVICES TO THE OIL AND GAS EXPLORATION INDUSTRY. DRAFT ASS ESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION I.E. 2009-10 UNDER SECTION 143( 3) / 144C (1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WAS PASSED ON 11.03.2012 ON A TOTAL INCOME OF RS.57,24,29,240/-. THE SAID DRAFT ASSESSM ENT ORDER WAS AS UNDER :- 'RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30.0 9.2011 DECLARING TOTAL INCOME OF RS.22,96,37,533/-. THE CASE WAS PROCESSED UNDER SECTION 143(1). THE CASE WAS SELECTED UNDER SCRUTINY BY CASS. ACCOR DINGLY NOTICE UNDER SECTION 143(2) WAS ISSUED ON 06.08.2012 AND SERVED UPON THE ASSESSEE. SUBSEQUENTLY NOTICE UNDER SECTION 142(1) WAS ISSUED ON 20.11.2012 ALONGWITH QUESTIONNAIRE. FURTHER NOTICE UNDER SECTION 142(1) WAS ISSUED ON 06.02.2013. IN PURSUANCE TO THE VARIOUS NOTICES AND DUE OPPORTU NITIES OF HEARING, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, SHRI R.P . EASWARAN, FCA AND SHRI ITESH DODHI, CA FROM NANGIA & CO. ATTENDED THE PROC EEDINGS FROM TIME TO TIME AND SUBMITTED WRITTEN REPLIES DATED 29.11.2012 ; 12.12.2012 & REPLY DT.08.03.2013. THE SUBMISSIONS OF THE ASSESSEE WERE CAREFULLY PERUSED AND THE CASE WAS HEARD. 2.1 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAD ENTERED INTO TWO CONTRACTS WITH OIL AND NATURAL GAS CORPORATION LTD. FOR THE ACQUISITION AND PROCESSING OF SEISMIC DATA IN RESPECT OF WHICH THE WORK WAS EXECUTED DURING THE RELEVANT ASSESSMENT YEAR. THE AO HAS GONE THROUGH T HE CONTRACTS ENTERED INTO BY THE ASSESSEE AND HAS REPRODUCED THE SCOPE AND OB JECT OF THE WORK TO BE PERFORMED IN RESPECT OF THE CONTRACTS IN HIS ORDER, WHICH ARE REPRODUCED AS UNDER :- 3 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 CONTRACT NO.MR/WOB/MM/GP/3D-VESSEL/SC/37/2006EB-21 31 WITH ONGC DATED JULY 12, 2007 FOR HIRING OF 3D VESSEL ON TIME CHARTER BASIS FOR OFFSHORE SEISMIC SURVEYS DURING FIELD SEASON 2007-0 8 & 2008-09. CONTRACTOR SHALL WITH HIS OWN PERSONNEL; AND EQUIPM ENT PLAN AND EXECUTE ACQUISITION AND PROCESSING OF 3D SEISMIC DA TA IN DIFFERENT SURVEY AREAS OF WESTERN & EASTERN OFFSHORE. THE SCOPE OF W ORK AND TECHNICAL SPECIFICATION OF OFFSHORE 3D SEISMIC DATA PROCESSIN G IS PROVIDED IN APPENDIX AI OF THE CONTRACT. THEY ARE SUMMARIZED AS UNDER :- 'AI.1. SEISMIC DATA PROCESSING THE PRIMARY OBJECTIVE OF THE PROCESSING OF 3D SEISM IC DATA, TO BE ACQUIRED IN THE SURVEY AREAS OF WESTERN AND EASTERN OFFSHORE, I S TO OBTAIN ACCURATE HIGH RESOLUTION IMAGING (FREE FROM GEOPHYSICAL SIGNIFICA NT ERRORS) WITH GEOLOGICAL OBJECTIVE IN APPENDIX A.). AI.2 GENERAL REQUIREMENTS ALL NECESSARY TESTING TO DETERMINE OPTIMUM PROCESSI NG PARAMETERS CONSISTENT WITH GOOD INTERNATIONAL GEOPHYSICAL INDUSTRY PRACTI CE WILL BE PERFORMED PRIOR TO COMMENCEMENT OF PRODUCTION PROCESSING. THE DATA PROCESSING RATES SHALL BE INCLUSIVE OF ALL THE TEST PROCESSING, CORRESPOND ING QC PRODUCTS (E.G. PAPER PLOTS. SCREEN DUMPS WHEREVER REQUIRED ETC.) & PREPA RATION AND SUBMISSION OF DELIVERABLES/OUTPUTS. THE CONTRACTOR WILL PROVIDE 3 D SEISMIC DATA PROCESSING FACILITIES CONSISTING OF COMPUTERS, SOFTWARE, TAPE DRIVERS, PRINTERS AND OTHER REQUIRED PERIPHERAL EQUIPMENT. A COMPETENT TEAM OF SEISMIC DATA PROCESSORS IN PROFESSIONAL AND EFFICIENT MANNER SHOULD DELIVER AN OUTPUT OF HIGH QUALITY SEISMIC DATA REQUIRED FOR INTERPRETATION. THE CONTR ACTOR IS SOLELY RESPONSIBLE FOR THE QUALITY FOR ALL ASPECTS OF THE DATA PROCESS ED. CONTRACT NO. PETROGAS/MBOSN/3D ACQUISITION /08-09 W ITH PETROGAS E&P LLC DATED SEPTEMBER 29, 2008 FOR MARINE 3D SEIS MIC AND GRAVITY MAGNETIC DATA ACQUISITION SERVICES. THE SCOPE OF WO RK AND TECHNICAL SPECIFICATION OF OFFSHORE 3DSEISMIC DATA PROCESSING (APPENDIX A) IS PROVIDED IN SECTION 3 OF THE CONTRACT. THEY ARE SUMMARIZED A S UNDER :- 'SCOPE OF WORK 2.1 THE WORK SHALL MAINLY COMPRISE CONTRACTOR'S PRO VISION OF 790 SQ. KMS. OF MARINE 3D SEISMIC DATA ACQUISITION USING 6 STREA MERS AND 2 GUNS ARRAYS IN EXPLORATION BLOCK MB-OSN-2004/2 (MUMBAI OFFSHORE) A ND GRAVITY-MAGNETIC DATA ACQUISITION ALONG THE 3D SEISMIC SURVEY. CONTR ACTOR WILL PROVIDE THE INSTRUMENTS TOGETHER WITH MINIMUM TWO SKILLED PERSO NNEL NECESSARY TO CONDUCT THE GRAVITY-MAGNETIC SURVEY. THE MAIN OBJEC TIVES OF THE SURVEY(S) ARE: TO MAXIMIZE VISIBILITY OF THE OFFSHORE HORIZONS FROM 5000-2500 MSECS TO MAXIMIZE IMAGE QUALITY OF THE FAULTS AND INTE R- COMPARTMENTALIZATION WITHIN THE MAIN HORIZON. 4 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 TO RETAIN THE MAXIMUM BANDWIDTH OF THE RECORDED DATA. TO DELIVER GOOD QUALITY, HIGH FOLD DATA WITH FEW COVERAGE GAPS. 2.1.1 CONTRACTOR IS TO PROVIDE THE SEISMIC VESSEL, ALL SUPPORT VESSELS E.G. MINIMUM TWO CHASE BOATS/GUARD VESSELS AND THE CREWS INCLUDING ALL NECESSARY PERSONNEL, EQUIPMENT AND SUPPLIES, AS MOR E SPECIFICALLY DETAILED HEREIN, TO PERFORM THE SURVEY.' 2.2 DURING THE YEAR, ASSESSEE HAD OFFERED GROSS REC EIPTS OF RS.228,52,78,062/- FROM THE SAID CONTRACTS WITH M/S . ONGC LIMITED AND M/S PETROGAS E&P LLC AND HAD APPLIED PROVISIONS OF 44BB THEREON AND COMPUTED INCOME AT DPR OF 10% THEREBY ARRIVING AT INCOME OF RS.22,85,27,806/- ALONG WITH INTEREST INCOME OF RS.11,09,727/-. BEFORE TH E AO, IT WAS SUBMITTED THAT THE NATURE OF THE SERVICES PERFORMED UNDER BOTH THE ABOVE CONTRACTS CLEARLY SHOWED THAT ASSESSEE HAD CARRIED OUT GEOPHYSICAL SE ISMIC SURVEY ALONG WITH DATA INTERPRETATION OF THE DATA SO COLLECTED ALONG WITH VESSELS AND THE CREWS INCLUDING ALL NECESSARY PERSONNEL, EQUIPMENT AND SU PPLIES NECESSARY FOR EXECUTION OF THE SCOPE OF WORK MENTIONED ABOVE. ACC ORDINGLY, THE AO REQUIRED THE ASSESSEE TO EXPLAIN WHY THE INCOME OF THE ASSES SEE AS 'FEE FOR TECHNICAL SERVICES' (FTS IN SHORT) SINCE IT HAD PROVIDED SERV ICES OF 3D SEISMIC DATA ACQUISITION AND PROCESSING WHICH IS FTS IN NATURE A S PER THE ABOVE CONTRACTS. THE ASSESSEE FILED WRITTEN SUBMISSIONS DATED 08.03. 2013 WHICH WERE CONSIDERED AND NOT FOUND TO BE ACCEPTABLE BY THE AO. 2.3 THE AO OBSERVED THAT THE ABOVE RECEIPTS OF THE ASSESSEE ARE COVERED UNDER SECTION 9(1) (VII) OF THE ACT. THE AO FURTHE R OBSERVED THAT SECTIONS 5 & 9 ARE CHARGING SECTIONS. HE FURTHER OBSERVED THAT I N ORDER TO BRING ANY INCOME 5 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 UNDER THE TAXABILITY OF THE ACT, THE SAME NEEDED TO BE EXAMINED UNDER THE PROVISIONS OF THESE TWO SECTIONS. HE OBSERVED THAT SECTION 28 TO 41 IS COMPUTATION SECTIONS AND SECTION 44BB IS A PRESUMPT IVE SECTION. THE AO OBSERVED THAT IT IS IMPORTANT TO ANALYZE THAT WHEN A PRESUMPTIVE SECTION IS INTRODUCED, IT WILL START WITH A NON-OBSTANTE CLAUS E WITH RESPECT TO SECTIONS 28 TO 41 WHICH ARE THE COMPUTATION SECTIONS. THE AO, AFT ER OBSERVING THE AFORESAID SECTIONS AND CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE, HELD THAT, IN THE LIGHT OF DISCUSSION ABOVE, IT IS CLEAR THAT PROVISIONS OF SECTION 44BB WILL NOT BE APPLICABLE AGAINST FTS RECEIPTS OF THE ASSESSEE. IT IS OBVIOUS FROM THE EXTRACTS OF THE FINANCE BILL 2010 REFERRED EARLIER THAT THE AMENDMENT IN PROVISO TO SECTION 44BB (1) AS WELL AS IN SECTION 44DA ARE IN THE NATURE OF CLARIFICATORY AND AS SUCH, FOLLOWING THE HON'BLE SUPREME COURT AS MENTIONED ABOVE, THE CLARIFICATION BROUGHT IN BY THE AMENDMENTS MUST BE READ INTO THE MAIN PROVISION WITH EFFECT FROM TIME THAT THE MAIN PROVI SIONS OF SECTION 44BB CAME INTO FORCE. THUS, EVEN THOUGH CLARIFICATORY AMENDME NTS ARE MADE EFFECTIVE FROM 1 ST APRIL 2011, IN VIEW OF LEGISLATIVE INTENT, EVEN PR IOR TO THE SAID CLARIFICATORY AMENDMENTS AS MENTIONED ABOVE, THE INCOME IN THE NA TURE OF FTS OR ROYALTIES CANNOT BE TAXED UNDER PRESUMPTIVE SCHEME OF TAXATIO N UNDER SECTION 44BB(L) OF INCOME TAX ACT, 1961. THE RECEIPTS OF THE ASSESSEE ARE COVERED UNDER PROVISIONS OF SECTION 44DA OF I.T. ACT AND THEREF ORE INCOME IS TO BE COMPUTED AS PER THE PROVISIONS OF SEC. 28 TO 43C OF I.T. ACT . SINCE BOOKS OF ACCOUNTS HAVE 6 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 NOT BEEN PREPARED BY THE ASSESSEE AND ACCORDINGLY N OT PRODUCED THEREFORE, INCOME OF THE ASSESSEE FROM THE CONTRACT IS TO BE E STIMATED AT 25% OF GROSS RECEIPTS UNDER THE CONTRACT. THE PE OF THE ASSESSEE IN INDIA IS NOT DISPUTED AS THE ASSESSEE HAS FILED THE RETURN UNDER SECTION 44B B OFFERING ITS INCOME AS TAXABLE IN INDIA. MOREOVER ASSESSEE HAS ALSO PROVID ED EQUIPMENT AND MATERIAL ALONG WITH SERVICES OF CARRYING OUT 3D/2D SEISMIC D ATA THROUGH PRESENCE OF ITS VESSELS IN INDIA AND THEREFORE HAS A PE IN INDIA. T HE ASSESSEE HAS IN ITS WRITTEN SUBMISSION ALSO ACCEPTED THAT IT HAS A PE IN INDIA. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAD NOT FILED ITS OBJECTIONS AGAI NST THE SAID DRAFT ORDER BEFORE THE DISPUTE RESOLUTION PANEL. ACCORDINGLY, THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 144C(3)(B) O F THE ACT AT TOTAL INCOME OF RS.57,24,29,240/-. 3. THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST AP PELLATE AUTHORITY AGAINST THE ORDER OF THE AO. THE LD. CIT (A), AFTER GOING THROUGH THE SUBMISSIONS MADE BY THE LD. AR FOR THE ASSESSEE, ALLOWED THE APPEAL OF THE ASSESSEE AS UNDER :- 3.2 THE FINDINGS OF LD. AO AND THE AVERMENTS OF LD . ARS HAVE BEEN CONSIDERED. THE PLETHORA OF CASES CITED AND THE SC OPE OF WORK AS PER THE CONTRACTS MAKES IT CLEAR THAT THE APPELLANT IS ENGA GED IN ACTIVITIES COVERED UNDER SECTION 44BB OF THE ACT. ALSO NO RETROSPECTI VITY CAN BE READ INTO THE AMENDMENT TO SECTION 44BB AND SECTION 44DA OF THE A CT FOLLOWING THE CASE OF B.J. SERVICES REPORTED IN 339 ITR 169 (UK). FURT HERMORE, FOLLOWING THE CASE OF CGG VERITAS (SUPRA) THE APPELLANT DESERVES TO HAVE HIS INCOME COMPUTED U/S 44BB CONSIDERING THAT THERE IS A PE IN EXISTENCE IN INDIA. DUE TO THESE FACTORS THE INCOME IS TO BE ASSESSED U/S 44BB OF THE ACT. 4. THE REVENUE, BEING AGGRIEVED, HAS FILED THE APPE AL BEFORE THE TRIBUNAL BY TAKING THE FOLLOWING GROUNDS OF APPEAL :- 7 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE SCOPE OF WORK EXECUTED BY THE ASSESSEE UNDER CONTRACTS WITH ONGC AND PETROGAS E & P LLC FO R PROVIDING SERVICES OF GEOPHYSICAL SEISMIC SURVEYS AND ACQUISITION AND PROCESSING OF SEISMIC DATA ('SERVICES') WAS NOT IN THE NATURE OF FEE FOR TECHN ICAL SERVICES ('FTS') SQUARELY COVERED U/S 9( 1 )(VI I) OF THE IT ACT, 1961 ('THE ACT'). 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSEE WAS TAXABLE UNDER THE PRESUMPTIVE PROVISIONS OF SEC 44BB AND IGNORING THE FACT THAT TAXABILITY U/S 44BB SHALL NOT APPLY IN RESPECT OF INCOME REFER RED TO IN SECTION 44DA IN VIEW OF THE CLARIFICATORY PROVISO TO SEC. 44BB AND SEC 44DA OF THE ACT. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSEE WAS NOT TAXABLE UNDER THE PROVISIONS OF SEC 44DA R.W.S 115A EVEN TH OUGH THE NATURE OF SERVICES RENDERED BY THE ASSESSEE WERE TECHNICAL IN NATURE LIABLE TO TAX U/S 44DA OF THE ACT. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN INTERPRETATION OF THE LEGISLATI VE INTENT BEHIND THE SCHEME OF TAXATION ENVISAGED IN 9(1)(VII) READ WITH SECTIO NS 44DA AND 44BB OF THE ACT, IGNORING THE DECISION IN THE CASE OF CIT VS M/ S ONGC AS AGENT OF M/S FORAMER FRANCE [(2008) 299 ITR 438 UTTARAKHAND] . 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN IGNORING THE DISTINCT SCHEME OF TAXATION OF FTS AND DISREGARDING THE INSERTION OF PROVISOS IN SECTION(S ) 44BB/44DA/115A AND THE RATIONALE BEHIND THE INTRODUCTION OF SAID CLARIFICATORY PROVISOS IN THE FINANCE BILL 2010. 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN RELYING ON THE DECISION OF THE ITAT IN THE CASE OF M/S CGG VERITAS SERVICES, SA IN ITA NO.4653/DEL/2010 (ON TH E ISSUE THAT ONCE A PE IS ESTABLISHED TO BE IN PLACE THEN THE INCOME HAS TO B E TREATED AS BUSINESS PROFITS AND ASSESSABLE U/S 44BB). 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT PROVISO TO SECTION 44DA BROUGHT ABOUT BY THE FINANCE ACT 2010 WAS ONLY CLARIFICATORY IN N ATURE AND ITS APPLICATION HAS TO BE READ INTO THE MAIN PROVISIONS WITH EFFECT FROM THE TIME THE MAIN PROVISION CAME INTO EFFECT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRIL LING V/S CIT. 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, CIT(A) HAS ERRED IN REVERSING THE ACTION OF THE AO WHO, HAVING HELD THAT THE ASSESSEE'S REVENUES ON ACCOUNT OF SERVICES RENDERED UNDER THE CONTRACTS ARE LIABLE TO BE TAXED U/S 44DA, RIGHTLY ESTIMATED THE INCOME OF THE ASSESSEE BY APPLYING 25% 8 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 RATE OF PROFIT ON GROSS RECEIPTS IN THE ABSENCE OF BOOKS OF ACCOUNTS AND DETAILS OF EXPENSES INCURRED IN PROVIDING THE SERVICES. 9. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MOD IFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. 5. THE ABOVE GROUNDS ARE INTERCONNECTED AND THUS WI LL BE ADJUDICATED JOINTLY. THE SHORT QUESTION BEFORE US IS WHETHER TH E INCOME OF THE ASSESSEE IS TAXABLE U/S 44BB OF THE ACT, OR IS U/S 44DA AS HELD BY THE AO. AND THE OTHER QUESTION IS WHETHER THE FINANCE BILL 2010 IS RETROS PECTIVE OR NOT. IN OTHER WORDS, THE CONTROVERSY REVOLVES AROUND COMPUTATION OF INCO ME AS FTS (FEES FOR TECHNICAL SERVICES) AS AGAINST CLAIM OF TAXABILITY U/S 44BB OF THE ACT. THE AO IS SEEN TO HAVE GIVEN A FINDING THAT THE SCOPE OF W ORK (COPIES OF CONTRACT HAVE BEEN FILED DURING APPELLATE PROCEEDINGS) EXECUTED B Y THE ASSESSEE WAS NOT IN THE NATURE OF BUILDING CONSTRUCTION, MINING OR LIKE PRO JECT AND THUS WAS INCLUDIBLE IN THE DEFINITION OF FTS AS PER SECTION 9(1)(VII) OF T HE ACT AND IT HAS ALSO BEEN HELD THAT THE PROVISION OF 44DA APPLY AND ON THIS BASIS, THE INCOME HAS BEEN DETERMINED AFTER APPLYING AN ESTIMATED PROFIT RATE OF 25% ON THE GROSS RECEIPTS. 6. THE LD. DR RELIED ON THE ORDER OF THE AO AND ALS O FILED THE SYNOPSIS OF THE ORAL SUBMISSIONS MADE, WHICH ARE REPRODUCED AS UNDER :- SYNOPSIS OF REVENUE'S ORAL SUBMISSIONS 1. THE ASSESSMENT ORDER DATED 10.05.2013 IS EMPHAT ICALLY RELIED UPON. FOLLOWING ADDITIONAL SUBMISSIONS ARE MADE. LEGISLATIVE INTENT: TO EXCLUDE INCOME IN THE NATURE OF FTS / ROYALTIES FROM 44BB 9 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 2. AMENDMENT TO PROVISO TO SECTIONS 44DA & 44BB BRO UGHT IN BY THE FINANCE ACT 2010 (RELEVANT EXTRACT OF EXPLANATORY N OTES IS ANNEXED AT ANNEXURE 'A' WHICH CLEARLY BRING OUT THAT THE AMEND MENT WAS CLARIFICATORY) WAS CLARIFICATORY IN NATURE AND ITS APPLICATION HAS TO BE READ INTO THE MAIN PROVISIONS WITH EFFECT FROM THE TIME THE MAIN PROVI SION CAME IN TO EFFECT. 3. IN FOLLOWING DECISIONS THE COURTS HAVE HELD THAT DESPITE A PROSPECTIVE DATE MENTIONED IN THE FINANCE ACT, THE AMENDMENT MA Y HAVE RETROSPECTIVE OPERATION. WHILE HOLDING SO, THE COURTS HAVE HELD T HAT SOMETIMES LEGISLATURE SPECIFICALLY MENTIONS ABOUT THE RETROSPECTIVE OPERA TION OF AN AMENDMENT AND IN SOME SITUATIONS SUCH RETROSPECTIVE OPERATIONS HA S TO BE INFERRED BY WAY OF IMPLICATION. A. CIT V. GOLD COIN HEALTH FOODS [304 ITR 308 (SC)] (LARGER BENCH)] B. K.GOVINDAN & SONS V. CIT [2001] 247 ITR 192 (SC) C. CIT V. SHELLY P. PRODUCTS 261 ITR 367 (SC) D. ALLIED MOTORS V. CIT [1997] 224 ITR 677 (SC) E. COMMISSIONER OF INCOME-TAX V. APAR INDUSTRIES LT D 323 ITR 411 (BOM.) 4. THE HON'BLE SUPREME COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING VS. CIT [2005] 279 ITR 310 (SC) OBSERVED: 'AN EXPLANATION TO A STATUTORY PROVISION MAY FULFIL THE PURPOSE OF CLEARING UP AN AMBIGUITY IN THE MAIN PROVISION OR A N EXPLANATION CAN ADD TO AND WIDEN THE SCOPE OF THE MAIN SECTION. IF IT IS IN ITS NATURE CLARIFICATORY THEN THE EXPLANATION MUST BE READ INT O THE MAIN PROVISION WITH EFFECT FROM THE TIME THAT THE MAIN PROVISION C AME INTO FORCE. BUT IF IT CHANGES THE LAW IT IS NOT PRESUMED TO BE RETR OSPECTIVE IRRESPECTIVE OF THE FACT THAT THE PHRASE USED ARE 'IT IS DECLARE D' OR 'FOR THE REMOVAL OF DOUBTS'. [PARA 20] 5. PERUSAL OF THE ABOVE REFERRED EXTRACTS FROM THE FINANCE BILL 2010 SHOW THAT, EVEN BEFORE THE AMENDMENT WAS INTRODUCED, THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE INCOME IN THE NATURE OF FEES FOR TECHNICAL SERVICES OR ROYALTIES FROM THE PURVIEW OF SECTION 4 4BB IRRESPECTIVE OF THE BUSINESS TO WHICH IT RELATES. TO SUMMA RISE, THE EX TRACT FROM FINANCE BILL 2010 HIGHLIGHTS THE FOLLOWING: A. SECTIONS 44BB, 44DA AND 115A READ TOGETHER PROVI DE THAT INCOME OF A NON-RESIDENT, IN THE NATURE OF FEE FOR TECHNICAL SERVICES, SHALL BE TAXABLE UNDER THE PROVISIONS OF EITHER SEC TION 44DA OR SECTION 115A IRRESPECTIVE OF THE BUSINESS TO WHICH IT RELAT ES. B. JUDICIAL PRONOUNCEMENTS HAVING RAISED DOUBTS REG ARDING THE SCOPE OF SECTION 44BB VIS-A-VIS SECTION 44DA AS TO WHETHER FTS RELATING TO EXPLORATION AND, THEREFORE, TO REMOVE D OUBTS AND CLARIFY THE DISTINCT SCHEME OF TAXATION OF INCOME BY WAY OF FEE FOR TECHNICAL SERVICES, THE PROVISO TO SECTION 44BB WAS AMENDED T O EXCLUDE THE 10 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 APPLICABILITY OF 44BB TO INCOME COVERED U/S 44DA. S IMILARLY, SECTION 44DA WAS AMENDED TO PROVIDE THAT SECTION 44BB SHALL NOT APPLY TO INCOME COVERED U/S 44DA. 6. A REFERENCE IS ALSO MADE TO HEYDON'S RULE AND IT IS SUBMITTED THAT THE AMENDMENTS IN THE SCHEME OF SECTION 44BB AND 44DA, MADE VIDE FINANCE ACT 2010 MUST BE TREATED AS CLARIFICATORY IN NATURE . CARVE OUT IN SECTION 9(1 )(VII) FOR FTS FOR ASSEMBL Y, 'MINING OR LIKE PROJECT' UNDERTAKEN BY THE RECIPIENT 7. IN CGG VERITAS SERVICES SA [2012] 18 TAXMANN.COM 13 (DELHI), THE HON'BLE ITAT HELD THAT EXCEPTION TO DEFINITION OF F TS AS CONTAINED IN EXPLANATION 2 TO SECTION 9(1 )(VII) HAS TWO LIMBS: A. FIRST, IT SHOULD BE CONSTRUCTION, ASSEMBLY, 'MI NING OR LIKE PROJECT' AND B. SECOND, THIS PROJECT SHOULD BE UNDERTAKEN BY THE ASSESSEE (RELYING UPON DELHI HIGH COURT DECISION IN RIO TINT O TECHNICAL SERVICES [2012] 17 TAXMANN.COM 70 (DELHI)). 8. THEREIN, HON'BLE ITAT DELHI ALSO CLARIFIED THAT IN INSTRUCTION NO. 1862, QUESTION REFERRED WAS REGARDING DEFINITION OF 'MINING OR LIKE PROJECT' ONLY AND SECOND LIMB OF THE EXCEPTION WAS NOT SUBJE CT MATTER OF SAID INSTRUCTION. THIS POSITION WAS CORROBORATED IN NUME ROUS DECISIONS INCLUDING MI OVERSEAS (AAR), CAT GEODATA GMBH (AAR) ETC. 9. DIT VS. JINDAL DRILLING AND INDUSTRIES LTD ([201 0] 320 ITR 104/182 TAXMAN 59 (DELHI)) AND GEOFIZYKA TORUN SP Z.O.O, IN RE [2010] 320 ITR 268/186 TAXMAN 213 (AAR - NEW DELHI), RELIED UPON B Y DELHI HIGH COURT IN DIT V. OHM LTD. ([2012] 28 TAXMANN.COM 120/[2013] 2 12 TAXMAN 440 (DELHI)), DID NOT ADJUDICATE THE ASPECT OF ELIGIBIL ITY IN TERMS OF SECOND LIMB OF THE EXCLUSIONARY PROVISO I.E. 'FOR A PROJECT UNDERT AKEN BY THE RECIPIENT' AS CONFIRMED IN CGG VERITAS (SUPRA). ALSO DECISION OF DIT V JINDAL DRILLING AND INDUSTRIES LTD. (2010) 320 ITR 104, PERTAINED TO AY S 2000-01, 2001-02 AND DID NOT CONTAIN ANY REFERENCE TO SECTION 44DA AS TH E SAID PROVISION CAME ON THE STATUTE W.E.F., 1.4.2004. JUDGEMENT OF HON'BLE SUPREME COURT IN ONGC V CIT (2 015) 59 TAXMANN.COM 1 (SC) DATED 01.07.2015 10. THE ISSUE THAT AROSE FOR CONSIDERATION (PERTAIN ING TO AY 1985-86 / 1986-87) MAY BE SUMMARIZED AS FOLLOWS: 'WHETHER THE AMOUNTS PAID BY THE ONGC TO THE NON-RE SIDENT ASSESSES/FOREIGN COMPANIES FOR PROVIDING VARIOUS SE RVICES IN CONNECTION WITH PROSPECTING, EXTRACTION OR PRODUCTI ON OF MINERAL OIL IS CHARGEABLE TO TAX AS 'FEES FOR TECHNICAL SERVICES' UNDER SECTION 44D 11 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 READ WITH EXPLANATION 2 TO SECTION 9(1)(VII) OF THE INCOME TAX ACT OR WILL SUCH PAYMENTS BE TAXABLE ON A PRESUMPTIVE BASI S UNDER SECTION 44 BB OF THE ACT ?' 11. THE HON'BLE SUPREME COURT HAS HELD AT PARA 13 THAT: 'THE INCOME TAX ACT DOES NOT DEFINE THE EXPRESSIONS 'MINES' OR 'MINERALS'. THE SAID EXPRESSIONS ARE FOUND DEFINED AND EXPLAINED IN THE MINES ACT, 1952 AND THE OIL FIELDS (DEVELOPMENT AND REGULATION) ACT 1948. WHILE CONSTRUING THE SOMEWHAT PARI MATERI A EXPRESSIONS APPEARING IN THE MINES AND MINERALS (DEVELOPMENT AN D REGULATION) ACT 1957 REGARD MUST BE HAD TO THE PROVISIONS OF EN TRIES 53 AND 54 OF LIST I AND ENTRY 22 OF LIST II OF THE 7TH SCHEDULE TO THE CONSTITUTION TO UNDERSTAND THE EXCLUSION OF MINERAL OILS FROM THE D EFINITION OF MINERALS IN SECTION 3(A) OF THE 1957 ACT. REGARD MU ST ALSO BE HAD TO THE FACT THAT MINERAL OILS IS SEPARATELY DEFINED IN SECTION 3(B) OF THE 1957 ACT TO INCLUDE NATURAL GAS AND PETROLEUM IN RE SPECT OF WHICH PARLIAMENT HAS EXCLUSIVE JURISDICTION UNDER ENTRY 5 3 OF LIST I OF THE 7TH SCHEDULE AND HAD ENACTED AN EARLIER LEGISLATION I.E. OIL FIELDS (REGULATION AND DEVELOPMENT) ACT, 1948. READING SEC TION 2(J) AND 2(JJ) OF THE MINES ACT, 1952 WHICH DEFINE MINES AND MINERALS AND THE PROVISIONS OF THE OIL FIELDS (REGULATION AND DEVELO PMENT) ACT, 1948 SPECIFICALLY RELATING TO PROSPECTING AND EXPLORATIO N OF MINERAL OILS, EXHAUSTIVELY REFERRED TO EARLIER, IT IS ABUNDANTLY CLEAR THAT DRILLING OPERATIONS FOR THE PURPOSE OF PRODUCTION OF PETROLE UM WOULD CLEARLY AMOUNT TO A MINING ACTIVITY OR A MINING OPERATION. VIEWED THUS, IT IS THE PROXIMITY OF THE WORKS CONTEMPLATED UNDER AN AG REEMENT, EXECUTED WITH A NON-RESIDENT 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 FO REIGN COMPANY IS TO BE ASSESSED UNDER SECTION 44BB OR SECTION 44D OF TH E 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 EXPRES SIONS 'MINING PROJECTS' OR 'LIKE PROJECTS' OCCURRING IN EXPLANATI ON 2 TO SECTION 9(1) OF THE ACT WOULD COVER RENDERING OF SERVICE LIKE IM PARTING OF TRAINING AND CARRYING OUT DRILLING OPERATIONS FOR EXPLORATIO N OF AND EXTRACTION OF OIL AND NATURAL GAS AND HENCE PAYMENTS MADE UNDER S UCH AGREEMENT TO A NON-RESIDENT/FOREIGN COMPANY WOULD BE CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D OF T HE ACT. WE DO NOT SEE HOW ANY OTHER VIEW CAN BE TAKEN IF THE WORKS OR SERVICES MENTIONED UNDER A PARTICULAR AGREEMENT IS DIRECTLY ASSOCIATED OR INEXTRICABLY CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL. KEEPING IN MIND THE ABOVE PROVISION, W E HAVE LOOKED INTO EACH OF THE CONTRACTS INVOLVED IN THE PRESENT GROUP OF CASES AND FIND THAT THE BRIEF DESCRIPTION OF THE WORKS COVERED UND ER EACH OF THE SAID 12 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 CONTRACTS AS CULLED OUT BY THE APPELLANTS AND PLACE D BEFORE THE COURT IS CORRECT. THE SAID DETAILS ARE SET OUT BELOW ....... 'THE ABOVE FACTS WOULD INDICATE THAT THE PITH AND S UBSTANCE OF EACH OF THE CONTRACTS / AGREEMENTS IS INEXTRICABLY CONNECTE D WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL. THE DOMINA NT PURPOSE OF EACH OF SUCH AGREEMENT IS FOR PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL THOUGH THERE MAY THE CERTAIN ANCILLARY WORKS CONTEMPLATES THEREUNDER. IF THAT BE SO, WE WILL HAVE NO HESITATI ON IN HOLDING THAT THE PAYMENTS MADE BY ONGC AND RECEIVED BY THE NON-RESID ENT ASSESSES OR FOREIGN COMPANIES UNDER THE SAID CONTRACTS IS MORE APPROPRIATELY ASSESSABLE UNDER THE PROVISION OF SECTION 44 BB AND NOT SECTION 44 D OF THE ACT.' 12. PERUSAL OF THE ABOVE DECISION WILL SHOW THAT TH E HON'BLE SUPREME COURT HAS HELD THAT DRILLING OPERATIONS FOR THE PUR POSE OF PRODUCTION OF PETROLEUM WOULD AMOUNT TO A MINING ACTIVITY OR A MI NING OPERATION AND THAT THE PROXIMITY OF THE WORKS CONTEMPLATED UNDER AN AG REEMENT, WITH MINING ACTIVITY OR MINING OPERATIONS WOULD BE CRUCIAL FOR THE DETERMINATION OF THE QUESTION WHETHER THE PAYMENTS MADE UNDER SUCH AN AG REEMENT IS TO BE ASSESSED UNDER SECTION 44BB OR SECTION 440 OF THE A CT. THE TEST OF PITH AND SUBSTANCE OF THE AGREEMENT HAS BEEN HELD AS REASONA BLE. 13. IT IS HUMBLY PRAYED THAT HON'BLE SUPREME COURT DECISION MAY NOT HAVE PRECEDENTIAL / BINDING VALUE FOR THE AY 2010-'11 SI NCE THE CASE APPLIES TO THE LAW AS IT STOOD IN AY 1985-86 / 1986-87, WHEN THE P ROVISIONS OF S. 440A, AND THE CORROBORATING AMENDMENTS IN 115A, 44BB OF INCOM E TAX ACT 1961 HAD NOT COME ON TO THE STATUTE. FURTHER, THE ASPECT THA T THE EXCEPTION CONTAINED IN EXPLANATION 2 TO SECTION 9(1)(VII) IS CONFINED TO T HE PERSON WHO HAS UNDERTAKEN A MINING OR LIKE PROJECT, WAS NOT BROUGH T TO THE NOTICE OF THE HON'BLE COURT. THE AMENDMENTS BROUGHT ABOUT BY FINA NCE ACT 2003 AND 2010 AND THE EXPLANATORY NOTES THEREUNDER WERE ALSO NOT BEFORE SUPREME COURT SINCE THE CASE PERTAINED TO AY 1985-86/1986-87. IT IS VERY HUMBLY SUBMITTED THAT THE DECISION DIFFERS ON FACT AND IN LAW FROM T HE CASE ON HAND SINCE THE HON'BLE SUPREME COURT DID NOT HAVE THE OPPORTUNITY TO ADDRESS THE FOLLOWING ASPECTS: (I) EXAMINE SECOND LIMB OF THE EXCEPTION TO DEFINI TION OF FTS AS CONTAINED IN EXPLANATION 2 TO SECTION 9(1 )(VII) (II) EXAMINE THE LEGISLATIVE INTENT AND THE AMENDM ENTS BROUGHT ABOUT BY FINANCE ACT 2010 INTEREST U/S 2348 13. WITHOUT PREJUDICE TO REVENUE'S STAND THAT INTER EST U/S 234B IS INDEED CHARGEABLE IN THE PRESENT CASE, FOLLOWING ADDITIONA L / 'PROTECTIVE' SUBMISSION IS MADE: 13 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 IT NEEDS TO BE DETERMINED IF THE ASSESSEE HAD SOME ROLE IN HAVING LOWER OR NO DEDUCTION OF TDS U/S 197. IT MAY BE THE CASE THAT THE ASSESSEE ITSELF MAY HAVE APPROACHED THE AD OR WOULD HAVE INSISTED ON TH E PAYER TO DEDUCT NO TDS. [2010] 194 TAXMAN 495 (DELHI) DIRECTOR OF INCOME-TA X V. JACABS CIVIL INCORPORATED/ MITSUBISHI CORPORATION: 'IT IS STATED AT THE COST OF REPETITION THAT THE LI ABILITY TO DEDUCT OR COLLECT THE TAX AT SOURCE IS THAT OF THE PAYER. THE REFORE, FOR THE PURPOSES OF SECTION 234B OF THE ACT, THE QUESTION W OULD BE AS TO WHETHER THE PAYEE, I.E., THE ASSESSEE IN THIS CASE, HAD ANY ROLE IN DEDUCTING OR COLLECTING THE TAX. ONCE THAT IS IN TH E NEGATIVE, AND IT WAS NOT DUTY OF THE PAYEE/ASSESSEE, THE QUESTION OF PAY MENT OF ANY INTEREST WOULD NOT ARISE AS IT CANNOT BE SAID, IN SUCH CIRCU MSTANCES, THAT THE ASSESSEE IS IN DEFAULT FOR THE PURPOSES OF SECTION 234B OF THE ACT. NO DOUBT, AS PER THE JUDGMENT IN THE CASE OF ANJUM M.H . GHASWALA (SUPRA), IF THERE IS A DEFAULT IN MAKING THE PAYMEN T OF ADVANCE TAX, THE CONSEQUENCE WHICH IS TO FOLLOW IS THAT THE INTEREST BECOMES PAYABLE UNDER SECTION 234B OF THE ACT. BUT IN THE INSTANT C ASE, THE PROVISIONS OF SECTION 234 B OF THE ACT WOULD NOT BE ATTRACTED AT ALL.' [PARA 6] THE LD. DR, ON THE BASIS OF ASSESSMENT ORDER AND TH E ABOVE SUBMISSIONS, PRAYED THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND T HAT OF THE AO BE RESTORED. 7. ON THE OTHER HAND, THE LD. AR REITERATED THE SUB MISSIONS MADE IN THE ORDER OF THE LD. CIT (A) AND ALSO RELIED ON THE ORD ER OF THE LD. CIT (A). HE ALSO SUBMITTED A WRITTEN SUBMISSION AND THE SAME ARE REP RODUCED HEREUNDER :- BRIEF FACTS OF THE CASE: THE ASSESSEE IS FOREIGN COMPANY INCORPORATED UNDER THE LAWS OF NORWAY. IT IS ENGAGED IN THE ACTIVITIES RELATING TO ACQUISITION A ND PROCESSING OF 3D SEISMIC DATA UNDER CONTRACTS WITH ONGC AND PETROGAS E & P L LC. FOR THE YEAR UNDER CONSIDERATION, THE RETURN OF INCOME WAS FILED DECLA RING INCOME OF INR 22,96,37,533 AS PER PROVISION OF SECTION 44BB OF TH E ACT. THE RETURN WAS SELECTED FOR SCRUTINY AND AO PASSED ASSESSMENT ORDE R, WHEREIN, THE ASSESSEE'S CLAIM FOR THE BEING TAXED U/S 44BB WAS REJECTED AND ITS INCOME HAS BEEN TAXED AS FEES FROM TECHNICAL SERVICES. AGGRIEVED BY THE V ARIATION IN ITS INCOME, THE ASSESSEE HAS FILED BEFORE THE LD. CIT(A) WHEREIN TH E LD. CIT(A) HAS HELD THAT 14 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 THE BENEFIT OF PROVISION 44BB SHALL BE AVAILABLE TO THE ASSESSEE. HENCE THE REVENUE IS IN PRESENT APPEAL. IN THIS REGARD OUR SU BMISSIONS ARE AS UNDER: AT THE OUTSET IS SUBMITTED THAT THE ISSUE UNDER CON SIDERATION IS SQUARELY COVERED BY DECISION OF HON'BLE JURISDICTIONAL ITAT IN ASSESSEE'S OWN CASE REPORTED IN 37 ITR (TRIB) 46 WHEREIN THE HON'BLE TR IBUNAL HAS HELD THAT ASSESSEE IS ENTITLED TO DECLARE ITS INCOME UNDER PR OVISION OF SECTION 44BB OF THE ACT. RELEVANT OBSERVATION OF THE HON'BLE ITAT I S AS UNDER: 5. THE RULING OF AAR IN THE CASE OF GEOPHZIKA TORUN SP. ZO.O HAS BEEN CONFIRMED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX-II VS. OHM LTD. [2012] 28 TA XMANN 120 (DEL). THE SAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX-II VS. OHM LTD. (SUPRA) WAS FOLLOWED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PG S GEOPHYSICAL AS (SUPRA). IN THE LIGHT OF THE ABOVE JUDGMENTS OF HON 'BLE JURISDICTIONAL HIGH COURT, WE HOLD THAT FOR THE RELEVANT ASSESSMEN T YEAR, ASSESSEE IS ENTITLED TO DECLARE ITS INCOME UNDER THE PROVISION OF SECTION 44BB OF THE ACT. IT IS ORDERED ACCORDINGLY. IT IS FURTHER SUBMITTED THAT THE ABOVE ORDER OF HON 'BLE ITAT WAS AFFIRMED BY THE HON'BLE UTTARAKHAND HIGH COURT BY DISMISSING TH E APPEAL OF REVENUE AT THE VERY THRESHOLD VIDE ORDER DATED 06-08-2015 IN I TA NO. 28/2015. RELEVANT OBSERVATIONS OF THE HON'BLE HIGH COURT ARE AS UNDER : 4. IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APEX COURT IN CIVIL APPEAL NO. 731 OF 2007 AND CONNECTED CASES (OIL & N ATURAL GAS CORPORATION LIMITED VS. COMMISSIONER OF INCOME TAX & ANOTHER), THE SUBSTANTIAL QUESTIONS OF LAW RELATING TO THE ASSESS ABILITY OF THE AMOUNTS UNDER SECTION 448B HAVE TO BE ANSWERED AGAI NST THE APPELLANT / REVENUE. ACCORDINGLY, WE ANSWER THE SAID QUESTION S OF LAW AGAINST THE REVENUE IN THE LIGHT OF THE AFORESAID JUDGMENT OF THE HON'BLE APEX COURT. 5 .. 6. IN SUCH CIRCUMSTANCES, THE APPEALS ARE DISPOSED OF AS FOLLOWS: (I) WE ANSWER THE QUESTIONS OF LAW RELATING TO THE ASSESSABILITY OF THE AMOUNTS UNDER SECTION 44BB AGAINST THE REVENUE. IT IS SUBMITTED THAT WHILE DISPOSING THE APPEAL OF THE APPEAL OF THE REVENUE IN HIGH COURT, THE HON'BLE COURT HAS RELIED UPON THE D ECISION OF APEX COURT IN CASE OF ONGC LIMITED IN ITA NO. 731 OF 2007 DATE OF PRONOUNCEMENT JULY 1ST, 2015.RELEVANT OBSERVATION OF THE PRONOUNCEMENT IS AS UNDER: 13. THE INCOME TAX ACT DOES NOT DEFINE THE EXPRESSI ONS 'MINES' OR 'MINERALS'. THE SAID EXPRESSIONS ARE FOUND DEFIN ED AND EXPLAINED IN THE MINES ACT, 1952 AND THE OIL FIELDS (DEVELOPMENT AND REGULATION) ACT 1948. WHILE CONSTRUING THE SOMEWHAT PARI MATERI A EXPRESSIONS APPEARING IN THE MINES AND MINERALS (DEVELOPMENT AN D REGULATION) 15 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 ACT 1957 REGARD MUST BE HAD TO THE PROVISIONS OF EN TRIES 53 AND 54 OF LIST I AND ENTRY 22 OF LIST /I OF THE 7TH SCHEDULE TO THE CONSTITUTION TO UNDERSTAND THE EXCLUSION OF MINERAL OILS FROM THE D EFINITION OF MINERALS IN SECTION 3(A) OF THE 1957 ACT. REGARD MU ST ALSO BE HAD TO THE FACT THAT MINERAL OILS IS SEPARATELY DEFINED IN SECTION 3(B) OF THE 1957 ACT TO INCLUDE NATURAL GAS AND PETROLEUM IN RE SPECT OF WHICH PARLIAMENT HAS EXCLUSIVE JURISDICTION UNDER ENTRY 5 3 OF LIST I OF THE 7TH SCHEDULE AND HAD ENACTED AN EARLIER LEGISLATION I.E. OIL FIELDS (REGULATION AND DEVELOPMENT) ACT, 1948. READING SEC TION 2(J) AND 2(JJ) OF THE MINES ACT, 1952 WHICH DEFINE MINES AND MINERALS AND THE PROVISIONS OF THE OIL FIELDS (REGULATION AND DEVELO PMENT) ACT, 1948 SPECIFICALLY RELATING TO PROSPECTING AND EXPLORATIO N OF MINERAL OILS, EXHAUSTIVELY REFERRED TO EARLIER, IT IS ABUNDANTLY CLEAR THAT DRILLING OPERATIONS FOR THE PURPOSE OF PRODUCTION OF PETROLE UM WOULD CLEARLY AMOUNT TO A MINING ACTIVITY OR A MINING OPERATION. VIEWED THUS, IT IS THE PROXIMITY OF THE WORKS CONTEMPLATED UNDER AN AG REEMENT, EXECUTED WITH A NON-RESIDENT 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 FO REIGN COMPANY IS TO BE ASSESSED UNDER SECTION 44BB OR SECTION 44D OF TH E 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 EXPRES SIONS 'MINING PROJECTS' OR 'LIKE PROJECTS' OCCURRING IN EXPLANATI ON 2 TO SECTION 9(1) OF THE ACT WOULD COVER RENDERING OF SERVICE LIKE IM PARTING OF TRAINING AND CARRYING OUT DRILLING OPERATIONS FOR EXPLORATIO N OF AND EXTRACTION OF OIL AND NATURAL GAS AND HENCE PAYMENTS MADE UNDER S UCH AGREEMENT TO A NON-RESIDENT/ FOREIGN COMPANY WOULD BE CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D OF T HE ACT. WE DO NOT SEE HOW ANY OTHER VIEW CAN BE TAKEN IF THE WORKS OR SERVICES MENTIONED UNDER A PARTICULAR AGREEMENT IS DIRECTLY ASSOCIATED OR INEXTRICABLY CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL. KEEPING IN MIND THE ABOVE PROVISION, W E HAVE LOOKED INTO EACH OF THE CONTRACTS INVOLVED IN THE PRESENT GROUP OF CASES AND FIND THAT THE BRIEF DESCRIPTION OF THE WORKS COVERED UND ER EACH OF THE SAID CONTRACTS AS CULLED OUT BY THE APPELLANTS AND PLACE D BEFORE THE COURT IS CORRECT. THE SAID DETAILS ARE SET OUT BELOW. 1. CIVIL APPEAL NO. 4321 - DRILLING OF EXPLORATION WELLS AND CARRYING OUT SEISMIC SURVEYS FOR EXPLORATORY DRILLI NG. 2. .. 3. .. 4 . .. THE ABOVE FACTS WOULD INDICATE THAT THE PITH AND SU BSTANCE OF EACH OF THE CONTRACTS/AGREEMENTS IS INEXTRICABLY CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL. THE DOMINA NT PURPOSE OF EACH 16 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 OF SUCH AGREEMENT IS FOR PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS THOUGH THERE MAY BE CERTAIN ANCILLARY WORKS CONTEMPLATED THEREUNDER. IF THAT BE SO, WE WILL HAVE NO HESITATI ON IN HOLDING THAT THE PAYMENTS MADE BY ONGC AND RECEIVED BY THE NON-RESID ENT ASSESSEES OR FOREIGN COMPANIES UNDER THE SAID CONTRACTS IS MO RE APPROPRIATELY ASSESSABLE UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D OF THE ACT. ON THE BASIS OF THE SAID CONCLUSION REA CHED BY US, WE ALLOW THE APPEALS UNDER CONSIDERATION BY SETTING ASIDE TH E ORDERS OF THE HIGH COURT PASSED IN EACH OF THE CASES BEFORE IT AND RES TORING THE VIEW TAKEN BY THE LEARNED APPELLATE COMMISSIONER AS AFFIRMED B Y THE LEARNED TRIBUNAL. IT IS FURTHER SUBMITTED THAT THE LD. DEPARTMENTAL R EPRESENTATIVE HAS TAKEN FOLLOWING ARGUMENTS DURING THE COURSE OF HEARING ON 12-10-2015: 1. AMENDMENT IN SECTION 44BB AND 44DA SHOULD BE REA D AS RETROSPECTIVE 2. BENEFIT OF SECTION 44BB IS NOT APPLICABLE ON SEC OND LEG CONTRACTS 3. DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF PGS GEOPHYSICAL AS OUR SUBMISSIONS IN RESPECT OF ARGUMENT NO. 1 I.E. AMENDMENT IN SECTION 44BB AND 4 4DA SHOULD BE READ AS RETROSPECTIVE IT IS SUBMITTED THAT THE HON'BLE UTTARAKHAND HIGH C OURT IN CASE OF BJ SERVICES COMPANY MIDDLE EAST LIMITED VS. DCIT 3391TR 169 DAT E OF PRONOUNCEMENT 20-08-2011 HAS HELD THAT THE AMENDMENTS PROPOSED BY FINANCE BILL, 2010, IN SS. 44BB AND 44DA WERE ONLY PROSPECTIVE IN NATURE. RELEVANT OBSERVATIONS OF THE COURT ARE AS UNDER: 55. AS STATED EARLIER, THE COMBINED EFFECT OF THE P ROVISIONS OF S. 44BB, 44DA AND 115A OF THE ACT WILL NOT HAVE A BEAR ING TO THE CASES IN HAND IN AS MUCH AS THE EXPLANATORY NOTE TO THE F INANCE BILL, 2010 CLEARLY INDICATES THAT THE AMENDMENTS PROPOSED IN S . 44BB AND 44DA OF THE ACT WOULD TAKE EFFECT FROM 1ST APRIL, 2011 A ND WOULD APPLY IN RELATION TO THE ASST. YR. 2011-12 AND SUBSEQUENT YE ARS. THE AMENDMENT IS PROSPECTIVE IN NATURE AND WOULD NOT APPLY TO THE CASES IN HAND WHICH IS OF THE EARLIER ASSESSMENT YEARS. IT IS SUBMITTED THAT THE REVENUE HAS FILED AN SPECI AL PETITION BEFORE THE HON'BLE UTTARAKHAND HIGH COURT AGAINST THE ABOVE CASE AND S AME HAS BEEN DISMISSED BY THE HON'BLE HIGH COURT VIDE ORDER DATED MAY 28 TH 2013 REPORTED AT 216 TAXMAN 190. RELEVANT OBSERVATIONS OF THE COURT ARE AS UNDER: 'WHEREAS SECTION 44BB DEALS WITH A NON-RESIDENT ASS ESSEE PROVIDING, AMONGST OTHERS, SERVICES OR FACILITIES IN CONNECTIO N WITH PROSPECTING 17 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS, THE SECTIONS MENTIONED IN THE PROVISO, REFERRED TO ABOVE, DEAL WITH FEES R ECEIVED BY NON- RESIDENT ASSESSEES FOR PROVIDING, AMONGST OTHERS, S ERVICES OR FACILITIES. THEREFORE, BY ADDING THE PROVISO WITH EFFECT FROM 1 ST APRIL, 2011, A CLEAR CUT DISTINCTION HAS BEEN MADE BETWEEN THOSE N ON- RESIDENT ASSESSEES, WHO ARE ENGAGED IN THE BUSINESS OF PROVI DING, AMONGST OTHERS, SERVICES OR FACILITIES IN CONNECTION WITH P ROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AND OTHER KIND OF NON-RESIDENT ASSESSEES, WHO GET FEES FOR PROVIDING SERVICES OR F ACILITIES. THE ASSESSING OFFICER FELT THAT, BY REASON OF INSERTION OF THE SAID PROVISO, HE CAN LOOK INTO THOSE COMPLETED ASSESSMENTS FOR TH E ACCOUNTING YEARS, WHICH STOOD CLOSED PRIOR TO 1ST APRIL, 2011 AND, AC CORDINGLY, EXERCISED POWER UNDER SECTION 148 OF THE INCOME TAX ACT. BY T HE JUDGMENT UNDER APPEAL, THE LEARNED JUDGE HAS POINTED OUT THA T THERE WAS NO JUST REASON FOR DOING THE SAME, INASMUCH AS, THE DISTINC TION REFERRED TO ABOVE, ACCORDING TO THE INCOME TAX ACT, APPLIES ONL Y SINCE 1ST APRIL. 2011. 4. WE, ACCORDINGLY, REFUSE TO ADMIT THE APPEALS. TH EY ARE DISMISSED. IT IS SUBMITTED THAT THE HON'BLE DELHI HIGH COURT I N CASE OF OIT VS. OHM LIMITED 352 ITR 406 HAS GIVEN A SIMILAR FINDING AS OF DECISION OF BJ SERVICES MIDDLE EAST LIMITED (SUPRA). RELEVANT OBSERVATIONS OF THE HON'BLE HIGH COURT ARE AS UNDER: 12. THE SECOND PROVISO TO SUB-SECTION (1) OF SECTI ON 44DA INSERTED BY THE FINANCE ACT, 2010 W.E.F 01.04.2011 MAKES THE POSITION CLEAR. SIMULTANEOUSLY A REFERENCE TO SECTION 44DA W AS INSERTED IN THE PROVISO TO SUB-SECTION (1) OF SECTION 44B8. IT SHOU LD BE REMEMBERED THAT SECTION 44DA ALSO REQUIRES THAT THE NON-RESIDE NT OR THE FOREIGN COMPANY SHOULD CARRY ON BUSINESS IN INDIA THROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN AND THE RIGHT, PROPE RTY OR CONTRACT IN RESPECT OF WHICH THE ROYALTY OR FEES FOR TECHNICAL SERVICES IS PAID SHOULD BE EFFECTIVELY CONNECTED WITH THE PERMANENT ESTABLISHMENT. SUCH A REQUIREMENT HAS NOT BEEN SPELT OUT IN SECTIO N 44BB; MOREOVER, A FLAT RATE OF 10 PERCENT OF THE REVENUES RECEIVED BY THE NON-RESIDENT FOR THE SPECIFIC SERVICES RENDERED BY IT ARE DEEMED TO BE PROFITS FROM THE BUSINESS CHARGEABLE TO TAX IN INDIA UNDER SECTI ON 44BB, WHEREAS UNDER SECTION 44DA, DEDUCTION OF EXPENDITURE OR ALL OWANCE WHOLLY AND EXCLUSIVELY INCURRED BY THE NON-RESIDENT FOR TH E BUSINESS OF THE PERMANENT ESTABLISHMENT IN INDIA AND FOR EXPENDITUR E TOWARDS REIMBURSEMENT OF ACTUAL EXPENSE BY THE PERMANENT ES TABLISHMENT TO ITS HEAD OFFICE OR TO ANY OF ITS OTHER OFFICES IS ALLOW ED FROM THE REVENUES RECEIVED BY THE NON-RESIDENT. BECAUSE OF THE DIFFER ENT MODES OR METHODS PRESCRIBED IN THE TWO SECTIONS FOR COMPUTIN G THE PROFITS, IT APPARENTLY BECAME NECESSARY TO CLARIFY THE POSITION BY MAKING NECESSARY AMENDMENTS. THAT PERHAPS IS THE REASON FO R INSERTING THE SECOND PROVISO TO SUB-SECTION (1) OF SECTION 44DA A ND A REFERENCE TO 18 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 SECTION 44DA IN THE PROVISO BELOW SUB-SECTION (1) O F SECTION 44BB. A CAREFUL PERUSAL OF BOTH THE PROVISOS SHOWS THAT THE Y REFER ONLY TO COMPUTATION OF THE PROFITS UNDER THE SECTIONS. IF B OTH THE SECTIONS HAVE TO BE READ HARMONIOUSLY AND IN SUCH A MANNER THAT N EITHER OF THEM BECOMES A USELESS LUMBER THEN THE ONLY WAY IN WHICH THE PROVISOS CAN BE GIVEN EFFECT TO IS TO UNDERSTAND THEM AS REFERRI NG ONLY TO THE COMPUTATION OF PROFITS, AND TO UNDERSTAND THE AMEND MENTS AS HAVING BEEN INSERTED ONLY TO CLARIFY THE POSITION. SO UNDE RSTOOD, THE PROVISO TO SUB-SECTION (1) OF SECTION 44BB CAN ONLY MEAN THAT THE FLAT RATE OF 10 PERCENT OF THE REVENUES CANNOT BE DEEMED TO BE THE PROFITS OF THE NONRESIDENT WHERE THE SERVICES ARE OF THE TYPE WHIC H DO NOT FALL UNDER THAT SECTION, BUT ARE MORE GENERAL IN NATURE SO AS TO FALL UNDER SECTION 44DA. SIMILARLY, THE SECOND PROVISO TO SUB-SECTION (1) OF SECTION 44DA CAN ONLY BE INTERPRETED TO MEAN THAT WHERE THE SERVICES ARE GENERAL IN NATURE AND FALL UNDER THE SUB-SECTION RE AD WITH EXPLANATION 2 TO SECTION 9(L)(VII) OF THE ACT, THEN AN ASSESSEE RENDERING SUCH SERVICES AS PROVIDED IN SECTION 44BB CANNOT CLAIM T HE BENEFIT OF BEING ASSESSED ON THE BASIS THAT 10 PERCENT OF THE REVENU ES WILL BE DEEMED TO BE THE PROFITS AS PROVIDED IN SECTION 44BB. IN OTHE R WORDS, THE AMENDMENT MADE BY THE FINANCE ACT, 2010 W.E.F. 01.0 4.2011 IN BOTH THE SECTIONS, CANNOT HAVE THE EFFECT OF ALTERING OR EFFACING THE FUNDAMENTAL NATURE OF BOTH THE PROVISIONS AND THEIR RESPECTIVE SPHERES OF OPERATION OR TO TAKE AWAY THE SEPARATE IDENTITY OF SECTION 44BB. WE DO NOT, THEREFORE, SEE HOW THESE AMENDMENTS CAN ASS IST THE REVENUE'S CONTENTION IN THE PRESENT CASE, PUT FORWARD BY THE LEARNED SENIOR STANDING COUNSEL. WE, THEREFORE, AGREE WITH THE AAR THAT IN THE PRESENT CASE THE PROFITS SHALL BE COMPUTED IN ACCOR DANCE WITH THE PROVISIONS OF SECTION 44BB OF THE ACT AND NOT SECTI ON 44DA. THE ABOVE PROPOSITION HAS BEEN FOLLOWED IN THE CASE OF BAKER HUGHES ASIA PACIFIC LIMITED VS ADIT 167 TTJ 304 WHERE IN IT HAS BEEN HELD AS UNDER: 64. WHEN VIEWED IN THE BACK DROP OF THIS OBJECTIVE, WE FIND THAT SECTION 44BB HAS BEEN COUCHED IN SUCH A MANNER SO A S TO ENCOMPASS WITHIN ITS AMBIT ALL SERVICES CONNECTED WITH OIL EX PLORATION WITHIN ITS AMBIT. IF A NONRESIDENT IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH OR SUPPLYING PLANT OR MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR EXTRACT ION OR PRODUCTION OF MINERAL OIL THEN 10% OF THE AGGREGATE OF THE AMOUNT S SPECIFIED IN SUB- SECTION (2) IS DEEMED TO BE THE PROFITS AND GAINS O F SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. 65. THE DEPARTMENT'S CONTENTION IS THAT SECTION 44D A INSERTED BY THE FINANCE ACT, 2010 W.E.F. 1-4-2011 IN SECTION 4 4BB IS RETROSPECTIVE AND, THEREFORE, ROYALTY AND FEES FOR TECHNICAL SERVICE SHOULD BE TAXED U/S 44DA AND NOT U/S 44BB. IN OUR O PINION, THE AMENDMENT CANNOT BE HELD TO BE RETROSPECTIVE PARTIC ULARLY BECAUSE IT BRINGS SUBSTANTIAL CHANGE IN THE TAXABILITY OF ASSE SSEE. IT IS WELL SETTLED 19 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 LAW THAT AN AMENDMENT TO THE TAXING STATUTE IF RESU LTS IN HIGHER TAX BURDEN ON ASSESSEE THEN IT IS PROSPECTIVE IN NATURE AND NOT RETROSPECTIVE. WE FIND THAT THIS ISSUE HAS BEEN DEA LT ELABORATELY BY HON'BLE JURISDICTIONAL HIGH COURT (UTTARAKHAND) IN B.J. SERVICES (SUPRA). WE ARE NOT INCLINED TO ACCEPT THE CONTENTI ONS ADVANCED ON BEHALF OF THE REVENUE, REPRODUCED EARLIER, FOR THE SIMPLE REASON THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON'BL E JURISDICTIONAL HIGH COURT, DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF OHM (SUPRA) AND BY THE DECISION OF THE ITAT IN CGG VERI TAS (SUPRA) AND PHONEX (SUPRA). OUR SUBMISSIONS IN RESPECT OF ARGUMENT NO. 2 I.E. BENEFIT OF SECTION 44BB IS NOT APPLICABLE ON SECOND LEG CONTRACTS IT IS SUBMITTED THAT THE HON'BLE DELHI TRIBUNAL IN CASE OF SBS MARINE LIMITED VS. ADIT ITA NO. 107/DEL/2012 DATE OF PRONOUNCEMENT 13-02-2015HAS HELD THAT BENEFIT OF SECTION 44BB OF THE ACT SHOULD NOT BE DENIED TO THE SECOND LEG CONTRACT. RELEVANT EXTRACT OF THE PRONOUNCEMENT IS AS UNDER: 23. FURTHER, THERE IS NO REQUIREMENT OF A DIRECT CO NTRACT OR AGREEMENT WITH THE PERSON ACTUALLY ENGAGED IN PROSP ECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AS CANVAS SED BY THE REVENUE FOR THE APPLICABILITY OF SECTION 44B8. ONE MAY REFE R OTHER PROVISIONS OF THE STATUE WHICH INSISTS ON AN AGREEMENT. FOR IN STANCE, SECTION 42 DEALS WITH ALLOWANCES ALLOWABLE IN COMPUTING THE PR OFITS OR GAINS OF ANY BUSINESS CONSISTING OF THE PROSPECTING FOR OR E XTRACTION OR PRODUCTION OF MINERAL OILS IN RELATION WHICH THE CE NTRAL GOVT. HAS ENTERED INTO AN AGREEMENT. SECTION 80IA(4)(I)(B) PR OVIDES THAT THE ENTERPRISE CARRYING ON THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY HAS TO ENTE R INTO AN AGREEMENT WITH THE CENTRAL GOVERNMENT OF A STATE GOVT. OR A L OCAL AUTHORITY ETC. IN THE ABSENCE OF ANY REQUIREMENT IN SECTION 4488 T HAT THE PERSON PROVIDING SERVICES, FACILITIES OR PLANT AND MACHINE RY ON HIRE SHOULD HAVE DIRECTLY ENTERED INTO A CONTRACT OR AGREEMENT WITH THE PERSON ACTUALLY ENGAGED IN PROSPECTING FOR OR EXTRACTION O R PRODUCTION OF MINERAL OILS, ONE CANNOT CURTAIL THE SCOPE OR APPLI CABILITY OF SECTION 4488 TO SECOND LEG CONTRACTORS WHOSE CONTRACTS OR A GREEMENTS ARE WITH FIRST LEG CONTRACTORS BUT WHOSE SERVICES OR FACILIT IES OR PLANT AND MACHINERY ARE USED IN CONNECTION WITH PROSPECTING F OR OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AS REQUIRED UNDER SECTI ON 44BB.THE HON'BLE SUPREME COURT IN ICDS LTD V CIT [2013) 350 ITR 527 = 2013-TIOL-06- SC-IT HELD THAT THE ASSESSEE LEASING THE VEHICLES TO OTHERS WHO USE THE SAID VEHICLES IN THEIR BUSINESS OF RUNNING THEM ON HIRE IS ENTITLED FOR HIGHER RATE OF DEPRECIATION ON THE VEHICLES GIVEN ON LEASE. IT WAS HELD BY THE HON'BLE SUPREME COURT THA T THE LESSOR NEED NOT HIMSELF USE THE VEHICLES IN THE BUSINESS OF RUN NING THEM ON HIRE. THE RATIONALE OF THE AFORESAID DECISION OF THE SUPR EME COURT MAY BE 20 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 APPLIED IN THE CONTEXT OF SECTION 44BB IN AS MUCH A S SECTION 44BB DOES NOT MANDATE THAT THE ASSESSEE SHOULD DIRECTLY ENTER INTO CONTRACT WITH THE PERSON ENGAGED IN THE BUSINESS OF PROSPECT ING FOR OR EXTRACTION OR PRODUCTION OF, MINERAL OILS OR THE SE RVICES OR FACILITIES OR PLANT AND MACHINERY ON HIRE SHOULD BE DIRECTLY PROV IDED TO THE SAID PERSON ALONE. WE HAVE ALREADY GIVEN A FINDING OF FA CT THAT THE SERVICES AND FACILITIES PROVIDED BY THE ASSESSEE ALONG WITH PLANT AND MACHINERY ARE USED IN OFFSHORE DRILLING OPERATIONS I.E., THE ACTIVITY OF PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS. CO NSEQUENTLY, THE REQUIREMENTS OF SECTION 44BB ARE SATISFIED IN THE P RESENT CASE. 24. IN VIEW OF THE ABOVE, THERE IS NO MERIT IN THE CONTENTIONS OF THE REVENUE THAT THE ASSESSEE IS NOT AN ELIGIBLE ASSESS EE UNDER SECTION 4488 SINCE IT HAS NOT DIRECTLY ENTERED INTO CONTRACT WIT H THE ONGC AND IT IS NOT UNDERTAKING THE ACTIVITIES SPECIFIED IN SECTION 44BB ITSELF AND BEING SECOND LEG CONTRACTORS THEY ARE NOT ELIGIBLE UNDER SECTION 44BB. 29. THE REVENUE HAS HEAVILY RELIED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT OF INDIA IN UNION OF INDIA VS. GOSALI A SHIPPING PVT. LTD., 113 ITR 307 = 2002- TI/-40-SC-L8-INTL AND THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN POOMPUHAR SHIPPING CORPORATION LTD. VS. ITO, 360 ITR 257 = 2013-TII-37-HC-MAD-INTL IN CONTENDING THAT THE CONTRACTS ENTERED INTO BY THE A SSESSEE WITH ITS CUSTOMERS ARE IN THE NATURE OF A CONTRACT FOR HIRE OF EQUIPMENT. IN GOSALIA'S CASE, THE HON'BLE SUPREME COURT HAD TO CO NSIDER WHETHER A HIRE CHARGE PAID UNDER TIME CHARTER WAS A PAYMENT O N ACCOUNT OF CARRIAGE OF GOODS. IN THIS CONTEXT, THE HON'BLE SUP REME COURT HELD AT PAGE-311 THAT IN ORDER THAT IT MAY BE SAID THAT AMO UNT WAS PAYABLE ON ACCOUNT OF THE CARRIAGE OF GOODS, IT WOULD BE NECES SARY TO SHOW THAT ONE IS THE CONSIDERATION FOR OTHER, THAT IS TO SAY, THAT THE PAYMENT WHICH THE CHARTERERS HAD AGREED TO MAKE TO THE OWNE RS OF THE SHIP WAS IN CONSIDERATION OF THE CARRIAGE OF GOODS. IT WAS O BSERVED THAT IF THE CHARTERERS WERE LIABLE TO PAY THE AMOUNT IRRESPECTI VE OF WHETHER THEY CARRY THE GOODS OR NOT, IT WOULD BE DIFFICULT TO SA Y THAT THE AMOUNT WAS PAYABLE ON ACCOUNT OF CARRIAGE OF GOODS. IT WAS HEL D THAT THE CHARACTER OF THE PAYMENT CANNOT CHANGE ACCORDING TO THE USE T O WHICH THE CHARTERERS PUT THE SHIP OR ACCORDING AS TO WHETHER THE SHIP IS LOADED WITH GOODS IN A PORT IN INDIA. 30. IN THE PRESENT CASE, THE ISSUE AS TO WHETHER TH E PAYMENT MADE BY THE ASSESSEE'S CUSTOMERS WAS ON ACCOUNT OF CARRI AGE OF GOODS DOES NOT ARISE. THE ISSUE, THAT ARISES, IS WHETHER THE A SSESSEE IS RENDERING A SERVICE, PROVIDING A FACILITY OR GIVING A PLANT ON HIRE. IN FACT, THE SUPREME COURT OBSERVES AT PAGE-311 THAT ONE MUST HA VE REGARD TO THE SUBSTANCE OF THE MATTER AND, IF NECESSARY, TEAR THE VEIL IN ORDER TO SEE WHETHER THE TRUE CHARACTER OF A PAYMENT IS SOMETHIN G OTHER THAN WHAT, BY A CLEVER DEVICE OF DRAFTING, IT IS MADE TO APPEA R. ON A WHOLE READING OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE CHARTERERS, WE HAVE ALREADY GIVEN A FINDING OF FACT THAT THE ASSES SEE WAS PROVIDING 21 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 SERVICES OR FACILITIES IN CONNECTION WITH THE ACTIV ITY OF PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS. THE RE VENUE'S RELIANCE OF THE ABOVE DECISION OF THE SUPREME COURT IS THEREFOR E MISPLACED. 31. THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT I N POOMPUHAR SHIPPING CORPORATION LTD. VS. ITO, 360 ITR 257 =201 3- TI/-37-HC- MAD-INTL IS NOT APPLICABLE SINCE THE SAID DECISION DOES NOT DEAL WITH THE APPLICABILITY OR OTHERWISE OF SECTION 44BB .THE REVENUE'S RELIANCE ON SECTION 9(L)(VI) TO CATEGORIZE THE ASSE SSEE'S INCOME FOR HIRE OF VESSELS AS 'ROYALTY' IS ALSO NOT CORRECT SINCE C LAUSE (IVA) OF SECTION 9(L)(VI) EXCLUDES AMOUNTS REFERRED TO IN SECTION 44 BB. THE OTHER ARGUMENTS, DECISIONS RELIED ON BY THE LEARNED DR IN CLUDING THE ONE ON 'BASE EROSION PROFIT SHIFTING' ARE ALSO NOT RELEVAN T IN THE FACTUAL MATRIX OF THE PRESENT CASE AND CONSIDERING WHAT WE HAVE AL READY HELD. IN VIEW OF THE ABOVE, WE HOLD THAT THE INCOME OF THE ASSESS EE FOR THE YEAR UNDER CONSIDERATION IS TO BE COMPUTED IN ACCORDANCE WITH SECTION 44BB OF THE ACT. CONSEQUENTLY, GROUND NOS. 1 AND 2 ARE ALLOWED. IT IS FURTHER SUBMITTED THAT THE ABOVE ORDER OF HON 'BLE ITAT WAS AFFIRMED BY THE HON'BLE UTTARAKHAND HIGH COURT BY DISMISSING TH E APPEAL OF REVENUE AT THE VERY THRESHOLD VIDE ORDER DATED 06-08-2015 IN I TA NO. 36/2015. SIMILAR VIEW HAS BEEN HELD IN CASE OF LOUIS DREYFUS ARMATEURES SAS IN ITA NO. 5814/DEL/2010 DATE OF PRONOUNCEMENT 17.02.2015WHEREIN IT HAS BEEN HELD THAT THE PROVISION OF SECTION 44BB DO ES NOT DISTINGUISHES BETWEEN THE MAIN CONTRACTOR AND A SUB-CONTRACTOR. R ELEVANT EXTRACT OF THE PRONOUNCEMENT IS AS UNDER: 60. A READING OF THE AFORESAID JUDICIAL PRECEDENCE CLARIFY THAT SEC. 44BB DOES NOT DISTINGUISH BETWEEN THE MAIN CONTRACT OR OR A SUB- CONTRACTOR AS HAS BEEN INTERPRETED BY THE AO AND TH E DRP. THE CONCLUSIONS OF THE AO AND THE DRP ARE ERRONEOUS ON ACCOUNT OF THE REASON THAT THE PROVISION CLEARLY ENVISAGES THE NON - RESIDENT ASSESSEE TO BE ENGAGED IN THE BUSINESS OF SUPPLYING PLANT AN D MACHINERY ON HIRE. THE ONLY CONDITION IMPOSED, SO TO SAY, IS THA T SUCH PLANT AND MACHINERY HAS TO BE USED OR SHOULD BE USED FOR THE PURPOSES OF PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MIN ERAL OILS. THE LANGUAGE IN SECTION 44BB IN OUR VIEW IS CLEAR SO AL SO THE LEGISLATIVE INTENTION. IT IS A TRITE LAW THAT HAS ALREADY HELD BY THE HON'BLE SUPREME COURT IN B. PARMANNAND VS. MOHAN KOIKAL 2011 (4) SE E 266 THAT 'THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR OF THE LEGISLATIVE INTEND. IT IS WELL SETTLED PRINCIPLE OF LAW THAT THE COURT CANNOT READ ANYTHING INTO A STATUTORY PROVISION WHI CH IS PLAN AND UNAMBIGUOUS'. IF THE LEGISLATURES INTENTION AS CONT ENDED BY THE REVENUE WAS TO RESTRICT THE BENEFIT OF SEE. 44BB ON LY TO THE MAIN CONTRACTOR OR ONGC, THEN THE WORDS AFTER 'THE ASSES SEE ENGAGED IN THE BUSINESS OF 'SUPPLYING PLANT AND MACHINERY ON HIRE' OR 'PROVIDING SERVICES OR FACILITIES' OUGHT TO HAVE BEEN OMITTED. HENCE, WHERE THE PROVISION DOES NOT CREATE ANY DISCRIMINATION BETWEE N THE PERSON WHO 22 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 ACTUALLY DOES THE ACTIVITY OF PROSPECTING FOR OR EX TRACTION OR PRODUCTION, AND THE PERSON WHO SUPPLIES THE PLANTS AND MACHINERY, THE NARROW INTERPRETATION OF THE PROVISION IS THUS NOT PERMITTED. THE BASIC CONDITION TO BE SATISFIED IN THE SAID PROVISION IS THAT THE PLANT OR MACHINERY SUPPLIED OR LENTED ON HIRE BY THE ASSESSE E, NON-RESIDENT SHOULD BE USED IN THE PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERALS OILS OR WHERE EQUIPMENT HAS BEEN SUPPLIED, SUCH EQUIPMENT SHOULD HAVE BEEN USED FOR THE PURPOSES OF PROSPECTI NG FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS. HAVING REGARD TO THE ABOVE WE ARE OF THE CONSIDERED OPINION THAT THE FETTER ASSUMED BY AUTHO RITIES BELOW WHILE INTERPRETING THE PROVISIONS OF SECTION 44BB OF THE ACT ARE MANIFESTLY ABSENT AND THERE IS NOTHING IN THE SAID PROVISION S O AS TO DISENTITLE A SUB-CONTRACTOR FROM INVOKING THE SAID PROVISION. AC CORDINGLY WE DO NOT FIND ANY FAULT IN THE CLAIM OF THE ASSESSEE THA T REVENUES RECEIVED UNDER THE CHARTER AGREEMENTS WITH CGG FOR PROVIDING TWO SEISMIC SURVEY VESSELS ARE IN CONSIDERATION WITH PROSPECTIN G FOR, EXTRACTIONS OR PRODUCTION OF MINERAL OILS AND THEREFORE TAXABLE U/ S 44BB OF THE ACT. IT IS SUBMITTED THAT THE HON'BLE DELHI ITAT IN CASE OF AOIT VS. BAKER HUGHES SINGAPORE PTE. LTD ITA NO.744/0EL/2013 DATE OF PRON OUNCEMENT 20-04- 2015HAS HELD AS UNDER: 7. LEARNED COMMISSIONER (DR) HAS, EVEN WHILE ACCEPT ING THAT THE SAME ISSUE CAME UP FOR CONSIDERATION BEFORE COORDIN ATE BENCHES IN THE CASES OF BAKER HUGHES ASIA PACIFIC & ORS VS AOIT [3 4 ITR (TRIB) 192J = 2014-TII-L04-ITAT-DEL-INTL AND BAKER HUGHES ASIA PACIFIC LIMITED VS AOIT (ITA NO. 6476/0EL/12; ORDER DATED 5 TH SEPTEMBER 2014) = 2014-TL/-173-ITAT-DEL-INTL AND THIS ISSUE W AS DECIDED IN FAVOUR OF THE ASSESSEE, CONTENDED THAT 'NO CASE CAN BE HELD TO BE COVERED, STANDING AS IT DOES ON OWN FACTS WHICH ARE DISTINGUISHABLE'. SHE HAS ELABORATE ARGUMENTS IN SUPPORT OF THE STAND OF THE ASSESSING OFFICER AND URGED US TO TAKE AN INDEPENDENT VIEW OF THE MATTER. HER LINE OF REASONING, IN BROAD TERMS, IS LIKE THIS. IT IS POINTED OUT THAT THE PAYMENTS FOR USE AND HIRE OF EQUIPMENT AND PERSONNE L IS EQUIPMENT ROYALTY/ FEES FOR TECHNICAL SERVICES, AND THAT THE INCOME BEING IN NATURE OF ROYALTY/ FTS, AND NOT FOR A PROJECT UNDERTAKEN B Y THE APPELLANT, IS NOT ELIGIBLE FOR BENEFIT OF SECTION 4488 AS IT WOUL D BE CONTRARY TO THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASES OF FORAMER FRANCE AND ROLLS ROYCE. IT IS CONTENDED THAT THE PR OVISIONS OF SECTION 4400A, AS IN FORCE WITH EFFECT FROM 1ST APRIL 2011, ARE CLARIFICATORY IN NATURE AND HAVE TO BE READ INTO THE PROVISIONS OF T HE ACT. ITS HER CONTENTION THAT THE PROVISIONS OF SECTION 44BB ARE MEANT FOR THE FIRST LEG CONTRACTORS ENGAGED IN PROSPECTING, EXTRACTING AND PRODUCING MINERAL OILS, AND THAT THE BENEFIT OF THESE PROVISI ONS CANNOT BE EXTENDED TO THE VENDORS AND SUPPLIERS OF SUCH FIRST LEG CONTRACTORS. IT IS SUBMITTED THAT DOING SO WOULD AMOUNT TO BASE EROSIO N AND PROFIT SHIFTING FROM DEVELOPING COUNTRIES. A REFERENCE IS THEN MADE HEYDON'S RULE AND SUBMITTED THAT THE AMENDMENTS IN THE SCHEM E OF SECTION 44BB AND 440A, VIDE FINANCE ACT 2010, THOUGH STATED TO BE EFFECTIVE 23 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 FROM ASSESSMENT YEAR 2011-12 MUST BE TREATED AS C1A RIFICATORY IN NATURE. A REFERENCE IS MADE TO THE DECISION OF HON' BLE SUPREME COURT, IN THE CASE OF UNION OF INDIA VS GOSALIA SHIPPING P VT LTD (113 ITR 307) = 2002-TII-40-SC-LB-INTLFOR THE PROPOSITION TH AT WHEN PAYMENT IS MADE TO A SHIPPING COMPANY FOR TIME CHAR TER, ITS PAYMENT FOR HIRE OF SHIPMENT AND NOT FOR THE PURPOSE OF CAR RYING GOODS, AND BY THE SAME LOGIC, WHEN PAYMENT IS MADE BY THE FIRST L EG CONTRACTOR TO THE SUPPLIER OF EQUIPMENT OR PERSONNEL, THE PAYMENT IS FOR SUCH EQUIPMENT OR PERSONNEL AND NOT FOR THE PURPOSES IN WHICH THE EQUIPMENT OR PERSONNEL ARE PUT TO USE. IT IS THEN SUBMITTED THAT THE DECISION OF PGS GEOPHYSICAL AS VS ADIT (269 CTR 433) = 2014-TII-35- HC-OEL- INTL CONTRADICTS THE FINDINGS IN THE EARLIER HON'BL E DELHI HIGH COURT DECISION IN THE CASE OF DIT VS OHM LTD (352 ITR 406 ), BASED ON WHICH THE COORDINATE BENCH HAS DECIDED THIS ISSUE I N FAVOUR OF THE ASSESSEE. IT IS SUBMITTED THAT THE DECISION OF THE COORDINATE BENCH IN THE CASE OF BAKER HUGHES ASIA PACIFIC LTD (SUPRA), BY WHICH THIS ISSUE IN APPEAL IS STATED TO BE COVERED IN FAVOUR OF THE ASSESSEE, DID NOT TAKE ACCOUNT THE BINDING JUDICIAL PRECEDENTS IN THE CASE S OF PGS GEOPHYSICAL (SUPRA) AND GOSALIA SHIPPING (SUPRA) AS ALSO MANY OTHER RELEVANT DECISIONS, WE SHOULD NOT BE GUIDED BY THE SAME. 8. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITS THAT AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY DECISIONS OF THE COORDINATE BENCHES AND THESE DECIS IONS ARE NOT YET OVERTURNED BY THE HON'BLE COURTS ABOVE, THERE IS NO OCCASION TO DEVIATE FROM THE SAME. WE ARE THUS URGED TO CONFIRM THE FINDINGS OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 9. WE HAVE NOTED THAT THE ISSUE IS DIRECTLY COVERED BY THE DECISIONS OF THE COORDINATE BENCHES AND THERE ARE N O DIRECT DECISIONS ON THE ISSUE BY ANY HIGHER FORUMS. THE METICULOUS R ESEARCH DONE BY THE LEARNED COMMISSIONER (DR), AS ALSO HER ERUDITE ARGUMENTS, ARE OF NOT OF ANY PRACTICAL EFFECT AT THIS STAGE. AS FOR T HE BEPS CONSIDERATIONS, AS SO STRENUOUSLY ARGUED BY THE LEA RNED COUNSEL, BASE EROSION AND PROFIT SHIFTING IS A TAX POLICY CONSIDE RATION WHICH IS RELEVANT FOR THE PROCESS OF LAW MAKING, BUT IT CANN OT HAVE A ROLE IN THE JUDICIAL DECISION MAKING PROCESS BECAUSE JUDICIAL P ROCESS WILL INFRINGE NEUTRALITY IF IT IS TO BE SWAYED BY SUCH POLICY CON SIDERATION. THE JUDICIAL NEUTRALITY MUST NOT ONLY BE NEUTRAL VIS -A VIS THE PARTY BUT ALSO VALUE NEUTRAL VIS-A-VIS COMPETING IDEOLOGIES. JUDIC IAL AUTHORITIES ARE TO INTERPRET THE LAW AS IT EXISTS AND NOT AS IT OUGHT TO BE IN THE LIGHT OF CERTAIN UNDERLYING VALUE NOTIONS. AS FOR THE LEGAL ARGUMENTS ADVANCED BY THE LEARNED COMMISSIONER (DR), AS WAS LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF AMBIKA PRASAD MISHRA V S. STATE OF UP AIR 1980 SE 1762 : (1980) 3 SCC 719 (P. 1764 OF AIR 1980 SC), 'EVERY NEW DISCOVERY NOR ARGUMENTATIVE NOVELTY CANN OT UNDO OR COMPEL RECONSIDERATION OF A BINDING PRECEDENT ... A DECISION DOES NOT LOSE ITS AUTHORITY MERELY BECAUSE IT WAS BADLY ARGU ED, INADEQUATELY CONSIDERED OR FALLACIOUSLY REASONED .... '. SIMILAR LY, IN THE CASE OF 24 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 KESHO RAM & CO. VS. UNION OF INDIA (1989) 3 SEE 151 , HON'BLE SUPREME COURT HAD OBSERVED THAT '(T}HE BINDING EFFE CT OF A DECISION OF THIS COURT DOES NOT DEPEND UPON WHETHER A PARTICULA R ARGUMENT WAS CONSIDERED OR NOT, PROVIDED THE POINT WITH THE REFE RENCE TO WHICH THE ARGUMENT IS ADVANCED SUBSEQUENTLY WAS ACTUALLY DECI DED IN THE EARLIER DECISION ..... ' IN VIEW OF THESE DISCUSSIONS, WE S EE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW TAKEN BY THE COORDINATE BENCHES AND RESPECTFULLY FOLLOWING THE VIEWS OF THE COORDINATE BENCH, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNE D CIT (A) AND DECLINE TO INTERFERE IN THE MATTER. OUR SUBMISSIONS IN RESPECT OF ARGUMENT NO. 3 I.E. DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF PGS GEOPHYSICAL AS IT IS SUBMITTED THAT THE DECISION OF HON'BLE HIGH C OURT IN CASE OF PGS GEOPHYSICAL AS 369 ITR 27 HAS RECENTLY BEEN RECALLE D BY THE HON'BLE COURT VIDE ORDER DATED 01-05-2015.RELEVANT OBSERVATIONS O F THE COURT ARE AS UNDER: 'LEARNED SENIOR COUNSEL POINTS OUT THE RELEVANT PAR TS OF THE ASSESSING OFFICER'S (AO) ORDER, SUBMISSIONS MADE BEFORE THE I NCOME TAX APPELLATE TRIBUNAL (ITAT), AS WELL AS THE GROUNDS O F APPEAL TO SHOW THAT THE CONSISTENT CASE OF THE APPELLANT WAS THAT THE SERVICES IN QUESTION WERE EXCLUDED FROM THE DESCRIPTION OF 'TEC HNICAL SERVICES' BY VIRTUE OF SECTION 9(1)(VII) EXPLANATION 2 OF THE IN COME TAX ACT, 1961. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES AND A RE OF THE OPINION THAT SINCE THIS QUESTION FRAMED WAS PART OF THE TWO QUESTIONS ORIGINALLY FRAMED BUT WAS SUBSEQUENTLY RECAST, IT WOULD BE APP ROPRIATE IN THE INTEREST OF JUSTICE THAT THE JUDGMENT DISPOSING OF THE APPEAL DATED 09.07.2014 IS RECALLED; DIRECTED ACCORDINGLY. ITA 612/2012 LIST THE APPEAL ON 17.07.2015 FOR FURTHER HEARING O N THE SUBSTANTIAL QUESTIONS OF LAW AS FORMULATED ON 08.01.2013.' THUS, THE LD. AR PRAYED THAT THE ORDER OF THE LD. C IT (A) MAY BE UPHELD. 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. THE QUESTION WHETHER THE ASSESSEE IS ENTITLED TO DECLAR E ITS INCOME UNDER THE PROVISION OF SECTION 44BB OF THE ACT, HAS ALREADY B EEN ANSWERED IN THE FAVOUR OF THE ASSESSEE VIDE ORDER DATED 21 ST NOVEMBER 2014 IN ITA NO.5823/DEL/2011 25 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 IN ASSESSEES OWN CASE FOR AY 2008-2009, WE FURTHER FIND THAT THE SAID ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE REVENUE BEFORE T HE HONBLE JURISDICTION UTTARAKHAND HIGH COURT, WHICH WAS DISMISSED VIDE OR DER DATED 06.08.2015 IN ITA NO28/DEL/2015. THE HONBLE HIGH COURT WHILE AF FIRMING THE ORDER OF THE TRIBUNAL HELD AS UNDER: 4. IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APE X COURT IN CIVIL APPEAL NO. 731 OF 2007 AND CONNECTED CASES (OIL & N ATURAL GAS CORPORATION LIMITED VS. COMMISSIONER OF INCOME TAX & ANOTHER), THE SUBSTANTIAL QUESTIONS OF LAW RELATING TO THE ASSESS ABILITY OF THE AMOUNTS UNDER SECTION 448B HAVE TO BE ANSWERED AGAINST THE APPELLANT / REVENUE. ACCORDINGLY, WE ANSWER THE SAID QUESTIONS OF LAW AG AINST THE REVENUE IN THE LIGHT OF THE AFORESAID JUDGMENT OF THE HON'BLE APEX COURT. 5 .. 6. IN SUCH CIRCUMSTANCES, THE APPEALS ARE DISPOSED OF AS FOLLOWS: (I) WE ANSWER THE QUESTIONS OF LAW RELATING TO THE ASSE SSABILITY OF THE AMOUNTS UNDER SECTION 44BB AGAINST THE REVENUE. 9. IN THE LIGHT OF THE AFORESAID ORDER OF THE CO-OR DINATE BENCH WHICH HAVE BEEN AFFIRMED BY THE HONBLE HIGH COURT, WE RESPECT FULLY FOLLOW THE SAME AND WE HOLD THAT FOR THE RELEVANT ASSESSMENT YEAR I.E. AY 2010-11 THE ASSESSEE IS ENTITLED TO DECLARE ITS INCOME UNDER THE PROVISION OF SECTION 44BB OF THE ACT. 10. THE NEXT QUESTION IS WHETHER THE AMENDMENT IN S ECTION 44BB AND 44DA SHOULD BE READ AS RETROSPECTIVE IS ALSO NO LONGER R ES-INTEGRA AS POINTED OUT BY THE LD. AR. IN B J SERVICE COMPANY MIDDLE EAST LTD VS DCIT 339ITR169BY ORDER DATED 20.08.2011, THE HONBLE UTTARAKHAND HIG H COURT, THE JURISDICTION HIGH COURT HAS HELD AS UNDER: 26 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 55. AS STATED EARLIER, THE COMBINED EFFECT OF THE PROVISIONS OF S. 44BB, 44DA AND 115A OF THE ACT WILL NOT HAVE A BEAR ING TO THE CASES IN HAND IN AS MUCH AS THE EXPLANATORY NOTE TO THE F INANCE BILL, 2010 CLEARLY INDICATES THAT THE AMENDMENTS PROPOSED IN S . 44BB AND 44DA OF THE ACT WOULD TAKE EFFECT FROM 1ST APRIL, 2011 A ND WOULD APPLY IN RELATION TO THE ASST. YR. 2011-12 AND SUBSEQUENT YE ARS. THE AMENDMENT IS PROSPECTIVE IN NATURE AND WOULD NOT APPLY TO THE CASES IN HAND WHICH IS OF THE EARLIER ASSESSMENT YEARS. 11. IT WAS FURTHER BROUGHT TO OUR NOTICE BY THE LD. AR, THAT AGAINST THE AFORESAID ORDER OF THE HONBLE HIGH COURT S.L.P. WA S PREFERRED BY THE REVENUE WHICH WAS DISMISSED BY OBSERVING AS UNDER: 'WHEREAS SECTION 44BB DEALS WITH A NON-RESIDENT ASS ESSEE PROVIDING, AMONGST OTHERS, SERVICES OR FACILITIES IN CONNECTIO N WITH PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS, THE SECTIONS MENTIONED IN THE PROVISO, REFERRED TO ABOVE, DEAL WITH FEES R ECEIVED BY NON- RESIDENT ASSESSEES FOR PROVIDING, AMONGST OTHERS, S ERVICES OR FACILITIES. THEREFORE, BY ADDING THE PROVISO WITH EFFECT FROM 1 ST APRIL, 2011, A CLEAR CUT DISTINCTION HAS BEEN MADE BETWEEN THOSE N ON- RESIDENT ASSESSEES, WHO ARE ENGAGED IN THE BUSINESS OF PROVI DING, AMONGST OTHERS, SERVICES OR FACILITIES IN CONNECTION WITH P ROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AND OTHER KIND OF NON-RESIDENT ASSESSEES, WHO GET FEES FOR PROVIDING SERVICES OR F ACILITIES. THE ASSESSING OFFICER FELT THAT, BY REASON OF INSERTION OF THE SAID PROVISO, HE CAN LOOK INTO THOSE COMPLETED ASSESSMENTS FOR TH E ACCOUNTING YEARS, WHICH STOOD CLOSED PRIOR TO 1ST APRIL, 2011 AND, AC CORDINGLY, EXERCISED POWER UNDER SECTION 148 OF THE INCOME TAX ACT. BY T HE JUDGMENT UNDER APPEAL, THE LEARNED JUDGE HAS POINTED OUT THA T THERE WAS NO JUST REASON FOR DOING THE SAME, INASMUCH AS, THE DISTINC TION REFERRED TO ABOVE, ACCORDING TO THE INCOME TAX ACT, APPLIES ONL Y SINCE 1ST APRIL. 2011. 4. WE, ACCORDINGLY, REFUSE TO ADMIT THE APPEALS. TH EY ARE DISMISSED. 12. IN THE LIGHT OF THE APEX COURTS ORDER AS AFORE STATED, THE QUESTION OF RETROSPECTIVTY CANNOT BE ACCEPTED AND IS BEING REPE LLED AND SO THIS GROUND OF REVENUE FAILS. 27 ITA NO.5928/DEL/2013 CO NO.194/DEL/2014 13. DURING THE COURSE OF HEARING, THE LD AR DID NOT PRESS THE CO FILED BY THE ASSESSEE. THEREFORE, THE CROSS OBJECTION OF THE ASS ESSEE STANDS DISMISSED. 14. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 2015. SD/- SD/- (PRASHANT MAHARISHI) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 24 TH DAY OF NOVEMBER, 2015 TS COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A)-II, DEHRADUN. 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI