M/s. Al Mansoori Specialized Engineering Co. LLC, New Delhi V. DCIT, Dehradun

CO 215/DEL/2015

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4088 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 02-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJANA
• Keywords: Business income; Permanent establishment; Set aside
• Section: 234B; 44BB; 192; 11

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 6587/DEL/2014 (ASSESSMENT YEAR: 2011 - 12 ) DCIT, CIRCLE - 1, INTERNATIONAL TAXATION, AAYAKAR BHAWAN, 13A - SUBHASH ROAD, DEHRADUN VS. AL MANSOORI SPECIALIZED ENGINEERING CO. LLC, C/O. M/S. NANGIA & CO. CAS, 3 RD FLOOR, NCR PLAZA, NEW CANTT ROAD, DEHRADUN PAN:AAACA9529M (APPELLANT) (RESPONDENT) C.O. NO.215/DEL/2015 I TA NO .6587/DEL/2014 (ASSESSMENT YEAR: 2011 - 12 ) DCIT, CIRCLE - 1, INTERNATIONAL TAXATION, AAYAKAR BHAWAN, 13A - SUBHASH ROAD, DEHRADUN VS. AL MANSOORI SPECIALIZED ENGINEERING CO. LLC, C/O. M/S. NANGIA & CO. CAS, 3 RD FLOOR, NCR PLAZA, NEW CANTT ROAD, DEHRADUN PAN:AAACA9529M (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT ARORA, CA REVENUE BY: SH. P DAM KANUNJANA, SR. DR DATE OF HEARING 20/06/ 2016 DATE OF PRONOUNCEMENT 27 / 06 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. TH IS THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A ) - II, DEHRADUN, DATED 04/09/2014 FOR THE ASSESSMENT YEAR 2011 - 12 AND ASSESSEE HAS FILED CROSS OBJECTION IN THE ABOVE APPEAL. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE REVENUES RECEIVED BY THE ASSESSEE, ON ACCOUNT OF THE PROVISION OF SLICK - LINE SERVICES, WIRE - LINE SERVICES, WELL - TESTING SERVICES ETC., INCLUDING PROVISION OF TECHNICAL PERSONNEL, TO VARIOUS ENTITIES WAS TAXABLE U/S 44BB OF THE INCOME TAX ACT, 1961 ('THE ACT') AS OPPOSED TO SECTION 44DA READ WITH SECTION 9(L)(VII) OF THE ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) HAS ERRED IN IGNORING THE EFFECT OF THE AMENDMENT BROUGHT IN VI DE FINANCE ACT, 2010 W.E.F. 01.04.2011, IN TERMS OF WHICH INCOME COVERED BY SECTION 44DA HAS BEEN SPECIFICALLY EXCLUDED FROM THE PAGE 2 OF 8 SCOPE OF SECTION 44BB FOR ASSTT YEARS 2011 - 12 (THE YEAR UNDER CONSIDERATION) ONWARDS. 2.1 WHETHER ON THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE LD CIT (A) HAS ERRED IN IGNORING THE DISTINCT SCHEME OF TAXATION OF FEE FOR TECHNICAL SERVICES ('FTS') AND ROYALTY AND DISREGARDING THE INSERTION OF PROVISOS IN SECTION 44BB/44DA/ 115A AND THE RATIONALE BEHIND THE INTRODUCTION OF SAID A MENDMENT IN THE FINANCE BILL 2010 IN HOLDING THAT THE INCOME OF THE ASSESSEE FROM THE ABOVE SERVICES WAS COVERED UNDER THE PRESUMPTIVE PROVISIONS OF SECTION 44BB. 2.2 THE LD CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT EVEN IN TERMS OF RATIO OF THE JUDGMENT IN THE SAID OF OHM LTD [[352, ITR 406 ( DELHI)] CITED BY HIM, THE PROVISIONS OF SECTION 44BB ARE NOT APPLICABLE WHERE THE SCOPE OF THE SERVICES/FACILITIES PROVIDED BY AN ASSESSEE IS GENERAL IN NATURE FALLING UNDER SECTION 44DA(L) OF THE ACT. 2.3 THE LD CIT(A) HAS ERRED IN MECHANICALLY FOLLOWING THE DECISION IN THE CASE OF M/S OHM LTD WITHOUT FIRST ADJUDICATING UPON THE ISSUE AS TO WHETHER AND HOW THE SCOPE OF THE SERVICES/FACILITIES RENDERED UNDER THE CONTRACTS IS NOT GENERAL IN NATURE AND THEREFO RE, DOES NOT QUALIFY AS FTS U/S 9(L)(VII) OF THE ACT TAXABLE UNDER SECTION 44DA. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE INCOME EARNED BY THE ASSESSEE FOR IMPARTING OF SERVICES WAS ELIGIB LE FOR TREATMENT U/S 44BB OF THE ACT, WITHOUT ADJUDICATING THE ASPECT OF ELIGIBILITY UNDER THE SECOND LIMB OF THE EXCLUSIONARY PROVISO ( EXPLANATION TO SECTION 9(L)(VII) OF THE I T ACT, 1961) I.E. 'FOR A PROJECT UNDERTAKEN BY THE RECIPIENT' IN TERMS OF DEC ISION OF HON'BLE DELHI HIGH COURT IN CIT V RIO TINTO TECHNICAL SERVICES [2012 - TII - 01 - HC - DEL - INTL] 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN IGNORING THE DECISIONS OF JURISDICTIONAL HIGH COURT IN THE CASES OF ONGC AS AGENT OF FORAMER FRANCE AND M/S ROLLS ROYCE PVT LTD [2007 - TM - 03 - HC - UKHAND - INTL] 5. WHETHER ON THE FACTS AND CIRCUMSTANCES ON THE FACTS, THE LD CIT(A) HAS ERRED IN REVERSING THE ACTION OF THE AO WHO, HAVING HELD THAT THE ASSESSEE'S REVENUES ON ACCOUNT OF AFORESAID SERVICES UNDER CONTRACTS WITH VARIOUS ENTITIES ARE LIABLE TO BE TAXED U/S 44DA , RIGHTLY ESTIMATED THE INCOME OF THE ASSESSEE BY APPLYING 25% RATE OF PROFIT ON GROSS RECEIPTS IN THE ABSENCE OF BOOKS OF ACCOUNTS AND DETAILS OF EXPENSES INCURRE D IN PROVIDING THE SERVICES. 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT INTEREST U/S 234B OF THE INCOME TAX ACT, 1961 ('THE ACT') WAS NOT CHARGEABLE IN THIS CASE BY RELYING UPON THE CASE OF M/S MAERSK [334 ITR 79] A. THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE CASE OF M/S MAERSK WAS DISTINGUISHABLE ON FACTS AS IT DEALT WITH A CASE WHERE THE EMPLOYER FAILED TO DEDUCT TAX AT SOURCE DESPITE THE SPECIFIC PROVISIONS OF THE ACT IN TERMS OF WHICH THE EMPLOYER WAS MANDATORILY REQUIRED TO DEDUCT TAX FROM THE SALARY PAID TO THE EMPLOYEE. IN THE SAID CASE, THE HON'BLE COURT HELD THAT AN EMPLOYEE IS NOT LIABLE TO PAY ADVANCE TAX PAGE 3 OF 8 ON SALARY BECAUSE U/S 192 THERE IS AN OBLIGATION ON THE EMPLOYER TO DEDUCT TAX AT SOURCE. THE CASE DOES NOT LAY DOWN A GENERAL PROPOSITION OF LAW THAT INTEREST U/S 234B IS NOT CHARGEABLE IN ALL CASES, PARTICULARLY IN CASES WHERE THE NON - RESIDENT ASSESSEE/PAYEE/DEDUCTEE HAS PLAYED A ROLE IN INDUCING NON - D EDUCTION OR SHORT - DEDUCTION ON THE PART OF THE PAYER/DEDUCTOR. B. THE LD. CIT (A) HAS ERRED IN FAILING TO TAKE NOTE OF THE OBSERVATIONS OF THE HON'BLE HIGH COURT IN THE CASE OF M /S MITSUBISHI [330 ITR 578 (DEL) THAT THE ROLE OF THE ASSESSEE/PAYEE/DEDUCTE E IN SHORT - DEDUCTION OR NON - DEDUCTION OF TAX NEEDS TO BE ASCERTAINED BEFORE CLAIM REGARDING NON - LIABILITY TO INTEREST U/S 234B OF THE ACT IS ACCEPTED, A PROPOSITION AFFIRMED SUBSEQUENTLY IN THE CASE OF M/S ALCATEL LUCENT (JUDGMENT OF DELHI HIGH COURT DATED 7.11.2013 IN ITA NO. 327 & ORS OF 2012). 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN THE CROSS OBJECTION : - 1. THAT THE LD. COMMISSIONER OF INCOME - TAX, APPEALS - LL, DEHRADUN [CIT(A)] ERRED IN NOT HOLDING THAT THE NATURE OF OPERATIONS UNDERT AKEN BY THE RESPONDENT UNDER THE VARIOUS CONTRACTS WITH ITS CUSTOMERS WAS NOT FEES FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION (2) TO SECTION 9(1 ){VII) OF THE INCOME TAX ACT, 1961. 2. WITHOUT PREJUDICE TO THE ABOVE, THAT THE LD. CIT(A) HAS ERRED I N NOT HOLDING THAT THE ACTIVITIES PERFORMED BY THE RESPONDENT ARE IN THE NATURE OF A BUILDING, CONSTRUCTION, INSTALLATION AND/OR A MINING OR LIKE PROJECT AND FOR THIS REASON, EXCLUDED FROM THE AMBIT OF THE DEFINITION OF FEES FOR TECHNICAL SERVICES AS DEFIN ED IN EXPLANATION (2) TO SECTION 9(1 )(VII). 3. WITHOUT PREJUDICE TO ANY OF THE ABOVE, THAT THE LD. CIT(A) HAS ERRED IN NOT HOLDING THAT THE SCOPE OF OPERATIONS OF THE RESPONDENT ARE SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT OF UT TARAKHAND IN THE CASE OF CIT VS. ONGC AS AGENT OF SCAN DRILLING COMPANY IN ITR NO. 2 OF 2001. 4. WITHOUT PREJUDICE TO ANY OF THE ABOVE, THAT THE LD. CIT(A) HAS ERRED IN NOT HOLDING THAT SECTION 44DA COULD NOT HAVE APPLIED IN RESPECT OF PAYMENTS RECEIVED BY A NON - RESIDENT ASSESSEE FROM ANOTHER NON - RESIDENT. 5. WITHOUT PREJUDICE TO ANY OF THE ABOVE, THAT THE LD. CIT(A) HAS ERRED IN NOT HOLDING THAT IN THE EVENT THAT THE INCOME IS TAXABLE AS FEES FOR TECHNICAL SERVICES / ROYALTY, THE TAXABLE INCOME IN I NDIA IS TO BE DETERMINED BY UNDERTAKING A FAR (FUNCTIONS, ASSETS, RISKS) ANALYSIS OF THE INDIAN PERMANENT ESTABLISHMENT OF THE RESPONDENT AND NOT AT THE ADHOC PROFIT ESTIMATION OF 25 PER CENT AS DONE BY THE APPELLANT. PAGE 4 OF 8 4. THE BRIEF FACT OF THE CASE IS THAT ASSESSEE IS EARNING REVENUE FROM VARIOUS CONTRACTS WHICH ARE HELD TO BE FEES FOR TECHNICAL SERVICES AS PER SECTION 9(1 ) (VII) OF THE ACT AND FURTHER AS THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS AND ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE IS R ENDERING SUCH SERVICES THROUGH ITS PERMANENT ESTABLISHMENT IN INDIA , HE COMPUTED THE INCOME OF THE ASSESSEE ON ESTIMATE BASIS DEEMING PROFIT RATE OF 25% OF THE GROSS RECEIPTS AS BUSINESS INCOME. THE CONTENTION OF THE ASSESSEE WAS THAT THE ABOVE INCOME REC EIVED BY THE ASSESSEE IS FROM PROVIDING SERVICES AND FACILITIES IN CONNECTION WITH EXPLORATION, EXPLOITATION AND PRODUCTION OF MINERAL OIL. THEREFORE, THE INCOME OF THE ASSESSEE IS TAXABLE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION UNDER THE PRESUMPTIVE TAX SCHEME PROVIDED U/S 44BB OF THE INCOME TAX ACT. THE LD ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND FRAMED ASSESSMENT ON A TOTAL INCOME OF RS. 36510770/ - AGAINST THE RETURNED INCOME OF RS. 14604309/ - . ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A) WHO IN TURN HELD THAT THAT SERVICES RENDERED BY THE APPELLANT HAS DIRECT NEXUS WITH OIL EXTRACTION AND THEREFORE FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF OHM LTD. 352 ITR 406 (DEL), HE HELD THAT GROSS RECEI PT OF THE ASSESSEE SHALL BE DEALT WITH U/S 44BB OF THE ACT AND NOT CHARACTERIZED AS FEES FOR TECHNICAL SERVICES OR ROYALTY. AGAINST THIS ORDER OF THE LD CIT(A) REVENUE HAS FILED AN APPEAL AND ASSESSEE HAS FILED CROSS OBJECTION. 5. BEFORE US THE LD DR RELIED UPON THE ORDER OF THE LD ASSESSING OFFICER, HOWEVER, IT WAS FAIRLY CONCEDED BY HIM THAT NOW THIS ISSUE DOES NOT SURVIVE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF ONGC VS. CIT IN CIVIL APPEAL NO. 731/2007 DAT ED 01.07.2015. AGAINST THIS LD AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 30.12.2015 IN CASE OF THE ASSESSEE FOR AY 2005 - 06. HE FURTHER SUBMITTED THAT THE LD ASSESSING OFFICER HAS HIMSELF ACCEPTED THIS POSITI ON IN AY 2013 - 14. HE FURTHER SUBMITTED THAT THE CROSS OBJECTION FILED BY THE ASSESSEE IS SUPPORTIVE IN NATURE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE ISSUE OF TAXABILITY OF THE RECEIPT ON IDENTICAL FACTS AND CIRCUMSTANCES HAS BEEN CONSIDE RED IN ASSESSEES OWN CASE IN ITA NO. 5868/DEL/2011 VIDE ORDER DATED 30.12.2015 AS UNDER: - PAGE 5 OF 8 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOT IN DISPUT E THAT THE ASSESSEE RECEIVED THE HIRING CHARGES FROM M/S BG EXPLORATION & PRODUCTION INDIA LTD. ON ACCOUNT OF SLICKLINE SERVICES TO BE PERFORMED IN THE DRILLED OIL WELLS LOCATED IN THE PANNA/MUKTA OILFIELD, FROM M/S CAIRN ENERGY INDIA PTY LTD. FOR THE SLIC KLINE SERVICES TO BE PERFORMED IN RAJASTHAN AND FROM M/S OIL & NATURAL GAS CORPORATION FOR THE PROVISION OF WIRELINE AND GAS LIFT SERVICES. THE CLAIM OF THE ASSESSEE WAS THAT ITS INCOME WAS TAXABLE U/S 44BB OF THE ACT. THE SAID CLAIM OF THE ASSESSEE WAS DE NIED BY THE AO. 8. NOW THIS ISSUE HAS BEEN SETTLED BY THE HON'BLE APEX COURT IN THE CASE OF OIL & NATURAL GAS CORPORATION LTD. VS CIT & ANR. IN CIVIL APPEAL NO. 731/2007 VIDE ORDER DATED 01.07.2015. IN THE SAID CASE IT HAS BEEN HELD AS UNDER: A1 MANSOORI S PECIALIZED ENGINEERING '13. 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 MATERIA EXPRESSIONS APPEARING IN THE MINES AND MINERALS (DEVELOPMENT AND REGULATION) ACT 1957 REGARD MUST BE HAD TO THE PROVISIONS OF ENTRIES 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 DEFINITION OF MINERALS IN SECTION 3(A) OF THE 1957 ACT. REGARD MUST ALSO BE HAD TO THE FACT THAT MINERAL OILS IS SEPARATELY DEFINED IN SECTION 3(B) OF THE 1957 ACT T O INCLUDE NATURAL GAS AND PETROLEUM IN RESPECT OF WHICH PARLIAMENT HAS EXCLUSIVE JURISDICTION UNDER ENTRY 53 OF LIST I OF THE 7TH SCHEDULE AND HAD ENACTED AN EARLIER LEGISLATION I.E. OIL FIELDS (REGULATION AND DEVELOPMENT) ACT , 1948. READING SECTION 2(J) AND 2(JJ) OF THE MINES ACT, 1952 WHICH DEFINE MINES AND MINERALS AND THE PROVISIONS OF THE OIL FIELDS ( REGULATION AND DEVELOPMENT) ACT , 1948 SPECIFICALLY PAGE RELATING TO PROSPECTING AND EXPLORATION OF MINERAL OILS, EXHAUSTIVELY REFERRED TO EARLIER, IT IS ABUNDANTLY CLEAR THAT DRILLING OPERATIONS FOR THE P URPOSE OF PRODUCTION OF PETROLEUM WOULD CLEARLY AMOUNT TO A MINING ACTIVITY OR A MINING OPERATION. VIEWED THUS, IT IS THE PROXIMITY OF THE WORKS CONTEMPLATED UNDER AN AGREEMENT, EXECUTED WITH A NON - RESIDENT ASSESSEE OR A FOREIGN COMPANY, WITH MINING ACTIVI TY 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 UNDER 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 T EST 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' A1 MANSOORI SPECIALIZED ENGINEERING 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 - RESID ENT/FOREIGN COMPANY WOULD BE CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D OF THE 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, WE HAVE LOOKED INTO EACH OF THE CONTRACT S INVOLVED IN THE PRESENT GROUP OF CASES AND FIND THAT THE BRIEF DESCRIPTION OF THE WORKS COVERED UNDER EACH OF THE SAID CONTRACTS AS CULLED OUT BY THE APPELLANTS AND PLACED BEFORE THE COURT IS CORRECT. THE SAID DETAILS ARE SET OUT BELOW. S. CIVIL WORK COVERED UNDER THE CONTRACT NO. APPEAL NO. 1. 4321 DRILLING OF EXPLORATION WELLS AND CARRYING OUT SEISMIC SURVEYS FOR EXPLORATORY DRILLING. PAGE 6 OF 8 2. 740 DRILLING, FURNISHING PERSONNEL FOR MANNING, MAINTENANCE AND OPERATION OF DRILLING RIG AND TRAINING OF PERSONNEL. 3. 731 DRILLING, FURNISHING PERSONNEL FOR MANNING, MAINTENANCE AND OPERATION OF DRILLING RIG AND TRAINING OF PERSONNEL. 4. 1722 FURNISHING SUPERVISORY STAFF WITH EX PERTISE IN OPERATION AND MANAGEMENT OF DRILLING UNIT. 5. 729 CAPPING INCLUDING SUBDUING OF WELL, FIRE FIGHTING. A1 MANSOORI SPECIALIZED ENGINEERING 6. 738 CAPPING INCLUDING SUBDUING OF WELL, FIRE FIGHTING. 7. 1528 ANALYSIS OF DATA TO PREPARE JOB DESIGN, PR OCEDURE FOR EXECUTION AND DETAILS REGARDING MONITORING. 8. 1532 STUDY FOR SELECTION OF ENHANCED OIL RECOVERY PROCESSES AND CONCEPTUAL DESIGN OF PILOT TESTS. 9. 1520 ENGINEERING AND TECHNICAL SUPPORT TO ONGC IN IMPLEMENTATION OF CYCLIC STEAM STIMULATION IN HEAVY OIL WELLS. 10. 2794 ASSESSMENT AND PROCESSING OF SEISMIC DATA ALONG WITH ENGINEERING AND TECHNICAL SUPPORT IN IMPLEMENTATION OF CYCLIC STEAM STIMULATION. 11. 1524 CONDUCTING RESERVOIR STIMULATION STUDIES IN ASSOCIATION WITH PERSONNEL OF ONGC. 12. 1535 LABORATORY TESTING UNDER SIMULATED RESERVOIR CONDITIONS. 13. 1514 CONSULTANCY FOR OPTIMAL EXPLOITATION OF HYDROCARBON RESOURCES. 14. 2797 CONSULTANCY FOR ALL ASPECTS OF COAL BED METHANE. 15. 6174 ANALYSIS OF DATA OF WELLS TO PREPARE A JOB DESIGN. 16. 1517 GEOLOGICAL STUDY OF THE AREA AND ANALYSIS OF SEISMIC INFORMATION REPORTS TO DESIGN 2 DIMENSIONAL SEISMIC SURVEYS. 17. 7226 OPINION ON HYDROCARBON RESOURCES AND FORESEEABLE POTENTIAL. 18. 7227 OPINION ON HYDROCARBON RESOURCES AND FORESEEABLE POTENTIAL. 19. 7230 OPINION ON HYDROCARBON RESOURCES AND FORESEEABLE POTENTIAL. A1 MANSOORI SPECIALIZED ENGINEERING 20. 6016 OPINION ON HYDROCARBON RESOURCES AND FORESEEABLE POTENTIAL. 30. 2012 INSPECTION OF GENERATOR. 21. 6008 EVALUATION OF ULTIMATE RESOURCE POTENTIAL AND PRESENTATIONS OUTSIDE INDIA IN CONNECTION WITH PROMOTIONAL ACTIVITIES FOR JOINT VENTURE 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 CONT ROL 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 TURBI NES. 27. 1522 REPLACEMENT OF CHOKE AND KILL CONSOLES ON DRILLING RIGS. 28. 1521 INSPECTION OF GAS GENERATORS. 29. 1515 INSPECTION OF RIGS. 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. 2795 FEASIBILITY STUDY OF RIG TO ASSESS ITS REMAINING USEFUL LIFE AND TO CARRY OUT STRUCTURAL ALTERATIONS. 35. 925 ENGINEERING ANALYSIS OF RIG. A1 MANSOORI SPECIALIZED ENGINEERING 36. 1519 IMPARTING TRAINING ON CASED HOLD PRODUCTION LOG EVALUATION AND ANALYSIS. 37. 1533 TRAINING ON WELL CONTROL. 38. 1518 TRAIN ING ON IMPLEMENTATION OF SIX SIGMA CONCEPTS. 39. 1516 TRAINING ON IMPLEMENTATION OF SIX SIGMA CONCEPTS. PAGE 7 OF 8 40. 6023 TRAINING ON DRILLING PROJECT MANAGEMENT. 41. 2796 TRAINING IN SAFETY RATING SYSTEM AND ASSISTANCE IN DEVELOPMENT AND AUDIT OF SAFETY MANAGEMENT SYSTEM. 42. 1239 TO DEVELOP TECHNICAL SPECIFICATION FOR 3D SEISMIC API MODULES OF WORK AND TO PREPARE BID PACKAGES. 43. 1527 SUPPLY SUPERVISION AND INSTALLATION OF SOFTWARE WHICH IS USED F OR ANALYSIS OF FLOW RATE OF MINERAL OIL TO DETERMINE RESERVOIR CONDITIONS. 44. 1523 SUPPLY, INSTALLATION AND FAMILIARIZATION OF SOFTWARE FOR PROCESSING SEISMIC DATA. THE ABOVE FACTS WOULD INDICATE THAT THE PITH AND SUBSTANCE OF EACH OF THE CONTRACTS/AGREEM ENTS IS INEXTRICABLY CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL. THE DOMINANT PURPOSE OF EACH OF SUCH AGREEMENT IS FOR PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS THOUGH THERE MAY BE CERTAIN ANCILLARY WORKS CONTEMPLATED T HEREUNDER. IF THAT BE SO, WE WILL HAVE NO HESITATION IN HOLDING THAT THE PAYMENTS MADE BY ONGC AND RECEIVED BY THE NON - RESIDENT ASSESSEES OR FOREIGN COMPANIES UNDER THE SAID CONTRACTS IS MORE APPROPRIATELY ASSESSABLE UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D OF THE ACT. ON THE BASIS OF THE SAID CONCLUSION REACHED BY US, WE ALLOW THE A1 MANSOORI SPECIALIZED ENGINEERING APPEALS UNDER CONSIDERATION BY SETTING ASIDE THE ORDERS OF THE HIGH COURT PASSED IN EACH OF THE CASES BEFORE IT AND RESTORING THE VIEW TAKEN BY THE LEARNED APPELLATE COMMISSIONER AS AFFIRMED BY THE LEARNED TRIBUNAL.' 9. WE, THEREFORE, BY KEEPING IN VIEW THE RATIO LAID D OWN BY THE HON'BLE APEX COURT IN THE AFORESAID REFERRED TO CASE OF OIL & NATURAL GAS LTD. VS CIT & ANR., SET ASIDE THE IMPUGNED ORDER AND DIRECT THE AO TO ACCEPT THE CLAIM OF THE ASSESSEE THAT ITS REVENUE IS CHARGEABLE TO TAX U/S 44BB OF THE ACT AND NOT U/ S 115 A OF THE ACT . 10. IT IS ALSO RELEVANT TO POINT OUT THAT IN THE CASE OF M/S PRECISION ENERGY SERVICES LTD. WHICH WAS RELIED BY THE DRP WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE WAS SUBJECT MATTER OF ADJUDICATION BEFORE THE HON'BLE UTTARAKHAND HIGH COURT IN ITA NO. 75/2014 WHEREIN THEIR LORDSHIPS IN PARA 4 OF THE ORDER DATED 06.08.2015 HELD AS UNDER: '4. IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APEX COURT IN CIVIL APPEAL NO. 731 OF 2007 AND CONNE CTED CASES (OIL & NATURAL GAS CORPORATION LTD. VS COMMISSIONER OF INCOME TAX & ANOTHER), THE SUBSTANTIAL QUESTIONS OF LAW RELATING TO THE ASSESSABILITY OF THE AMOUNTS UNDER SECTION 44BB HAVE TO BE ANSWERED AGAINST THE APPELLANT/REVENUE. ACCORDINGLY, WE ANSWER THE SAID QUESTIONS OF LAW AGAINST THE REVENUE IN THE LIGHT OF THE AFORESAID JUDGMENT OF THE HON'BLE APEX COURT.' 11. WE, THEREFORE, BY CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE ARE OF THE CONFIRMED VIEW THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE INCOME OF THE ASSESSEE ARISING FROM PERFORMANCE OF A1 MANSOORI SPECIALIZED ENGINEERING ASSOCIATED DRILLING ACTIVITY THROUGH THE PROVISIONS OF OILFIELD EQUIPMENT ON HIRE ALONG WITH OPE RATING PERSONNEL, USED THE EXPLORATION/PROSPECTING/EXTRACTION OF MINERAL OIL WERE FEES FOR TECHNICAL SERVICES UNDER SECTION 9(1)(VII) OF THE ACT AND WAS CHARGEABLE TO TAX @ 20% OF THE GROSS REVENUE U/S 11 5 A OF THE ACT AND NOT TAXABLE U/S 44BB OF THE ACT. 7. IN VIEW OF THE ABOVE DECISION OF COORDINATE BENCH IN ASSESSEES OWN CASE AND F URTHER, FOR AY 2013 - 14 LD ASSESSING OFFICER HAS ACCEPTED THIS POSITION IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT DATED 01.07.2015 IN CASE OF ONGC VS. CIT HAS TAXED THE INCOME OF THE ASSESSEE U/S 44BB OF THE ACT. IN VIEW OF THE ABOVE, WE DISMISS THE APPEAL FILED BY THE REVENUE. PAGE 8 OF 8 8. THE CROSS OBJECTION FILED BY THE ASSESS EE IS STATED TO BE SUPPORTIVE AND THEREFORE NOT PRESSED BY LD AR HENCE, DISMISSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 / 06 /2016 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 06 / 2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI