ONGC as representative assessee of University of Calgary, Alberta, Canada, Dehradun V. DCIT (International Taxation), Dehradun

ITA 3525/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2757 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 15-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: MOHD FARID
• Keywords: Double taxation relief
• Section: 195; 54

Judgement Text

1 ITA NOS. 3524 & 3526/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 3524/DEL/2016 ( A .Y 2012-13) ONGC AS REPRESENTATIVE ASSESSEE OF DEWEY & LEBOEUF INTERNATIONAL COMPANY LLC, USA DGM-HEAD, OIL AND NATURAL GAS CORPORATION LTD. ROOM NO. 244, OLD SECRETARIAT, TEL BHAWAN DEHRADUN AAACO1598A (APPELLANT) VS DCIT (INTERNATIONAL TAXATION) CIRCLE-II DEHRADUN (RESPONDENT) ITA NO. 3525/DEL/2016 ( A.Y 2012-13) ONGC AS REPRESENTATIVE ASSESSEE OF UNIVERSITY OF NEW SOUTH WALES, AUSTRALIA DGM-HEAD, OIL AND NATURAL GAS CORPORATION LTD. ROOM NO. 244, OLD SECRETARIAT, TEL BHAWAN DEHRADUN AAACO1598A (APPELLANT) VS DCIT (INTERNATIONAL TAXATION) CIRCLE-II DEHRADUN (RESPONDENT) APPELLANT BY SH. MOHD. FARID, CA RESPONDENT BY SH. S. S. RANA, CIT(DR) ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE RESPECTIVE ASSES SEES AGAINST THE ORDERS DATED 19/04/2016 PASSED BY CIT(A)-2, NEW DELHI FOR ASSESSMENT YEAR 2012- 13. DATE OF HEARING 06.05.2019 DATE OF PRONOUNCEMENT 12.06.2019 2 ITA NOS. 3524 & 3526/DEL/2016 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 3524/DEL/2016 (A.Y. 2012-13) 1. THE LD. COMMISSIONER OF INCOME TAX ((APPEALS)-2 , NOIDA, HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFICER WHEREIN IT WAS HELD THAT THE RECEIPTS OF DEWEY & LEBOEUF INTERNATI ONAL COMPANY LLC, USA, ARE TAXABLE AS FEES FOR TECHNICAL SERVIC ES. 2. THE LD. COMMISSIONER OF INCOME TAX ((APPEALS)-2, NOIDA, HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT HOLDING THAT THE RECEIPTS OF DEWEY & LEBEOUF INTERN ATIONAL COMPANY LLC, USA, WERE NOT TAXABLE IN INDIA AS PER THE INDI A-USA DOUBLE TAXATION AVOIDANCE AGREEMENT. ITA NO. 3526/DEL/2016 (A.Y. 2012-13) 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, NO IDA, HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT THE RECEIPTS OF UNIVERSITY OF NEW SOUTH WALES, AUSTRALIA, FROM ONGC WERE TAXABLE U/S. 44DA OF THE INCOME-TAX ACT, 1961, AND IN NOT HOLDING THAT THE SAME WERE TAXABLE U/S. 44BB OF THE INCOME-TAX ACT, 1961. 2. WITHOUT PREJUDICE TO THE PRECEDING GROUND, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, NOIDA, HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN APPLY ING A DEEMED PROFIT RATE OF 25% FOR COMPUTING TAXABLE INCOME U/S 44DA O F THE INCOME-TAX ACT, 1961. 3. WITHOUT PREJUDICE TO THE PRECEDING GROUNDS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, NOIDA, HAS ERRED IN LAW AND 3 ITA NOS. 3524 & 3526/DEL/2016 IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOL DING THE ASSESSING OFFICERS ACTION OF CHARGING SURCHARGE AND EDUCATIO N CESS ON THE AMOUNT OF TAX PAYABLE COMPUTED AS PER THE MAXIMUM R ATE PRESCRIBED IN INDIA-AUSTRALIA DOUBLE TAXATION AVOIDANCE AGREEM ENT, BOTH FOR THE PURPOSE OF GROSSING-UP RECEIPTS AND FOR COMPUTING T HE FINAL TAX LIABILITY. 3. THE FACTS OF ITA NO. 3524/DEL/2016 ARE AS UNDER: 3.1 OIL AND NATURAL GAS CORPORATION LIMITED (ONGC) HAD VIDE LETTER DATED 16.06.2008 ENGAGED DEWEY AND LEBOEUF INTERNATIONAL COMPANY LLC, USA (NON-RESIDENT), FOR REPRESENTING ONGC BEFORE RUSSIA N COURTS IN REGARD TO THE LITIGATION BETWEEN ONGC AND AMUR SHIPBUILDING YARD. THE NON-RESIDENT IS A TAX RESIDENT OF THE UNITED STATES OF AMERICA (USA). ONGC FILED A RETURN OF INCOME AS REPRESENTATIVE ASSESSEE OF THE NON-RESIDE NT ON 28.09.2012 CLAIMING THAT THE RECEIPTS OF THE NON-RESIDENT UNDER THE AFO RESAID LETTER ARE NOT TAXABLE IN INDIA. DRAFT ASSESSMENT ORDER WAS PASSED BY ASSE SSING OFFICER U/S 143(3)/144C (1) OF THE ACT ON 21/01/2015 AT A TOTAL INCOME OF RS. 87,78,960/- AGAINST INCOME OF NIL SHOWN BY THE ASSESSEE IN RETU RN OF INCOME AS REPRESENTATIVE ASSESSEE OF THE NONRESIDENT. THE AS SESSING OFFICER CONSIDERED GROSS RECEIPTS OF THE NON TAXABLE AS FEE FOR TECHN ICAL SERVICES AND BROUGHT TO TAX THE RECEIPTS AS PER PROVISIONS OF SECTION 115A OF THE ACT TO BE TAXED ON GROSS BASIS. SINCE, THE ASSESSEE DID NOT FILE ANY OBJECTION BEFORE THE DISPUTE RESOLUTION PANEL, THE ASSESSMENT WAS FINALIZED U/S 143(3)/144C (3) (B) OF THE ACT. 3.2 THE FACTS OF ITA NO. 3526/DEL/2016 ARE AS UNDER : ONGC HAD VIDE AGREEMENT DATED 11.01.2005 ENGAGED UN IVERSITY OF NEW SOUTH WALES, AUSTRALIA (NON-RESIDENT) FOR CONSTRUCTION, I NSTALLATION AND MAINTENANCE OF HIGH RESOLUTION CT SCANNING FACILITY AT INSTITUT E OF RESERVOIR STUDIES, 4 ITA NOS. 3524 & 3526/DEL/2016 ONGC, AHMADABAD. THE SAID AGREEMENT WAS VALID FOR 7 8 MONTHS, 18 MONTHS FOR INSTALLATION, TESTING AND COMMISSIONING OF CT S CANNING FACILITY AND REMAINING 60 MONTHS FOR MAINTENANCE THEREOF ON ANNU AL BASIS. THE CT SCANNER IS UNDER MAINTENANCE CONTRACT W.E.F. 11 TH MARCH 2008. DURING THE RELEVANT PREVIOUS YEAR, PAYMENTS WERE MADE FOR ANNU AL MAINTENANCE OF THE CT SCANNER. THE NON-RESIDENT IS A TAX RESIDENT OF AUST RALIA. ONGC FILED RETURN OF INCOME AS REPRESENTATIVE ASSESSEE OF THE NON-RESIDE NT ON 31.07.2012 CLAIMING THAT THE RECEIPTS OF THE NON-RESIDENT AGAINST THE A FORESAID AGREEMENT ARE NOT TAXABLE IN INDIA. ALTERNATIVELY, THE ASSESSEE SUBMI TTED THAT THE RECEIPTS OF THE NON-RESIDENT WERE CLAIMED TO BE TAXABLE UNDER SECTI ON 44BB OF THE ACT. THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTIONS 142 (1) AND 143(2) OF THE ACT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME OF THE NON-RESIDENT SHOULD NOT BE TREATED AS FEES FOR TEC HNICAL SERVICES. IN RESPONSE, ONGCS AUTHORIZED REPRESENTATIVES APPEARED BEFORE T HE ASSESSING OFFICER AND FILED WRITTEN SUBMISSIONS FURNISHING ALL REQUISITE INFORMATION AND CONTENDED THAT THE RECEIPTS OF THE NON-RESIDENT WERE NOT TAXA BLE IN INDIA AND, ALTERNATIVELY, THE SAME COULD ONLY BE TAXED U/S 44B B OF THE ACT. THE ASSESSING OFFICER BROUGHT THE RECEIPTS OF THE NON-RESIDENT TO TAX AS FEES FOR TECHNICAL SERVICES UNDER SECTION 115A OF THE ACT AND ROUND O FF THE TAX THEREON @ 15% AS PER INDIA-AUSTRALIA DOUBLE TAXATION AVOIDANCE AG REEMENT. THE ASSESSING OFFICER FURTHER APPLIED SURCHARGE @ 2% AND EDUCATIO N CESS @ 3% BOTH FOR THE PURPOSE OF GROSSING UP OF THE ACTUAL RECEIPTS AND F OR COMPUTING THE TOTAL TAX PAYABLE ON THE GROSSED-UP AMOUNT. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDERS, THE RE SPECTIVE ASSESSEES FILED APPEALS BEFORE THE CIT(A). THE CIT(A) DISMISSED TH E APPEALS OF THE ASSESSEES. 5. THE LD. AR SUBMITTED THAT THE TRIBUNAL IN BOTH T HE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 HAS DECIDED THE ISSUES CONTESTED HEREIN VIDE 5 ITA NOS. 3524 & 3526/DEL/2016 ORDER DATED 25 TH APRIL 2018 (ITA NO. 1329/DEL/2016) AND ITA NO. 1335/DEL/2016). 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDERS AND THE ORDERS OF THE CIT(A), BUT COULD NOT DISTINGUISH THE DECISION RELI ED UPON BY THE LD. AR IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE FACTS IN THE PRESENT ASSESSMENT YEAR I.E. FOR ASSESSMENT YEAR 2012-13 ARE IDENTICAL TO THE FA CTS EMERGE FROM THE ASSESSMENT YEAR 2011-12 BEING ITA NO. 1326/DEL/2016 . THE TRIBUNAL HELD AS UNDER: 8. PURSUANT TO THE AGREEMENT BETWEEN THE DIRECTO RATE GENERAL OF HYDROCARBONS (DGH) AND THE NON-RESIDENT (GX, USA ), GX, USA WHICH WAS UNDER A PROGRAM TITLED INDIA SPAN, THE US COMPANY WAS PERMITTED TO CARRY OUT SEISMIC SURVEYS AND ACQUIRE, PROCESS, INT ERPRET SEISMIC GRAVITY AND MAGNETIC DATA AND THEREAFTER, ASSIST DGH IN PRE PARING DATA PACKAGES FOR 12,000 KM OF SEISMIC DATA ACQUIRED FROM EASTERN AND WESTERN SHORE OF INDIA. IN ORDER TO MEET PART OF THE FUNDING REQUIRE MENTS FOR THE INDIA SPAN PROGRAM, GX, USA WAS ENTITLED TO SELL THE DATASET O N NON-EXCLUSIVE BASIS TO BOTH NATIONAL AND INTERNATIONAL EXPLORATION & PRODU CTION COMPANIES. A LETTER OF COMMITMENT DATED 03.11.2005 WAS EXECUTED BETWEEN GX, USA AND ONGC FOR PARTICIPATION OF ONGC IN THE NON-RESID ENTS INDIA SPAN PROGRAM. FURTHER AN AGREEMENT DATED 03.11.2005 WAS ENTERED BETWEEN ONGC AND GX, USA, WHEREBY ONGC WAS GRANTED A LICENS E TO USE THE SEISMIC DATA SUBJECT TO TERMS AND CONDITIONS SPECIF IED THEREIN. IN THE TERMS OF THE AGREEMENT, ONGC HAD OBTAINED A LICENSE TO US E THE PRODUCT 'INDIA SPAN' FOR A PERIOD OF 40 YEARS FROM GX, USA. INDIA SPAN', WHICH IS A REGIONAL 2D SEISMIC DATA PROGRAMME AND GEOLOGICAL A ND GEOPHYSICAL STUDY COVERING ALL THE MAJOR PROSPECTIVE BASINS OFF-SHORE EAST AND WEST INDIA, WAS PROVIDING BOTH, THE FUNDAMENTAL BASIS FOR EVALUATIO N OF INDIAS VAST OFF- 6 ITA NOS. 3524 & 3526/DEL/2016 SHORE MARGINS AS WELL AS THE REGIONAL FRAMEWORK IN DEPTH DOMAIN. THE DATA/DELIVERABLE UNDER THE AGREEMENT AND THE PAYMEN T DETAILS THEREOF ARE AS UNDER:- A) LICENCE PRICE FOR INDIASPAN 8500 KMS : USD 31,00,000 (INCLUDING SEISMIC AND POTENTIAL FILED DATA) B) PRESTACK TIME MIGRATION (PTSM DELIVERABLES): USD 3,00,000 C) ADDITIONAL 2000 KMS WITH STANDARD DELIVERABLE : USD 7,46,000 TOTAL PRICE USD 43,68,000 9. AS PER THE TERMS OF THE AGREEMENT, NO TITLE OR OWNERSHIP OF DATA IS TRANSFERRED BY GX, USA TO ONGC. ONGC WAS GRANTED A NON-EXCLUSIVE RIGHT TO USE THE DATA FOR INTERNAL PURPOSE ONLY AND UNLES S AUTHORIZED BY GX, USA, ONGC HAD NO RIGHT TO COPY OR TRANSFER THE DATA. FUR THER ON TERMINATION OF THE LICENCE, ONGC HAD TO RETURN OR DESTROY THE DATA . DURING THE RELEVANT YEAR, GX, USA HAD RECEIVED USD 39,32,600 (INCLUDING PAYMENT OF USD 1,05,000 RECEIVED TOWARDS TRAINING) EQUIVALENT TO R S. 17,55,57,305 UNDER THE SAID AGREEMENT WHICH WAS CLAIMED AS NOT TAXABLE IN INDIA UNDER THE PROVISIONS OF DTAA BETWEEN INDIA AND USA. THE AO HA D BROUGHT THE SAME TO TAX AS ROYALTIES AS PER THE PROVISIONS OF SECT ION 9(L) (VI) OF THE ACT. THE CIT (A), ALTHOUGH, DID NOT GIVE ANY FINDING AS REGA RDS TO THE TAXABILITY OF THE SAID RECEIPTS AS ROYALTY, HOWEVER, FOLLOWING THE ORDER OF THE DELHI TRIBUNAL IN THE CASE OF CGG VERITAS SERVICES SA V. ADIT IN I TA NO.: 4653/DEL/2010, HELD THE SAME IS TO BE TREATED AS FEES FOR TECHNIC AL SERVICES UNDER SECTION 9(1) (VII) OF THE ACT. THE ITAT IN THE FIRST ROUND, VIDE ORDER DATED 22.02.2013 HAD RESTORED THE MATTER BACK TO CIT(A) WITH THE DIR ECTION TO EXAMINE THE TAXABILITY OF THE RECEIPTS IN LIGHT OF THE PROVISIO NS OF INDO-USA DTAA. PURSUANT TO THE DIRECTIONS OF THE ITAT, THE CIT (A) PASSED THE IMPUGNED ORDER DATED 05.01.2016, HOLDING THAT THE AMOUNT REC EIVED BY GX, USA WAS 7 ITA NOS. 3524 & 3526/DEL/2016 TAXABLE AS FTS BOTH UNDER SECTION 9(L)(VII) OF THE ACT AND ALSO UNDER ART. 12 OF THE INDIA-USA DTAA. 10. ONGOING THROUGH THE RELEVANT FACTS, WE FIND T HAT THE NON-RESIDENT ASSESSEE HAS CARRIED OUT SEISMIC DATA SERVICES UNDE R THE PROGRAM TITLED INDIA SPAN AND WAS ENGAGED BY ONGC FOR PROVIDING SEISMIC DATA. THE AFORESAID SERVICES, BEING IN THE NATURE OF PROVIDIN G SEISMIC SURVEY DATA/REPORT BY GX, USA WERE NOT MADE AVAILABLE' TO ONGC INASMUCH AS ONGC ONLY DERIVED THE BENEFIT OF THE SAID SERVICES AND DID NOT OBTAIN ANY TECHNICAL KNOWLEDGE, EXPERIENCE OR SKILL IN RESPECT OF COLLECTION OR PROCESSING OF SEISMIC DATA WHICH WOULD ENABLE ONGC TO UNDERTAK E SUCH SURVEY INDEPENDENTLY, WITHOUT ASSISTANCE OF GX, USA. IN TH AT VIEW OF THE MATTER, THE AMOUNT OF USD 38,27,600 RECEIVED BY GX IN RESPE CT OF THE SEISMIC DATA (EXCLUDING THE RECEIPTS OF USD 1,05,000 RELATING TO TRAINING) CANNOT, BE IN OUR OPINION BROUGHT TO TAX IN INDIA AS 'ROYALTIES AND F EES FOR INCLUDED SERVICES IN TERMS OF ARTICLE 12 OF INDIA-USA DTAA. THE TRAINING IMPARTED BY THE NON-RESIDENT IS PURELY INCIDENTAL TO ANALYSIS O F DATA AND DOES NOT LEAD TO IMPARTING OF KNOW-HOW RELATING TO SERVICES OF CO LLECTION OF DATA. THUS, THE IMPUGNED PAYMENT DOES NOT SATISFY THE TEST OF MAKE AVAILABLE WITHIN THE MEANING OF ARTICLE 12 OF INDO-USA DTAA. 11. IN ANY CASE SEISMIC /GEOLOGICAL STUDIES REV EAL THE POSSIBILITY OF PRESENCE OF HYDROCARBONS AND THUS, ARE VITAL FOR PR OSPECTING AND EXPLORING MINERAL OIL AND SINCE SERVICES RENDERED BY GX, USA WERE INEXTRICABLY CONNECTED WITH EXTRACTION AND PRODUCTION OF MINERAL OIL, THEREFORE, THE RECEIPTS THEREFROM WOULD OSTENSIBLY FALL WITHIN THE AMBIT OF CONSIDERATION FOR MINING OF LIKE PROJECT WHICH IS TO BE EXCLUDED FROM THE DEFINITION OF TERM FEE FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION 2 OF SECTION 9(1)(VII) AND 8 ITA NOS. 3524 & 3526/DEL/2016 SAME WERE TAXABLE U/S.44BB OF THE ACT. THUS, WE HOL D THAT; FIRSTLY, THE PAYMENT IN QUESTION DOES NOT FALL WITHIN THE SCOPE AND AMBIT OF FIS/FTS UNDER ARTICLE 12 OF INDIA-US DTAA AS THE SAME DID N OT SATISFY THE MAKE AVAILABLE CLAUSE; AND SECONDLY, IN ANY CASE IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ONGC VS. CIT ( SUPRA), SUCH PAYMENTS ARE IN THE NATURE OF MINING OR LIKE PROJECT AND THE REFORE, IT WILL NOT FALL WITHIN THE AMBIT AND SCOPE OF FEE FOR TECHNICAL SERVICES, AS CONTEMPLATED IN EXPLANATION 2 OF SECTION 9(1)(VII). THE RELEVANT OB SERVATIONS GIVEN IN THE SAID JUDGMENT FOR THE SAKE OF READY REFERENCE IS REPRODU CED HEREUNDER:- UNDER SECTION 44BB (1) OF THE INCOME-TAX ACT, 1961, IN THE CASE OF A NON- RESIDENT PROVIDING SERVICES OR FACILITIES IN CONNEC TION WITH OR SUPPLYING PLANT AND MACHINERY USED OR TO BE USED IN PROSPECTI NG, EXTRACTION OR PRODUCTION OF MINERAL OILS, THE PROFITS AND GAINS F ROM SUCH BUSINESS CHARGEABLE TO TAX ARE TO BE CALCULATED AT A SUM EQU AL TO 10 PER CENT, OF THE AGGREGATE OF THE AMOUNTS PAID OR PAYABLE TO SUCH NO N-RESIDENT ASSESSEE AS MENTIONED IN SUB-SECTION (2). ON THE OTHER HAND, SECTION 44D CONTEMPLATES THAT IF THE INCOME OF A FOREIGN COMPAN Y WITH WHICH THE GOVERNMENT OR AN INDIAN CONCERN HAD AN AGREEMENT EX ECUTED BEFORE APRIL 1, 1976, OR ON ANY DATE THEREAFTER THE COMPUTATION OF INCOME WOULD BE MADE AS CONTEMPLATED UNDER SECTION 44D. EXPLANATION (A) TO SECTION 44D SPECIFIES THAT 'FEES FOR TECHNICAL SERVICES' AS MEN TIONED IN SECTION 44D WOULD HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SECTION 9(1). THE EXPLANATION DEFINES 'FEES FOR TECHNICAL S ERVICES' TO MAIN CONSIDERATION FOR RENDERING OF ANY MANAGERIAL, TECH NICAL OR CONSULTANCY SERVICES. HOWEVER, THE LATER PART OF THE EXPLANATIO N EXCLUDES FROM CONSIDERATION FOR THE PURPOSES OF THE EXPRESSION, ' FEES FOR TECHNICAL SERVICES, ANY PAYMENT RECEIVED FOR CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATIO N WHICH WOULD BE 9 ITA NOS. 3524 & 3526/DEL/2016 CHARGEABLE UNDER THE HEAD SALARIES'. FEES FOR TECH NICAL SERVICES, THEREFORE, BY VIRTUE OF THE EXPLANATION WILL NOT IN CLUDE PAYMENTS MADE IN CONNECTION WITH A MINING PROJECT. THE INCOME-TAX ACT, 1961, DOES NOT DEFINE THE EXPRESSION MINES' OR 'MINERALS'. THE EXPRESSIONS ARE FOUND DEFINED AND E XPLAINED IN THE MINES ACT, 1952 AND THE OIL FIELDS (DEVELOPMENT AND REGUL ATION) ACT, 1948. WHILE CONSTRUING THE SOMEWHAT PARI MATERIA EXPRESSI ONS APPEARING IN THE MINES AND MINERALS (DEVELOPMENT AND REGULATION) AD, 1957, REGARD MUST BE HAD TO THE PROVISIONS OF ENTRIES 53 AND 54 OF LI ST I AND ENTRY 22 OF LIST 11 OF THE SEVENTH SCHEDULE TO THE CONSTITUTION TO U NDERSTAND 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 'MINE RAL OILS' IS SEPARATELY DEFINED IN SECTION 3(B) OF THE 1957 ACT TO INCLUDE NATURAL GAS AND PETROLEUM IN RESPECT OF WHICH PARLIAMENT HAS EXCLUS IVE JURISDICTION UNDER ENTRY 53 OF LIST I OF THE SEVENTH SCHEDULE AND HAD ENACTED AN EARLIER LEGISLATION, I. E., THE OIL FIELDS (REGULATION AND DEVELOPMENT) ACT, 1948. READING SECTION 2(J) AND (JJ) OF THE MINES ACT, 195 2, WHICH DEFINE MINES' AND MINERALS' AND THE PROVISIONS OF THE OIL FIELDS (REGULATION AND DEVELOPMENT) ACT, 1948, SPECIFICALLY RELATING TO PR OSPECTING AND EXPLORATION OF MINERAL OILS, IT IS ABUNDANTLY CLEAR THAT DRILLI NG OPERATIONS FOR THE PURPOSE OF PRODUCTION OF PETROLEUM WOULD CLEARLY AM OUNT TO A MINING ACTIVITY OR A MINING OPERATION. IT IS THE PROXIMITY OF THE WORKS CONTEMPLATED UNDER AN AGREEMENT, EXECUTED WITH A NON-RESIDENT OR A FOREIGN COMPANY, WITH MINING ACTIVITY OR MINING OPERATIONS THAT WOUL D BE CRUCIAL FOR THE DETERMINATION OF THE QUESTION WHETHER THE PAYMENTS MADE UNDER SUCH AN AGREEMENT TO THE NON-RESIDENT ASSESSEE OR THE FOREI GN COMPANY ARE TO BE ASSESSED UNDER SECTION 44BB OR SECTION 44D OF THE A CT. THE TEST OF PITH AND SUBSTANCE OF THE AGREEMENT IS APPLICABLE AND TH E CENTRAL BOARD OF DIRECT TAXES HAD ACCEPTED THE TEST AND HAD IN FACT ISSUED A CIRCULAR AS FAR BACK AS OCTOBER 22, 1990, TO THE EFFECT THAT MINING OPERATIONS AND THE 10 ITA NOS. 3524 & 3526/DEL/2016 EXPRESSIONS MINING PROJECTS' OR LIKE PROJECTS' OC CURRING 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 E XPLORATION OF AND EXTRACTION OF OIL AND NATURAL GAS AND HENCE PAYMENT S MADE UNDER SUCH AGREEMENT TO A NON-RESIDENT WOULD BE CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D OF T HE ACT. NO OTHER VIEW CAN BE TAKEN IF THE WORKS OR SERVICES MENTIONED UND ER A PARTICULAR AGREEMENT ARE DIRECTLY ASSOCIATED OR INEXTRICABLY C ONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OI L. THE APPELLANT, THE OIL AND NATURAL GAS COR PORATION (ONGC), WAS ASSESSED IN A REPRESENTATIVE CAPACITY ON BEHALF OF FOREIGN COMPANIES WITH WHOM IT HAD EXECUTED SEPARATE AGREEMENTS BY WHICH T HE NON-RESIDENT COMPANIES AGREED TO MAKE AVAILABLE SUPERVISORY STAF F AND PERSONNEL HAVING EXPERIENCE AND EXPERTISE FOR OPERATION AND M ANAGEMENT OF DRILLING RIGS FOR THE ASSESSMENT YEARS 1985-86 AND 1986-87. THE CONTRACT BETWEEN THE PARTIES VISUALISED OPERATION OF THE OIL RIGS IN CLUDING DRILLING OPERATIONS BY PERSONNEL MADE AVAILABLE UNDER THE AGREEMENTS. T HE CONTRACTS INVOLVED CARRYING OUT SEISMIC SURVEYS AND DRILLING FOR OIL A ND GAS, SERVICES OF STARTING, RE-STARTING AND ENHANCING PRODUCTION OF O IL AND GAS FROM WELLS, SERVICES FOR PROSPECTING FOR EXPLORATION OF OIL AND OR GAS, PLANNING AND SUPERVISION OF REPAIR OF WELLS, REPAIR, INSPECTION OR EQUIPMENT USED IN THE EXPLORATION, EXTRACTION OR PRODUCTION OF OIL AND GA S, IMPARTING TRAINING, CONSULTANCY IN REGARD TO EXPLORATION OF OIL AND GAS AND SUPPLY, INSTALLATION, ETC., OF SOFTWARE USED FOR OIL AND GAS EXPLORATION. THE ASSESSING AUTHORITY TOOK THE VIEW THAT THE ASSESSMENTS SHOULD BE MADE U NDER SECTION 44D OF THE INCOME-TAX ACT, 1961, AND NOT SECTION 44BB OF T HE ACT. THE APPELLATE COMMISSIONER AND THE APPELLATE TRIBUNAL DISAGREED W ITH THE VIEWS OF THE ASSESSING AUTHORITIES. ON APPEALS BEFORE THE HIGH C OURT, THE HIGH COURT HELD THAT THE CONTRACT CLEARLY CONTEMPLATED THE REN DERING OF TECHNICAL SERVICES BY PERSONNEL OF THE NON-RESIDENT COMPANY, AND SPECIFICALLY, THAT 11 ITA NOS. 3524 & 3526/DEL/2016 THE CONTRACT DID NOT MENTION THAT THE PERSONNEL OF THE NON-RESIDENT WERE ALSO CARRYING OUT THE WORK OF DRILLING OF WELLS AND AS THE COMPANY HAD RECEIVED FEES FOR RENDERING SERVICE THE PAYMENTS MA DE WERE LIABLE TO BE TAXED UNDER THE PROVISIONS OF SECTION 44D OF THE AC T. THE HONBLE COURT ALLOWING THE APPEALS, HELD THAT THE BRIEF DESCRIPTI ON OF THE WORKS COVERED UNDER EACH OF THE CONTRACTS IN QUESTION WOULD INDICATE THAT THE PITH AND SUBSTANCE OF EACH OF THE CONTRACTS WAS INEXTRICABLY CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL. THE DOMINANT PURPOSE OF EACH OF SUCH AGREEMENT S WAS FOR PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS THOUGH THE RE MAY BE CERTAIN ANCILLARY WORKS CONTEMPLATED THEREUNDER. IF THAT BE SO, THE PAYMENTS MADE BY THE ONGC AND RECEIVED BY THE NON-RESIDENT O R FOREIGN COMPANIES UNDER THE CONTRACTS FOR PROVIDING VARIOUS SERVICES IN CONNECTION WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OI LS WERE NOT CHARGEABLE TO TAX AS 'FEES FOR TECHNICAL SERVICES' UNDER SECTION 44D READ WITH EXPLANATION 2 TO SECTION 9(L)(VII) OF THE ACT BUT MORE APPRO PRIATELY ASSESSABLE ON A PRESUMPTIVE BASIS UNDER SECTION 44BB OF THE ACT. 12. ACCORDINGLY, RESPECTFULLY FOLLOWING THE JUDGMEN T OF HON'BLE SUPREME COURT WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSE E. B. ONGC LTD. AS REPRESENTATIVE ASSESSEE OF GX TECH NOLOGY CORPORATION, USA, 2485/DEL/2016, A.Y. 2010-11. 13. HERE, IN THIS CASE, ALSO THE FACTS ARE EXACTLY SIMILAR TO APPEAL FOR THE ASSESSMENT YEAR 2007-08 AND IN THIS EAR THE RELEVAN T LETTER OF COMMITMENT IS DATED 22.03.2007 WHICH WAS EXECUTED BETWEEN ONGC AND THE AFORESAID NON-RESIDENT FOR PARTICIPATION IN NON-RES IDENTS REGIONAL SEISMIC AND GEOLOGICAL STUDIES FOR INDIA SPAN PROGRAM. ONGC HAD ALSO PLACED PURCHASE ORDER NO. 4050004364 DATED 25-05-2007 FOR PROCUREMENT OF 12 ITA NOS. 3524 & 3526/DEL/2016 4088 LINE KILOMETRES OF SEISMIC DATA ACQUIRED BY TH E GX, USA UNDER THE INDIA SPAN PROGRAM. DURING THE RELEVANT PREVIOUS YE AR, GX, USA HAD RECEIVED PAYMENTS OF USD 5,00,371.20 EQUIVALENT TO RS. 2,55,13,928 FROM ONGC UNDER THE AFORESAID CONTRACT, WHICH WERE CLAIM ED AS NOT TAXABLE IN INDIA UNDER THE PROVISIONS OF DTAA BETWEEN INDIA AN D USA. THE AO HAD BROUGHT TO TAX AS ROYALTY AS PER THE PROVISIONS O F SECTION 9(1)(VI) OF THE ACT. THE CIT (A) HAD, HOWEVER, HELD THE SAME TO BE FEES FOR TECHNICAL SERVICES UNDER SECTION 9(1)(VII) OF THE ACT AND AL SO UNDER ARTICLE 12 OF THE INDIA-USA DTAA. 14. IN VIEW OF OUR FINDING GIVEN FOR THE ASSESSM ENT YEAR 2007-08, WE HOLD THAT THE SAME PAYMENT CANNOT BE BROUGHT IN IND IA AS FEES FOR INCLUDED SERVICES IN TERMS OF ARTICLE 12 OF INDIA- USA DTAA. IN ANY CASE, AS HELD ABOVE, IT IS SQUARELY COVERED BY THE JUDGME NT OF HON'BLE SUPREME COURT IN THE CASE OF ONGC LTD. (SUPRA). C. ONGC LTD. AS REPRESENTATIVE ASSESSEE OF BOOTS & COOTS INTERNATIONAL WELL CONTROL INC., USA. 15. BOOTS & COOTS WERE ENGAGED TO PROVIDE THE VARIO US SERVICES UNDER THE FOLLOWING CONTRACTS:- CONTRACT DATED 12.12.2008 FOR; (I) DEPLOYMENT OF WE LL CONTROL SPECIALISTS FOR BLOWOUT CONTROL OPERATIONS; (II) TR AINING OF CMT (CRISIS MANAGEMENT TEAM) AND OTHER ONGC PERSONNEL; (III) IN SPECTION AND TESTING OF BLOWOUT CONTROL EQUIPMENT; AND (IV) SERVICES FOR DEVELOPMENT OF PROCEDURES AND PRACTICES FOR BLOW OUT CONTROL OPERA TIONS. CONTRACT DATED 07.04.2010 FOR SECURING OF WELL G-4- AF AND SALVAGING OF SUB-SEA BLOW OUT PREVENTER (BOP). SETTLEMENT AGREEMENT DATED 23.07.2010 AND PURCHASE ORDER NO.5060034002 DATED 22.01.2008 FOR SECURING AND SAL VAGING OF WELL G-1 13 ITA NOS. 3524 & 3526/DEL/2016 DB. IN ACCORDANCE WITH THE AFORESAID AGREEMENTS AND C ONTRACTS, BOOTS AND COOTS RECEIVED A PAYMENT OF USD 2,22,34,382 EQUIVAL ENT TO RS.103,10,32,956 FROM ONGC WHICH WAS OFFERED TO TAX UNDER SECTION 44BB OF THE ACT, WHILE FILING RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. 16. THE ASSESSING OFFICER HAS BROUGHT TO TAX THE A FORESAID RECEIPTS AS FTS UNDER EXPLANATION 2 TO SECTION 9(1)(VII) R.W.S. 115A AND ALSO UNDER INDIA-US DTAA, WHICH HAS BEEN UPHELD BY THE LD. CIT (A) ALSO. 17. FROM THE PERUSAL OF THE TERMS OF AGREEMENTS A ND THE SERVICES PROVIDED BY BOOTS AND COOTS, IT IS SEEN THAT IT WAS FOR CONTROLLING THE SITUATION OF UNCONTROLLED FLOW OF CRUDE OIL/NATURAL GAS FROM OIL OR GAS WELL AFTER PRESSURE CONTROL SYSTEM FAILED, WHICH IS A SE RIOUS THREAT TO OIL PRODUCTION OPERATIONS. IT WAS ALSO ENGAGED IN TRAIN ING CMT (CRISIS MANAGEMENT TEAM) PERSONNEL, INSPECTION AND TESTING OF BLOWOUT CONTROL EQUIPMENT UTILIZED BY THE ASSESSEE AND TO PROVIDE S ERVICES FOR DEVELOPMENT OF STANDARDIZED PROCEDURES AND PRACTICE S FOR BLOWOUT CONTROL OPERATIONS. SINCE THE SERVICES RENDERED BY THE NON- RESIDENT ENTITY WAS DIRECTLY ASSOCIATED AND INEXTRICABLY CONNECTED WITH THE EXTRACTION AND PRODUCTION OF MINERAL OIL, THEREFORE, THE RECEIPTS THEREFROM OSTENSIBLY WOULD FALLS WITHIN THE AMBIT OF CONSIDERATION FOR ANY MI NING OR LIKE PROJECT WHICH IS TO EXCLUDED FROM THE DEFINITION OF FTS AS DEFINE D UNDER EXPLANATION 2 TO SECTION 9(1)(VII) AND SAME WOULD BE TAXABLE U/S.44B B. IT HAS BEEN POINTED OUT BY THE LEARNED COUNSEL THAT THIS TRIBUNAL IN AS SESSEES OWN CASE FOR THE ASSESSMENT YEARS 2010-11 AND 2009-10 IN ITA NO. 4469/DEL/2013 ORDER DATED 03.12.2015 AND ITA NO.4269/DEL/2012, VI DE ORDER DATED 14 ITA NOS. 3524 & 3526/DEL/2016 16.11.2016, ON IDENTICAL FACTS AND SIMILAR RECEIPTS HAS HELD THAT THE RECEIPTS IS TAXABLE U/S.44BB FOLLOWING THE HON'BLE SUPREME COURTS JUDGMENT OF ONGC LTD. (SUPRA). THUS, IN VIEW OF THE PRECEDENCE IN ASSESSEES OWN CASE, WE HOLD THAT THE SAID RECEIPTS CANNOT BE TAXED AS FTS UNDER 9(1) (VII), ALBEIT WOULD BE TAXABLE U/S.4 4BB. D. ONGC LTD. AS REPRESENTATIVE ASSESSEE OF DEWEY & LEBOEUF INTERNATIONAL COMPANY L.L.C., USA, ITA NO.1329/DEL/ 2016 ASSESSMENT YEAR 2011-12. 18. THE AFORESAID NON-RESIDENT ENTITY WAS ENGAGED FOR REPRESENTING ONGC BEFORE RUSSIAN COURTS WITH REGARD TO THE LITIG ATION BETWEEN ONGC AND AMUR SHIPBUILDING YARD. THE SERVICES WERE RENDE RED AND UTILIZED IN RUSSIA AND PAYMENT WAS ALSO RECEIVED OUTSIDE INDIA. DURING THE RELEVANT YEAR, DEWEY & LEBOEUF, USA RECEIVED AN AMOUNT OF US D 1,20,275 EQUIVALENT TO RS.54,51,535/- FROM ONGC UNDER THE SA ID AGREEMENT. IN THE RETURN OF INCOME FILED FOR THE SAID ASSESSMENT YEAR , THE ASSESSEE CLAIMED EXEMPTION OF THE AFORESAID RECEIPTS FROM TAX IN IND IA, THEREBY DECLARING NIL INCOME. HOWEVER, THE ASSESSING OFFICER, BROUGHT THE AFORESAID RECEIPTS TO TAX AS FEES FOR TECHNICAL SERVICES AS PER EXPLANA TION 2 TO SECTION 9(1)(VII) READ WITH SECTION 115A OF THE ACT. THE CIT (A) HELD THAT THE RECEIPTS WERE TAXABLE NOT ONLY UNDER SECTION 9(1)(VII) OF THE ACT BUT ALSO ARTICLE 12 OF INDIA-USA TREATY. 19. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE LEGAL REPRESENTATION SERVICES RENDERED BY DEWEY & L EBOEUF INTERNATIONAL COMPANY LLC, USA WAS IN CONNECTION WITH A DISPUTE W HICH AROSE OUTSIDE INDIA IN RELATION TO WORK CARRIED ON BY A NON RESID ENT OUTSIDE INDIA WHICH WAS BEING LITIGATED BEFORE THE COURT OF LAW IN RUSS IA. IN ANY CASE, THE SAID 15 ITA NOS. 3524 & 3526/DEL/2016 RECEIPT CANNOT BE BROUGHT TO TAX AS FEE FOR INCLUD ED SERVICES UNDER ARTICLE 12 OF INDIA-US DTAA, SINCE IN THE COURSE OF RENDERI NG SERVICES OF ONGC BY WAY OF REPRESENTING BEFORE RUSSIAN COURTS, ONGC HAS NOT BEEN ABLE TO APPLY THE KNOWLEDGE, SKILL, ETC. TO LITIGATE THE MA TTER BEFORE COURTS, IN FUTURE ON ITS OWN WITHOUT RECOURSE TO THE NON-RESIDENT. TH US, THE SAID SERVICES RENDERED BY THIS NON-RESIDENT ENTITY CANNOT BE TAXE D UNDER ARTICLE 12 OF INDIA-US DTAA. OTHERWISE, ALSO UNDER THE DOMESTIC L AW SUCH LEGAL SERVICES BEING IN THE NATURE OF PROFESSIONAL SERVIC ES FALL OUTSIDE THE AMBIT OF FTS AS DEFINED IN SECTION 9(1)(VII). 20. WE AGREE WITH THE CONTENTION RAISED BY THE LEARNED COUNSEL THAT SO FAR AS PROVIDING OF PROFESSIONAL LEGAL SERVICES BEFORE A FOREIGN COURT, CANNOT BE BROUGHT TO TAX AS FIS UNDER ARTICLE 12, B ECAUSE THERE IS NO MAKE AVAILABLE OF ANY KIND OF KNOWLEDGE OR SKILL TO ONGC BEFORE THE COURTS WHICH CAN ENABLE ONGC TO REPRESENT ITS CASE IN FUTU RE. UNDER INDIA-US DTAA, FOR APPLICABILITY OF ARTICLE 12 ITS IMPERATIV E THAT FTS/FIS SHOULD BE IN SUCH A NATURE THAT IT MAKES AVAILABLE THE KNOWLE DGE AND SKILL AND KNOWLEDGE TO THE OTHER PERSON. EVEN OTHERWISE ALSO UNDER SECTION 9(1)(VII) LEGAL SERVICES CANNOT BE RECKONED AS FTS ALBEIT IT IS PROFESSIONAL SERVICES OUTSIDE THE SCOPE OF SECTION 9(1)(VII). IT HAS ALSO BEEN BROUGHT ON RECORD THAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10, THE TRIBUNAL IN THE CONTEXT OF LEGAL SERVICES RENDERED BY THE SAME PARTY WITH REGARD TO LITIGATION BETWEEN ONGC AND AMUR SHIPBUIL DING YARD WAS HELD NOT TAXABLE AS FTS U/S.9(1)(VII). ACCORDINGLY, WE H OLD THAT SUCH PAYMENT CANNOT BE BROUGHT TO TAX U/S. 9(1)(VII). HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. E. ONGC LTD. AS REPRESENTATIVE ASSESSEE OF UNIVERSI TY OF NEW SOUTH 16 ITA NOS. 3524 & 3526/DEL/2016 WALES, AUSTRALIA, ITA NO.1335/DEL;/2016, ASSESSMENT YEAR 2011- 12. 21. THE NON-RESIDENT ASSESSEE (UNSW, AUSTRALIA) HAD ENTERED INTO A CONTRACT DATED 11.01.2005 WITH ONGC FOR CONSTRUCTIO N, INSTALLATION AND MAINTENANCE OF HIGH RESOLUTION CT SCANNING FACILITY AT THE IN-HOUSE R&D FACILITY OF ONGC VIZ., INSTITUTE OF RESERVOIR STUDI ES (IRS), AHMEDABAD, WHICH WAS PRIMARILY ENGAGED IN CARRYING OUT R&D WOR K RELATED TO ENHANCEMENT OF RECOVERY OF OIL/HYDROCARBONS THROUGH IMPROVED/ENHANCED RECOVERY STUDIES. THE SERVICES COVERED UNDER THE SA ID CONTRACT ARE AS UNDER:- SUPPLY OF HARDWARE (HIGH RESOLUTION CT SCANNER) INC LUDING COMMISSIONING AND TESTING; SUPPLY OF SOFTWARE INCLUDING INSTALLATION AND TEST ING; SOFTWARE MAINTENANCE AND ASSISTANCE WITH HARDWARE MAINTENANCE; TRAINING OF ONGC PERSONNEL. 22. IN TERMS OF THE CONTRACT, THE INSTALLATION, TE STING AND COMMISSIONING OF CT SCANNING FACILITY WAS TO BE COMPLETED WITHIN 18 MONTHS FROM INITIATION OF PROJECT, THE MAINTENANCE OF HARDWARE, SOFTWARE WAS TO CONTINUE FOR 5 YEARS FROM THE DATE OF COMMISSIONING THEREOF ON ANNUAL BASIS. THE CT SCANNER FACILITY WAS UNDER MAINTENANC E CONTRACT W.E.F. 11 TH MARCH 2008. DURING THE RELEVANT PREVIOUS YEAR, UNSW , AUSTRALIA RECEIVED USD 1,00,000 EQUIVALENT TO INR 44,81,095 ON ACCOUNT OF ANNUAL MAINTENANCE OF THE CT SCANNER FACILITY. IN THE RETURN OF INCOME FILED FOR THE SAID ASSESSMENT YEAR, THE NON-RESIDENT ASSESSEE CLA IMED EXEMPTION OF THE AFORESAID RECEIPTS FROM TAX IN INDIA UNDER THE PROV ISIONS OF THE INDIA- AUSTRALIA DTAA, THEREBY DECLARING NIL INCOME. ALT ERNATIVELY AND WITHOUT PREJUDICE TO THE AFORESAID, THE RECEIPTS WERE CLAIM ED TO BE TAXABLE UNDER SECTION 44BB OF THE ACT IN THE COMPUTATION OF INCOM E AND NOTES APPENDED THERETO, FILED ALONG WITH THE RETURN OF INCOME. THE AO, HOWEVER, BROUGHT 17 ITA NOS. 3524 & 3526/DEL/2016 THE SAME TO TAX AS FEES FOR TECHNICAL SERVICES UN DER SECTION 9(L)(VII) READ WITH SECTION 115A OF THE ACT AND ALSO UNDER ARTICLE 12 OF THE INDIA- AUSTRALIA DTAA. THE CIT (A), ALSO UPHELD THE SAID R ECEIPTS AS TAXABLE UNDER SECTION 9(1)(VII) READ WITH SECTION 44DA AFTE R RELYING ON THE ORDER OF CIT(A) IN PRECEDING AY VIZ., 2010-11, WHEREIN IT WA S HELD THAT THERE WAS A DEEMED PE OF UNSW WHICH CAME INTO EXISTENCE ON ACCO UNT OF ACTIVITY OF INSTALLATION OF EQUIPMENT IN INDIA IN TERMS OF ARTI CLE 5(3) OF THE INDIA- AUSTRALIA DTAA. ACCORDINGLY, LD. CIT (A) DIRECTED T HAT TAXABLE INCOME TO BE COMPUTED BY BRINGING TO TAX 25% OF GROSS RECEIPTS D EEMING THE SAME TO BE INCOME ATTRIBUTABLE TO PE OF NON-RESIDENT IN INDIA ON ADHOC BASIS ON THE GROUND THAT BOOKS OF ACCOUNT AS REQUIRED U/S.44DA W ERE NOT PRODUCED/MAINTAINED BY NON-RESIDENT ENTITY. 23. ON THE PERUSAL OF THE RELEVANT FINDINGS AND M ATERIAL REFERRED TO BEFORE US, WE FIND THAT THE UNSW, AUSTRALIA HAD ENT ERED INTO A CONTRACT WITH ONGC FOR CONSTRUCTION, INSTALLATION AND MAINTE NANCE OF HIGH RESOLUTION CT SCANNER AT ONGC PREMISES IN AHMEDABAD . THE HIGH RESOLUTION CT SCANNER IS USED TO STUDY THE RELATION SHIP BETWEEN PETROPHYSICAL AND TRANSPORT PROPERTIES COMPUTED ON MICRO CT IMAGES AND THOSE ARE MEASURED USING CONVENTIONAL LABORATORY TE CHNIQUES AND ACTUAL LOG RESPONSES. IT IS PERTINENT TO POINT OUT THAT TH E PAYMENTS RECEIVED BY UNSW, AUSTRALIA DURING THE RELEVANT PREVIOUS YEAR W ERE THAT ANNUAL MAINTENANCE CHARGES FOR MAINTENANCES OF THE HIGH RE SOLUTION CT SCANNER. SINCE HIGH RESOLUTION CT-SCANNER IS USED FOR CONDUC TION PETROGRAPHY STUDIES IN RESERVOIR ROCK DESCRIPTION WHICH CONTRIB UTES IN PROSPECTING / ENHANCING THE RECOVERY OF OIL, THEREFORE, SUCH SERV ICES RELATING TO MAINTENANCE OF HIGH RESOLUTION CT-SCANNER CAN BE SA ID TO BE DIRECTLY ASSOCIATE AND INEXTRICABLY CONNECTED WITH THE EXTRA CTION AND PRODUCTION OF MINERAL OIL. THE RECEIPTS THEREFROM WOULD FALL WITH IN THE AMBIT OF CONSIDERATION FOR ANY MINING OR LIKE PROJECT WHICH IS EXCLUDED FROM THE DEFINITION OF TERM FTS AS DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VII) AND 18 ITA NOS. 3524 & 3526/DEL/2016 SAME WOULD BE TAXABLE U/S.44BB. THE JUDGMENT OF HON 'BLE SUPREME COURT IN THE CASE OF ONGC RELATING TO REPAIRING OF VARIOU S EQUIPMENT USED DIRECTLY AND INDIRECTLY IN CONNECTION WITH EXPLORAT ION OR PRODUCTION OF MINERAL OILS WILL SQUARELY APPLY. THE OTHER ALLEGAT IONS OF THE AUTHORITIES BELOW THAT THE AGREEMENT ENVISAGES A LONG TERM COLL ABORATION, PARTICIPATION, TRAINING, MAINTENANCE AND SERVICE OF HIGH RESOLUTION CT SCANNER AND UNSW, AUSTRALIA WOULD PROVIDE HANDS ON TRAINING TO ONGC PERSONNEL ON OPERATION OF THE FACILITY AND ANALYSIS OF DATA GENERATED DURING THE DEPUTATION OF UNSE EXPERTS, WE ARE OF TH E OPINION THAT TRAINING IS INCIDENTAL TO OPERATIONAL OF THE MACHINE AND IT WILL STILL FALL WITHIN THE AMBIT OF SECTION 44BB OF THE ACT AND ONGCS CASE WO ULD ALSO APPLY IN SUCH CASE. ACCORDINGLY, WE HOLD THAT THE RECEIPTS B Y THE SAID NON-RESIDENT WOULD FALL WITHIN THE AMBIT OF SECTION 44BB. ACCORD INGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 24. IN VIEW OF THE FINDING GIVEN ABOVE QUA EACH ASS ESSEE, WE HOLD THAT ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. 25. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED. IN THE PRESENT ASSESSEES CASES ALSO THESE ISSUES A RE IDENTICAL. AS REGARDS ITA NO. 3524/DEL/2016, THE ASSESSEE PROVIDED OF PRO FESSIONAL LEGAL SERVICES BEFORE A FOREIGN COURT, WHICH CANNOT BE BROUGHT TO TAX AS FIS UNDER ARTICLE 12 OF THE INDIA-USA DTAA, BECAUSE THERE IS NO MAKE AVA ILABLE OF ANY PARTICULAR KNOWLEDGE OR SKILL TO ONGC BEFORE THE COURTS WHICH CAN ENABLE ONGC TO REPRESENT ITS CASE IN FUTURE. UNDER SECTION 9(1)(VI I) LEGAL SERVICES CANNOT BE TREATED AS FTS AS IT IS A PROFESSIONAL SERVICES WHI CH IS OUTSIDE THE SCOPE OF SECTION 9(1)(VII) OF THE ACT. IN A.Y. 2009-10, THE TRIBUNAL HELD THAT THE SAID LEGAL SERVICES IS NOT TAXABLE AS FTS U/S 9(1)(VII) OF THE ACT. THEREFORE, APPEAL OF THE ASSESSEE BEING ITA NO. 3524/DEL/2016 IS ALLOWED . 19 ITA NOS. 3524 & 3526/DEL/2016 AS REGARDS TO ITA NO. 3526/DEL/2016, UNIVERSITY OF NEW SOUTH WALES, AUSTRALIA HAD ENTERED INTO A CONTRACT WITH ONGC FOR CONSTRUCTION, INSTALLATION AND MAINTENANCE OF HIGH RESOLUTION CT SCANNER AT ON GC PREMISES IN AHMEDABAD. IN THIS YEAR ALSO THE PAYMENTS RECEIVED BY UNIVERSITY OF NEW SOUTH WALES, AUSTRALIA DURING THE RELEVANT PREVIOUS YEAR WERE THAT ANNUAL MAINTENANCE CHARGES FOR MAINTENANCES OF THE HIGH RE SOLUTION CT SCANNER. SINCE HIGH RESOLUTION CT SCANNER IS DIRECTLY ASSOCI ATE AND INEXTRICABLY CONNECTED WITH THE EXTRACTION AND PRODUCTION OF MIN ERAL OIL, THE RECEIPTS WOULD FALL WITHIN THE AMBIT OF CONSIDERATION FOR ANY MINI NG OR LIKE PROJECT WHICH IS EXCLUDED FROM THE DEFINITION OF TERM FTS AS DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT AND SAME WOULD BE TAXABLE U/S 44BB OF THE ACT. THUS THE RECEIPTS BY THE SAID NON-RESIDENT WOULD FALL WITHIN THE AMBIT OF SECTION 44BB OF THE ACT AS HELD IN THE EARLIER ASSESSMENT YEARS AS WELL. THEREFORE, APPEAL OF THE ASSESSEE BEING ITA NO. 3526/DEL/2016 IS ALLOWED. TH US, THE CIT(A) WAS NOT CORRECT IN HOLDING THAT THESE SERVICES ARE TAXABLE IN INDIA. HENCE BOTH THE APPEAL OF THE RESPECTIVE ASSESSEES ARE ALLOWED. 8. IN RESULT, BOTH THE APPEALS OF THE RESPECTIVE AS SESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2019 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12/06/2019 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 20 ITA NOS. 3524 & 3526/DEL/2016 ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 06.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.05.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 1 2 . 6 . 2 0 1 9 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 1 2 . 6 . 2 0 1 9 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 2 . 6 . 2 0 1 9 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 2 . 6 . 2 0 1 9 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 2 . 6 . 2 0 1 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER