M/s CGGVeritas Services SA, Gurgaon V. Additional Director of Income Tax, Dehradun

ITA 4653/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58525 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAM RAJ MORARKA; S D KAPILA ADV MS CHARU
• Keywords: Presumptive income; Business income; Double taxation relief; Rule of consistency; Permanent establishment; Advance ruling; Capital expenditure
• Section: 234B; 32; 63; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH B DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D. RANJAN, AM I. T. APPEAL NO. 4653 (DEL) OF 2010 ASSESSMENT YEAR : 2007-08. M/S. CGG VERITAS SERVICES SA VS. ADDL. DIRECTOR OF INCOME- TAX, [ FORMERLY C G G SERVICES ] INTERNATIONAL TAXATION, C/O. B M R & ASSOCIATES, D E H R A D U N. 22ND FLOOR, BUILDING NO. 5, TOWERA, D L F CYBER CITY, D L F PHASE : III, G U R G A O N 122 002 [HARYANA]. (P A N - AAC CC 2605 E) ( APPLICANT ) ( RESPONDENT ) ASSESSEE BY : SHRI S. D. KAPILA, ADV.; MS. CHARU, & SHRI RAM RAJ MORARKA, ADV.; DEPARTMENT BY : SHRI ASHWANI KUMAR MAHA JAN CIT( D.R.); O R D E R . PER K. D. RANJAN, AM : THIS APPEAL IS FILED BY THE ASSESSEE AND PERTAINS TO ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE RE PRODUCED AS UNDER:- 2 I. T. APPEAL NO. 4653 (DEL) OF 2010 ' 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER (AO) HAS ERRED IN COMPLETING THE ASSESSMENT OF INCOME OF THE APPELLANT AT INR 7,003,344,270 AS AGAINST THE O RIGINAL RETURNED INCOME OF INR 713,725,225; 1.2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN HOLDING THAT THE SERVICES RENDERED BY THE APPELLANT ARE NOT IN CONNECTION WITH EXPLORATION, EXTRACTION AND PRODUCT ION OF MINERAL OIL THEREBY, DISALLOWING THE PROVISIONS OF SECTION 44-B B OF THE INCOME-TAX ACT, 1961 (ACT); 1.3 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN NOT APPRECIATING THAT SEISMIC DATA ACQUISI TION AND ONBOARD PROCESSING ACTIVITIES ARE IN CONNECTION WITH EXPLOR ATION, EXTRACTION AND PRODUCTION OF MINERAL OIL AS PER SECTION 44-BB OF T HE ACT; 1.4 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN HOLDING THAT THE SERVICES RENDERED BY THE APPELLANT TO BE IN THE NATURE OF FEE FOR TECHNICAL SERVICES (FTS) THEREBY , LIABLE TO BE TAXED AS PER THE PROVISIONS OF SECTION 9(1)(VII) OF THE ACT; 3 I. T. APPEAL NO. 4653 (DEL) OF 2010 1.5 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN HOLDING 25 PER CENT OF THE GROSS RECEIPTS FROM ENI AS PROFITS EARNED ON THE PROJECT; 1.6 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN DEEMING THE ABOVE MENTIONED PROFIT RATE ON CONJECTURES AND SURMISES; 1.7 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN FAILING TO PROVIDE CREDIT TO THE APPELLANT IN RESPECT OF TAXES DEDUCTED AT SOURCE BY ONGC AND ENI AS PER THE PROVISIONS OF SECTION 195 OF THE ACT; 1.8 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE AO HAS ERRED IN LEVYING INTEREST UNDER SECTION 234-B AND I NITIATING PENALTY PROCEEDINGS AS PER THE PROVISIONS OF SECTION 271-B OF THE ACT. 2. THE MAIN EFFECTIVE GROUND OF APPEAL OF ASSESSEE IS THAT THE AO HAS WRONGLY BROUGHT TO TAX INCOME OF THE ASSESSEE U/S 9(1)(VII) INSTEAD OF U/S 44BB(1) OF THE INCOME TAX ACT, 1961. THE CASE OF DEPARTMENT IS THA T PROVISIONS OF SECTION 44BB (1) ARE NOT APPLICABLE TO THE FACTS OF THE CASE AND RECEIPTS ARE IN NATURE OF FEE FOR TECHNICAL SERVICES AND HENCE THE PROVISIONS OF SECT ION 115A OF THE I.T. ACT, 1961 4 I. T. APPEAL NO. 4653 (DEL) OF 2010 ARE APPLICABLE. THE FACT OF THE CASE STATED IN BRIE F ARE THAT THE ASSESSEE COMPANY, A TAX RESIDENT OF FRANCE, DURING THE RELEVANT ASSESSM ENT YEAR WAS ENGAGED IN PROVIDING GEOLOGICAL AND GEOPHYSICAL SERVICES FOR E XPLORING MINING POTENTIAL. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R UNDER CONSIDERATION THE ASSESSEE DERIVED INCOME IN INDIA FROM EXECUTION OF EXPLORATION PROJECTS FOR PROSPECTING MINERAL OIL DEPOSITS IN THE OFFSHORE WA TERS UNDER FOUR CONTRACTS WITH ONGC AND ONE CONTRACT WITH ENI, U.K. AS PER THE TER MS OF CONTRACT, THE PROJECTS INVOLVED CONDUCTING SEISMIC SURVEY OF LARGE AREA CO NSISTING OF THOUSANDS OF SQ. KM. OF SEA BED AND ACQUISITION OF 3D SEISMIC DATA, ONBOARD PROCESSING THEREOF AND THE ANALYSIS THEREOF WAS TO BE DELIVERED TO ONGC AN D ENI, IN THE FORM OF CD/ DISKETTE IN THE MANNER STIPULATED IN RESPECTIVE AG REEMENTS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08, UNDER STATUS OF NON RESIDENT, DECLARING AN INCOME OF RS.71,37,25,225/- UNDER SECT ION 44BB(1) OF IT ACT, 1961. THE ASSESSEE HAS OPTED TO BE TAXED UNDER PROVISIONS OF DOMESTIC TAX LAW AND NOT UNDER INDO-FRANCE DTAA BECAUSE DOMESTIC TAX LAW IS MORE BENEFICIAL TO U/S 90(2) OF IT ACT, 1961. THE ASSESSING OFFICER APPLIED DOM ESTIC LAW, HOWEVER HELD THAT INCOME OF ASSESSEE IS TAXABLE U/S 9(L)(VII) AND NOT U/S 44BB(1) AND ACCORDINGLY HAS COMPUTED INCOME AT RS 700,33,44,265/- WHICH IS TAXA BLE AT RATE OF 10% AS PER PROVISIONS OF SECTION 115A OF IT ACT, 1961. THE DRP HAS CONCURRED WITH VIEW OF ASSESSING OFFICER AND HENCE THE ASSESSEE HAS COME I N APPEAL BEFORE THIS TRIBUNAL. 5 I. T. APPEAL NO. 4653 (DEL) OF 2010 3. BEFORE US LD. A .R. OF THE ASSESSEE SUBMITTED TH AT ASSESSEE WAS AWARDED CONTRACTS BY ONGC AND ENI FOR THE PURPOSE OF EXPLOR ATION OF MINERAL OIL. THE INCOME ARISING FROM EXPLORATION OF MINERAL OIL HAD HITHERTO BEEN TAXED BY THE DEPARTMENT UNDER SECTION 44BB OF THE INCOME TAX ACT . HOWEVER, IN THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSING O FFICER DEVIATED HIS STAND ON SIMILAR FACTS AND HELD THAT REVENUE EARNED FROM ONG C CONTRACTS IS 'FEE FOR TECHNICAL SERVICES' AS DEFINED IN EXPLANATION 2 OF S. 9(L)(VII) OF THE ACT. ACCORDINGLY, THE RECEIPTS HAVE BEEN ASSESSED TO TAX UNDER SEC. 115A READ WITH SECTION 9(1)(VII) OF THE ACT AT RS. 700,33,44,265/- AS AGAINST THE RETURNED INCOME OF RS. 71,37,25,225/-. AS PER ASSESSING OFFICER TH E ASSESSEE HAS NEITHER UNDERTAKEN ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT NOR HAS IT RENDERED SERVICES TO THOSE COMPANIES THAT HAVE UNDERTAKEN THESE PROJECTS . THE ASSESSEE IS THUS NOT COVERED UNDER SEC. 44BB(1) AS IT DOES NOT FALL UNDE R THE EXCLUSIONARY CLAUSES OF EXPLANATION 2 TO SEC. 9(1)(VII) OF THE ACT. IT HAS FURTHER BEEN OBSERVED BY THE ASSESSING OFFICER THAT CBDT INSTRUCTION NO. 1862 DE ALS WITH 'MINING OR LIKE PROJECT AND THEREFORE, THE SAME WILL APPLY IN THE CASE OF THOSE ASSESSEES WHO ARE ENGAGED IN THE DRILLING OPERATIONS AND NOT IN THE C ASES OF THE ASSESSEE WHO ARE ENGAGED IN CARRYING OUT SEISMIC SURVEYS. THE A.O. H AS RELIED ON RULING OF AAR 6 I. T. APPEAL NO. 4653 (DEL) OF 2010 P/6 REPORTED AS 234 ITR 371 AND THE DECISION OF UTT ARANCHAL HIGH COURT IN THE CASE OF CIT VS. ONGC LTD 299 ITR 438 FOR THE PROPOSITION THAT PAYMENT FOR SEISMIC SURVEY IS COVERED BY SEC.115A AND NOT SEC. 44BB(1) OF THE ACT. 4. LD AR OF THE ASSESSEE FURTHER HAS SUBMITTED THAT ALL THE ONGC AND ENI CONTRACTS, THOUGH PERTAINING TO DIFFERENT OFF-SHORE LOCATIONS HAVE SIMILAR TERMS AND THE SCOPE OF WORK IS ALSO SIMILAR. REFERRING TO ONE OF THE CONTRACT AT S.NO 1 IN TABLE AT PAGE 2 OF THE ASSESSMENT ORDER HE SUBMIT S THAT THE AO HAS DISTORTED THE DESCRIPTION OF 'SCOPE OF WORK STIPULATED IN THE CO NTRACTS WITH ONGC. ACCORDING TO HER, THE ASSESSEE IS 'TO PROVIDE PERSONNEL AND E QUIPMENT', WHEREAS CLAUSE 1 OF THE CONTRACTS DESCRIBES SCOPE OF WORK BY STIPULATIN G THAT 'CONTRACTOR SHALL WITH HIS OWN PERSONNEL & EQUIPMENT PLAN AND EXECUTE ACQUISIT ION OF 3D SEISMIC DATA .... '. IN OTHER WORDS, THE ENTIRE WORK OF SEISMIC SURVEY H AS TO BE CARRIED OUT BY THE ASSESSEE BY EMPLOYING ITS OWN PERSONNEL AND EQUIPME NTS. HOWEVER, THE AO HAS WRONGLY ASSUMED IT TO MEAN THAT THE ASSESSEE WOULD PROVIDE PERSONNEL AND EQUIPMENTS TO ONGC FOR THE LATTER TO CARRY OUT THE WORK. HE HAS, THEREFORE, SUBMITTED THAT ASSESSEE HAD CARRIED SEISMIC SURVEY BY EMPLOYING ITS OWN EQUIPMENTS AND PERSONNEL. 7 I. T. APPEAL NO. 4653 (DEL) OF 2010 5. HE HAS FURTHER SUBMITTED THAT THE CARRYING OUT S EISMIC SURVEY CONSTITUTES AN INDEPENDENT AND SELF-CONTAINED PROJECT. THE ENTIRE PROJECT HAS TO BE EXECUTED BY THE ASSESSEE BY EMPLOYING VESSELS, WHETHER OWNED OR CHARTERED EQUIPPED WITH SPECIALIZED INSTRUMENTS. HE RELIED ON THE DECISION OF AUTHORITY FOR ADVANCE RULING IN THE CASE OF WAVEFIELD INSEIS ASA 320 ITR 290 WH EREIN IT HAS BEEN BROUGHT OUT VERY CLEARLY AS TO WHAT CONSTITUTES A SEISMIC SURVE Y. HE HAS ALSO REFERRED TO THE DECISION OF ITAT CALCUTTA IN THE CASE OF DCIT VS. S CHLUMBERGER SEA CO INC. 50 ITD 348(CAL), WHEREIN THE ASSESSEE A SUB-CONTRACTOR RENDERED SERVICES TO ONGC FOR ITS ON-SHORE OIL-WELLS AND ALSO SUPPLIED PERSON NEL AND MATERIALS. THE TRIBUNAL HELD THAT SUCH SERVICES WERE IN CONNECTION WITH EXP LORATION AND EXTRACTION OF MINERAL OIL AND THEREFORE THE INCOME WAS ASSESSABLE U/S 44BB. THIS DECISION WAS FOLLOWED BY THE TRIBUNAL IN PARADIGM GEOPHYSICAL (P ) LTD. 25 SOT 94 WHEREIN IT WAS HELD THAT THE COLLECTION OF 2D AND 3D SEISMIC D ATA BY PARADIGM AND ITS DELIVERY TO RIL FOR THE PURPOSE OF PROSPECTING AND EXTRACTION OF MINERAL OIL WAS COVERED BY THE PROVISIONS OF SEC. 44BB OF THE ACT. THE DECISION IN THE CASE OF PARADIGM GEOPHYSICAL (P) LTD. WAS FURTHER FOLLOWED BY THE TRIBUNAL IN THE CASE OF ALBERTA RESEARCH COUNCIL 41 SOT 525. IN THIS DECISI ON ALSO, THE TRIBUNAL HAS HELD THAT THE RECEIPT FOR PREPARING FEASIBILITY REPORT F OR IMPLEMENTATION OF 'CSS' IN LANWA OIL FIELDS IN MEHSANA DISTRICT IN GUJARAT WAS COVERED BY SEC. 44BB. RELYING ON THIS DECISION LD AR OF THE ASSESSEE SUBMITTED TH AT NOT ALL OPERATIONS CONCERNING 8 I. T. APPEAL NO. 4653 (DEL) OF 2010 'EXTRACTION OF MINERAL OIL' MUST NECESSARILY BE PHY SICAL OPERATIONS INSIDE THE CRUST OF THE EARTH. THE EXPLORATION IS CARRIED THROUGH A PROCEDURE KNOWN AS 'DIVINING'. THE WORD 'DIVINE' AS PER CHAMBERS 20 TH CENTAURY DICTIONARY (1983 EDITION) MEANS 'TO SEARCH FOR (UNDERGROUND WATER, ETC.), ESPECIALL Y WITH A DIVINING ROD'. SUCH PROCEDURE DOES NOT INVOLVE ANY PHYSICAL OPERATIONS UNDER THE SURFACE OF THE EARTH. HOWEVER, ACCORDING TO THE REVENUE AUTHORITIES, THE NORMAL DIGGING OPERATIONS UNDER THE SURFACE OF THE EARTH HAVE TO BE CONSIDERE D TO BE 'EXTRACTION OF MINERAL OIL'. THUS, AS PER THE AUTHORITIES BELOW IN ORDER T O BE TAXABLE UNDER SECTION 44BB OF THE ACT, THE ASSESSEE OUGHT TO HAVE CARRIED OUT SOME SUCH OPERATIONS UNDER THE SURFACE OF THE EARTH. 6. LD AR OF THE ASSESSEE READ OUT SECTION 44BB (1) WHICH IS REPRODUCED AS UNDER: 44BB. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A, IN THE C ASE OF AN ASSESSEE, BEING A NON-RESIDENT, ENGAGED IN THE BUSINESS OF PR OVIDING SERVICES OR FACILITIES IN CONNECTION WITH, OR SUPPLYING PLANT A ND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXT RACTION OR PRODUCTION OF, MINERAL OILS, A SUM EQUAL TO TEN PER CENT OF TH E AGGREGATE OF THE AMOUNTS SPECIFIED IN SUB-SECTION (2) SHALL BE DEEME D TO BE THE PROFITS 9 I. T. APPEAL NO. 4653 (DEL) OF 2010 AND GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION : PROVIDED THAT THIS SUB-SECTION SHALL NOT APPLY IN A CASE WH ERE THE PROVISIONS OF SECTION 42 OR SECTION 44D OR SECTION 115A OR SECTION 293A APPLY FOR THE PURPOSES OF COMPUTING PROFITS OR GAINS OR ANY OTHER INCOME REFERRED TO IN THOSE SECTIONS. IT HAS BEEN SUBMITTED THAT SECTION 44BB(1) DOES NOT TALK OF 'EXTRACTION OF MINERAL OIL' SIMPLICITOR. IT PREFIXES THE PHRASE 'IN CONNEC TION WITH' TO THE EXPRESSION 'EXTRACTION OF MINERAL OIL'. THIS SHOWS THAT THE SE CTION, BY VIRTUE OF THE PHRASE 'IN CONNECTION WITH', IS TALKING OF SOMETHING OTHER THA N PHYSICAL OPERATIONS BELOW THE SURFACE OF THE EARTH. REFERRING TO THE DECISION OF ITAT IN THE CASE OF ALBERTA RESEARCH COUNCIL (SUPRA) LD COUNSEL FOR THE ASSESS EE SUBMITS THAT IN THIS CASE THE TECHNICAL SERVICE WAS HELD TO BE COVERED BY SECTION 44BB(1) OF THE ACT PARTICULARLY WHEN SECTION 44BB IS SPECIAL PROVISION AND SECTION 115A IS GENERAL PROVISION. IN ALBERTA RESEARCH COUNCIL REFERENCE WAS MADE TO DECI SION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BASUDEV V. REX AIR 1949 ALL.513(FB) WHEREIN WORDS CONNECTED WITH HAVE BEEN HELD TO IMPLY A SUBSTANTI AL OR DIRECT CONNECTION AND NOT A FANCIFUL OR HIGHLY PROBLEMATIC CONNECTION. KARNATAKA HIGH COURT IN THE CASE OF STUMPP SCHEULE AND SOMAPPA LTD. (190 ITR 152) WHER EIN THE EXPRESSION 'IN CONNECTION WITH' WAS HELD TO INCLUDE MATTERS OCCURR ING PRIOR TO AS WELL AS 10 I. T. APPEAL NO. 4653 (DEL) OF 2010 SUBSEQUENT TO OR CONSEQUENT UPON SO LONG AS THEY AR E RELATED TO THE PRINCIPAL THING. SIMILAR LINE OF REASONING WAS ADOPTED BY THE AAR IN GEOFYZIKA TORUN, 320 ITR 268 TO CONCLUDE THAT THE NON-RESIDENT COMPANY, WHI CH WAS ENGAGED IN THE BUSINESS OF PROVIDING DATA FROM SEISMIC SURVEYS IN CONNECTION WITH PROSPECTING OF MINERAL OIL, IS SQUARELY COVERED UNDER SEC. 44BB OF THE ACT. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE THE COLLECTION' OF SEISMIC DATA OF THE SEA-BED IS THE FIRST STEP IN EXPLORING OIL-BEARING ROCK STRUCTURES AND I T IS INTEGRAL TO PROSPECTING FOR MINERAL OIL. AS PER WEBSTER'S ENCYCLOPEDIC UNABRIDG ED DICTIONARY WORD 'PROSPECT' MEANS OUTLOOK OR OVER VIEW A REGION O R IN A PARTICULAR DIRECTION. MINING MEANS (A) AN APPARENT INDICATION OF ORE OR N ATIVE METAL; (B) A SPOT GIVING SUCH INDICATIONS; (C) WORKINGS, OR AN EXCAVATION, I N A MINE. SECTION 3 OF THE PETROLEUM CONCESSION RULES, 1949, DEFINES WORD PRO SPECTING TO MEAN THE OPERATIONS NECESSARY TO ASCERTAIN WHETHER ANY GEOLO GICAL STRUCTURES FAVOURABLE FOR ACCUMULATION OF OIL ARE PRESENT AND ARE CAPABLE OF YIELDING PETROLEUM OR NATURAL GAS IN COMMERCIALLY WORKABLE QUANTITIES. IT INCLUDE S A DRILLING OF DEEP TEST WELLS IN SUCH NUMBER AS WOULD HE NECESSARY TO VERIFY THE GEO LOGICAL STRUCTURE OF THE OIL AND GAS-BEARING FORMATIONS AND THEIR PRODUCTIVE EXTENT. IN VIEW OF THE DEFINITION OF WORDS PROSPECTING AND MINING HE HAS SUBMITTED T HE ASSESSEE WAS ENGAGED IN EXECUTION OF THE PROJECTS CONNECTED WITH PROSPECTIN G OR MINING OF MINERAL OIL AND HENCE ELIGIBLE FOR ASSESSMENT U/S 44BB(1) OF THE AC T. HE PLACED RELIANCE ON THE 11 I. T. APPEAL NO. 4653 (DEL) OF 2010 RULING OF ADVANCE AUTHORITY IN GEOFYZIKA TORUN (SUP RA), WHEREIN IT HAS BEEN HELD THAT INCOME FROM EXECUTING PROJECTS/CONTRACTS FOR C APTURING 2D AND 3D SEISMIC DATA BY A NON-RESIDENT CONTRACTOR OR A NON RESIDENT SUB- CONTRACTOR IS COVERED BY SEC. 44BB OF THE ACT. BASED ON ABOVE IT HAS BEEN PL EADED THAT THE ASSESSEE, A NON- RESIDENT COMPANY, SATISFIES ALL THE CONDITIONS LAID DOWN IN SEC. 44BB OF THE ACT AND HENCE IT IS ELIGIBLE FOR TAXATION U/S 44BB. HE ALSO PLACED RELIANCE ON THE FOLLOWING RULINGS OF AAR: I. WAVEFIELD INSEIS ASA 320 ITR 290 II. WAVEFIELD INSEIS ASA 322 ITR 645 III. SEABIRD EXPLORATION FZ LLC 320 ITR 286 IV. SEABIRD EXPLORATION FZ LLC 326 ITR 558 V. GLOBAL GEOPHYSICAL SERVICES LTD 332 ITR 418 VI. OHM LIMITED 335 ITR 423 VII. BERGEN OILFIELD SERVICES AS 241 CTR 322 VII. BOURBON OFFSHORE PTE LIMITED (AAR NO 937 OF 20 10) 7. COMING TO THE QUESTION AS TO WHETHER PROVISO TO SECTION 44BB APPLIES TO THE FACTS OF THE ASSESSEE, THE LD AR OF THE ASSESSEE SU BMITTED THAT THE MAIN REASON FOR THE AO TAXING THE INCOME FROM ONGC CONTRACTS IS THA T BY VIRTUE OF THE PROVISO TO SECTION 44BB(1), THE INCOME IS TO BE EXCLUDED FROM SEC. 44BB AND BE TAXED AS FTS IN TERMS OF EXPLANATION 2 TO SEC. 9(1)(VII). TH E ASSESSING OFFICER HAS NOT 12 I. T. APPEAL NO. 4653 (DEL) OF 2010 POINTED OUT AS TO HOW THE IMPORT OF THE MAIN PROVIS ION OF SECTION 44BB(1) IS UNCLEAR. FURTHER, THE AO HAS IGNORED ANOTHER DICTUM LAID DOWN BY THE APEX COURT IN MORE RECENT JUDGMENTS. IT HAS BEEN HELD BY THE A PEX COURT THAT SINCE THE NATURAL PRESUMPTION IS THAT BUT FOR THE PROVISO, THE ENACTI NG PART SHOULD GENERALLY BE GIVEN SUCH A CONSTRUCTION WHICH WOULD MAKE THE EXCEPTIONS CARVED OUT BY THE PROVISO NECESSARY AND A CONSTRUCTION WHICH WOULD MAKE THE E XCEPTIONS UNNECESSARY AND REDUNDANT SHOULD BE AVOIDED (AIR 1966 SC 12. P.14; AIR 2000 SC 1390 AT P 1398). THE FACTS OF THE ASSESSEES CASE ARE FULLY C OVERED BY THE MAIN PROVISIONS OF SECTION 44BB OF THE ACT. THE REVENUE CANNOT APPLY T HE PROVISO WITHOUT FIRST DISCHARGING ITS ONUS TO ESTABLISH THAT NOT ONLY THE MAIN PROVISIONS OF SECTION 44BB DO NOT APPLY BUT ALSO THAT IMPUGNED RECEIPTS UNDER ONGC CONTRACTS ARE FEE FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION 2 OF S ECTION 9(1)(VII) OF THE ACT. THE REVENUE HAS FAILED TO DISCHARGE THIS BURDEN. 8. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THA T THE SERVICES PROVIDED UNDER THE CONTRACTS ARE NOT FTS AS THE DEFINITION OF FTS SPECIFICALLY EXCLUDES INCOME FROM 'MINING OR LIKE PROJECTS'. MOREOVER, THE RECEI PTS UNDER THE CONTRACTS ARE COVERED BY INSTRUCTION NO. 1862. BOTH THESE CONTENT IONS HAVE BEEN UPHELD BY VARIOUS BENCHES OF ITAT AND AAR IN THE CASES REFERR ED TO ABOVE. LD AR OF 13 I. T. APPEAL NO. 4653 (DEL) OF 2010 THE ASSESSEE REFERRED TO THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF UNION OF INDIA V. INDIAN CHARGE CHROME AND ANR (7 S CC 314) WHEREIN HONBLE COURT TOOK INTO CONSIDERATION THE DICTIONARY MEANI NG OF TERM PROJECT AS A PROPOSAL FOR UNDERTAKING; AN UNDERTAKING. A BARE P ERUSAL OF THE IMPUGNED CONTRACTS WOULD SHOW THAT THESE ARE FOR IMPLEMENT ING INDEPENDENT, SELF-CONTAINED AND PLANNED UNDERTAKING FROM BEGINNING TO ITS END; CULMINATING IN DELIVERY OF 2D AND 3D SEISMIC DATA. MOREOVER, THE CONTRACTOR HAS TO ENSURE QUALITY CONTROL, COLLECTS DATA ON ITS OWN, WHICH IT WARRANTS. HE REF ERRED TO CLAUSE 19 DEALING WITH 'INDEMNIFICATION'; CLAUSE 20 DEALING WITH 'PERFORMA NCE GUARANTEE'; AND CLAUSE 21 DEALING WITH 'INSURANCE' UNDER THE SAID CONTRACTS. HE HAS EMPHASIZED THAT ALL THE CREW AND TECHNICIANS ON BOARD REPORT TO THE ASSESSE E WHO ALONE IS ACCOUNTABLE FOR THEM. THE ENTIRE CONTRACT IS PERFORMED BY THE ASSES SEE ON ITS OWN AS INDEPENDENT CONTRACTOR WITHOUT INVOLVEMENT OF ONGC AND ENI. THE ONLY INTERACTION WITH THE REPRESENTATIVES OF ONGC IS FOR THE LIMITED PURPOSE OF PREPARATION OF THE PROJECT REPORT PRIOR TO COMMENCEMENT OF THE WORK UNDER THE CONTRACT. IN VIEW OF ABOVE, IT HAS BEEN SUBMITTED THAT THE ASSESSEE HAS IMPLEMENTE D THE CONTRACTS WITH ONGC AND ENI AS 'PROJECTS'. 14 I. T. APPEAL NO. 4653 (DEL) OF 2010 9. LD AR OF THE ASSESSEE REFERRED TO ARTICLE 31 A (E) OF THE CONSTITUTION OF INDIA WHICH DEALS WITH SEARCHING OR WINNING ANY MI NERAL OR MINERAL OIL'. HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SRI TARKESHWAR SIO THAKUR JIU, APPELLANT VS. BAR DASS DEY AND CO. AND ORS., RESPONDENTS (( 1979) 3 SCC 1(6), WHEREIN IT HAS BEEN OBSERVED THAT THE DEFINITION OF 'MINING OPERATIONS' AND 'MINE IS VERY WIDE. THE EXPRESSION 'WINNING OF MINERAL IN THE DEFINITION OF MINING OPERATIONS' IS SPACIOUS ENOUG H TO COMPREHEND EVERY ACTIVITY, BY WHICH THE MINERAL IS EXTRACTED OR OBTAINED FROM THE EARTH IRRESPECTIVE O WHETHER SUCH ACTIVITY IS CARRIED OUT ON THE SURFACE OR IN THE BOWELS OF THE EARTH. THE ESSENCE OF MINING OPERATIONS IS THAT IT MUST BE AN ACTIVITY FOR WINNING A MINERAL, WHETHER ON THE SURFACE OF OR BENEATH THE S URFACE OF THE EARTH. HE FURTHER SUBMITS THAT THE EXPRESSION 'WINNING' IN ART. 31A(L )(E) HAS BEEN CONSTRUED TO MEAN 'GETTING OR EXTRACTING MINERAL FROM THE MINES AND O THER INCIDENTAL PURPOSE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF GUJARA T POTTERY WORKS V. B. P. SOOD, CONTROLLER OF MINING LEASES FOR INDIA & ORS, (1967) 1 SCR 695 (SC). IN VIEW OF THE ABOVE IT HAS BEEN SUBMITTED THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE THOSE OF EXECUTING PROJECTS FOR THE EXPLORATION OF THE OIL BEARING ROCKS THROUGH SEISMIC SURVEY AND PROCESSING 2D AND 3D DATA IS INT EGRAL PART OF PROSPECTING FOR MINERAL OIL AND WINNING MINERAL OIL. THEREFORE, ANY SUCH PROJECT IS A MINING OR A LIKE PROJECT AS ENVISAGED IN THE EXPLANATION 2 TO SEC. 9(1) (VII), WHICH EXCLUDES 15 I. T. APPEAL NO. 4653 (DEL) OF 2010 SUCH 'LIKE PROJECTS FROM THE DEFINITION OF FTS. TH EREFORE, SEC. 44BB IS APPLICABLE TO THE SAID ACTIVITIES AS UNDERTAKEN BY THE APPLICA NT ASSESSEE. 10. AS REGARDS THE RELIANCE BY THE ASSESSING OFFICE R ON THE DECISION OF HONBLE UTTARANCHAL HIGH COURT IN CASE ONGC REPORTED IN 29 9 ITR 438 (UTT) IT HAS BEEN SUBMITTED THAT THE FACTS OF THAT CASE ARE DISTINGUI SHABLE AS THE QUESTION BEFORE THE HONBLE HIGH COURT WAS ENTIRELY DIFFERENT. THE QUE STION BEFORE THE COURT IN THAT CASE WAS AS TO WHETHER THE REVENUE RECEIVED BY THE NON-RESIDENT CONTRACTOR FOR PROVIDING TECHNICAL PERSONNEL TO ONGC FOR ASSISTING THE LATTER IN CARRYING MINING ACTIVITY WAS FTS OR 'SALARIES'. IN FACT, SECTION 44 BB HAS NOT EVEN BEEN REFERRED TO IN THAT JUDGMENT. THEREFORE, THAT JUDGMENT IS NOT R ELEVANT FOR DECIDING THE ISSUE AT HAND. 11. LD. AR OF THE ASSESSEE RELIED ON THE UNREPORTED DECISION OF HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF ONGC AS AGENT OF SCAN DRILLING COMPANY (INCOME TAX REFERENCE NO 2 OF 2001). THE COURT HELD THAT MANNING, MANAGEMENT AND OPERATION OF DRILL SHIPS FOR EXPLORATION PURPOS E WOULD FALL WITHIN THE AMBIT OF MINING OR LIKE PROJECT AND ACCORDINGLY FALL OUTSI DE THE PURVIEW OF FTS. 16 I. T. APPEAL NO. 4653 (DEL) OF 2010 12. AS REGARDS THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE RULING OF AAR IN THE CASE OF P/6 OF 1995 (234 ITR 371) IT HAS BEE N SUBMITTED THAT THIS RULING IS ALSO NOT APPLICABLE ON THE FACTS OF THE PRESENT CAS E. IN THE SAID RULING, THE QUESTION BEFORE THE AAR WAS ON APPLICABILITY OF SEC. 44BB AS COMPARED TO SEC. 44D OF THE ACT. THIS YEAR (A Y 2007-08), SEC. 44D IS NOT IN OP ERATION. FURTHER. THE QUESTION BEFORE THE AAR WAS AS TO WHETHER THE ASSESSEE WHO WAS PROVIDING CONSULTANCY SERVICES TO ONGC SHOULD BE TAXED U/S 44BB OR U/S 4 4D OF THE ACT. CONSULTANCY SERVICES CLEARLY FALL WITHIN THE DEFINITION OF FEE FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VII). THIS QUESTIO N DOES NOT ARISE IN THE PRESENT CASE AS THE ASSESSEE IS NOT PROVIDING CONSULTANCY S ERVICES TO ONGC UNDER THE CONTRACTS, AS IS EVIDENT FROM THE 'SCOPE OF WORK' A S DEFINED IN THE CONTRACTS WITH ONGC. ON THE OTHER HAND THE ASSESSEE IS RELYING ON THE LATER RULING OF AAR IN THE CASE OF GEOFIZYKA TORUN (SUPRA). 13. IT IS ALSO SUBMITTED BY THE LD AR OF THE ASSESS EE THAT THE ASSESSING OFFICER HAS WRONGLY APPLIED CBDT INSTRUCTION NO. 1862 TO HOLD T HAT THE SAID INSTRUCTION WAS ISSUED IN ALTOGETHER DIFFERENT CONTEXT AND SINCE NO DRILLING WAS CARRIED ON BY THE ASSESSEE, IT COULD BE SAID THAT THE ASSESSEE RECEIV ED CONSIDERATION FOR MINING OR LIKE 17 I. T. APPEAL NO. 4653 (DEL) OF 2010 PROJECT. THE ALLEGATION OF THE AO IS WHOLLY MISCONC EIVED AS HAS BEEN HELD IN VARIOUS JUDGMENTS REFERRED TO BY HIM. RATHER THE CA PTIONED INSTRUCTION BY CBDT STATES THAT PROSPECTING FOR, OR EXTRACTION OR PRODU CTION OF MINERAL OIL ARE OPERATIONS IN THE NATURE OF 'MINING OR LIKE PROJECT' AS REFERR ED TO IN EXPLANATION 2 TO SEC. 9(1 )(VII) OF THE ACT. THE SAID INSTRUCTION HAS ACCEPTE D THE OPINION OF THE ATTORNEY GENERAL OF INDIA THAT THE OPERATIONS FOR PROSPECTIN G FOR OR THE EXTRACTION OR PRODUCTION OF MINERAL OILS CAN BE TERMED AS 'MINING OPERATIONS' FOR THE PURPOSE OF EXPLANATION 2 TO SEC. 9(1)(VII)(B) IN PARAGRAPH 3 O F THE INSTRUCTION GOES ON TO SAY THAT 'IN VIEW OF THE ABOVE OPINION, THE CONSIDERATI ON FOR SUCH SERVICES WILL NOT BE TREATED AS FEE FOR TECHNICAL SERVICES FOR THE PURPO SE OF EXPLANATION 2 TO SEC. 9(1)(VII) OF THE ACT. PAYMENTS FOR SUCH SERVICES TO A FOREIGN COMPANY, THEREFORE, WILL BE INCOME CHARGEABLE TO TAX UNDER THE PROVISIO NS OF SEC. 44BB OF THE INCOME TAX ACT, 1961 AND NOT UNDER SPECIAL PROVISION FOR T HE TAXATION OF FEES FOR TECHNICAL SERVICES CONTAINED IN SEC. 115A. READ WITH SEC. 44D A OF THE ACT. IN SUPPORT OF HIS CLAIM HE ALSO PLACED RELIANCE ON VARIOUS OTHER DECI SIONS OF ITAT SUCH AS ACIT VS. PARADIGM GEOPHYSICAL PTY LTD (SUPRA); AND ONG C AS REPRESENTATIVE ASSESSEE OF' ALBERTA RESEARCH COUNCIL, CANADA VS. JCIT (SUPR A); AND ONGC AS REPRESENTATIVE ASSESSEE OF MARATHON MARINE ENGINEER ING, GERMANY IN ITA NO. 2143/DEL/2004. 18 I. T. APPEAL NO. 4653 (DEL) OF 2010 14. IN VIEW OF ABOVE LD. AR OF THE ASSESSEE HAS S UBMITTED THAT (I) THE ASSESSEE HAS PROVIDED SERVICES IN CONNECTION WITH PROSPECTIN G AND EXTRACTION OF MINERAL OIL. IT IS THEREFORE COVERED BY SECTION 44BB OF THE ACT; (II) THE ASSESSEE IS IMPLEMENTING A 'MINING OR LIKE PROJECT', WHICH IS E XCLUDED FROM THE DEFINITION OF FTS AS PER EXPLANATION 2 TO SECTION 9( 1)( VII) AND , THEREFORE, THE PROVISIONS OF SECTION 115A DO NOT APPLY TO IT; (III) WITHOUT PREJ UDICE. EVEN IF IT IS HELD TO BE RENDERING TECHNICAL SERVICES AS DEFINED IN EXPLANAT ION 2 TO SECTION 9( 1 )(VII) OF THE ACT, IT CAN BE TAXED U/S 44BB ONLY AND NOT UNDER SE CTION 115A OF THE ACT. THIS WOULD BE IN ACCORDANCE WITH INSTRUCTION NO, 1862 OF 1990, WHICH IS BINDING ON TAX AUTHORITIES; AND (IV) THE AO MAY BE DIRECTED TO TAX THE RECEIPTS FROM THE FOUR CONTRACTS WITH ONGC AND A CONTRACT WITH ENI IN ACCO RDANCE WITH THE PROVISIONS OF SECTION 44BB OF THE ACT. 15. ON THE OTHER HAND LD CIT(DR) SUBMITS THAT SEC TION 44BB(1) STARTS WITH NON-OBSTANTE CLAUSE 'NOTWITHSTANDING ANYTHING TO T HE CONTRARY CONTAINED IN SECTIONS AND HENCE THIS SUB SECTION OVER-RIDES SECTIONS 28 TO 41 & 43 AND 43A, WHICH ARE NORMAL PROVISIONS FOR COMPUTATION OF BUSINESS INCOME. IT PROVIDES PRESUMPTIVE TAXATION AS 10% OF RECEIPTS WITHOUT CON SIDERING EXPENDITURES WHICH IS 19 I. T. APPEAL NO. 4653 (DEL) OF 2010 DEEMED TO BE BUSINESS INCOME. THE AO IS NOT REQUIRE D TO EXAMINE BOOKS OF ACCOUNTS AND STATUTORY TAX AUDIT REPORT AS IS EVIDE NT FROM THE PROVISIONS OF SECTION 44BB(3) OF THE ACT. THE PROVISIONS OF SECTION 44BB( 1) ARE APPLICABLE IN CASE WHERE BUSINESS OF ASSESSEE IS OF PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH, OR SUPPLYING PLANT AND MACHINERY ON HIRE USED OR TO BE USED, IN THE PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS. THE SE RVICES ARE OF GENERAL KIND NOT RESTRICTED TO ANY PARTICULAR KIND OR SPECIES AND TH ESE SHOULD BE IN CONNECTION WITH PROSPECTING OR EXTRACTION OR PRODUCTION OF MINERAL OIL. HOWEVER, AS PER PROVISO TO SECTION 44BB (1), THE PROVISIONS OF 44BB(1) ARE NOT APPLICABLE IN THE CASES WHERE SECTIONS 42 OR 44D OR 44DA OR 115A OR 293A ARE APPL ICABLE. SECTIONS 44D, 44DA AND 115A DEAL WITH A SPECIFIC KIND OF SERVICES I.E. 'FEE FOR TECHNICAL SERVICES'(FTS). READING TOGETHER OF PROVISIONS OF SECTION 44BB(1) AND ITS PROVISO ONE MAY FIND THAT IF SERVICES PROVIDED BY THE ASSE SSEE ARE OF GENERAL NATURE, THEN SECTION 44BB(1) WILL APPLY AND IF THE SERVICES ARE OF THE KIND AS MENTIONED IN EXPLANATION 2 TO SECTION 9(1 )(VII) I.E. FEE FOR T ECHNICAL SERVICES, THEN PROVISIONS OF SECTION 44BB(1) WILL NOT APPLY. 16. EXPLANATION 2 TO SECTION 9(1)(VII) DEFINES EXP RESSION 'FEE FOR TECHNICAL SERVICES' AND MEANS ANY CONSIDERATION (INCLUDING AN Y LUMP SUM CONSIDERATION) FOR 20 I. T. APPEAL NO. 4653 (DEL) OF 2010 RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTAN CY SERVICES (INCLUDING THE PROVISIONS OF SERVICES OF TECHNICAL OR OTHER PERSON NEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MININ G OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOM E OF THE RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES. THUS AS PER THE DEFINITION THE SERVICES RENDERED SHOULD BE OF NATURE OF MANAGERIAL, TECHNICAL OR CONSULTANCY. THE PROVISION OF TECHNICAL PERSONNEL ALSO MEANS FEE FOR TECHNICAL SERVICES. THERE ARE TWO EXCEPTIONS TO THE DEFINITION OF FTS. FIRST EXCEPTION IS THAT RECE IPT FROM CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT IS NOT FTS IF THESE PROJECTS ARE UNDERTAKEN BY THE RECIPIENT. THE SECOND EXCEPTION IS THAT RECEIPT CHARGEABLE UND ER THE HEAD SALARY IS NOT FTS. THUS WITHIN THE MEANING OF EXPLANATION 2 TO SECTION 9(1 )(VII), THE CONSIDERATION RECEIVED ON ACCOUNT OF FEE FOR TECHNICAL SERVICES IS SUBJECT TO TAX AS PER PROVISIONS OF SECTION 44D OR 44DA OR 115A OF IT ACT , 1961. 17. SECTION 44D(B) PROVIDES THAT NO DEDUCTION OF E XPENDITURE OR ALLOWANCE IS TO BE GIVEN FROM GROSS FTS IF DATE OF CONTRACT IS BETW EEN 01-04-1976 AND 31-03- 2003. THE FINANCE ACT, 2003 INSERTED SECTION 44DA W .E.F. 01-04-2004, ACCORDING TO WHICH IF THE CONTRACT IS MADE AFTER 31-03-2003 A ND NON-RESIDENT HAS A PE IN INDIA AND THE CONTRACT IS EFFECTIVELY CONNECTED WIT H SUCH PE, THEN INCOME FROM FTS WILL BE COMPUTED U/S 44DA OF THE ACT. THE NET E FFECT OF SECTIONS 44D AND 21 I. T. APPEAL NO. 4653 (DEL) OF 2010 4DA IS THAT IF RELEVANT CONTRACT IS DATED BEFORE 31 .03.2003, THEN NO DEDUCTION ON ACCOUNT OF EXPENDITURE OR ALLOWANCE IS ALLOWABLE AN D FTS IS TO BE TAXED ON GROSS BASIS U/S 115A, BUT WHERE CONTRACT IS DATED AFTER 3 1-03-2003, THEN FTS IS TAXED ON NET BASIS IF TWO CONDITIONS ARE SATISFIED AND TAX R ATE TO BE APPLIED WILL BE THE SAME AS THAT FOR FOREIGN CORPORATION. IN A CASE, IF TWO NECESSARY CONDITIONS AS MENTIONED IN 44DA ARE NOT SATISFIED, THEN IN CASE OF CONTRACT DATED AFTER 31-03-2003, FTS WILL BE TAXED ON GROSS BASIS AS PER THE PROVISIONS OF SE CTION 115A. SECTION 115A DEALS WITH FTS OTHER THAN THOSE WHICH FALL WITHIN PURVIEW OF SECTION 44DA. THIS IS EVIDENT FROM STARTING SENTENCE OF SECTION 115A(1)(B ) WHICH SAYS THAT 'WHERE TOTAL INCOME OF A NON-RESIDENT (NOT BEING A COMPANY) OR A FOREIGN COMPANY INCLUDES ANY INCOME BY WAY OF ROYALTY OR FEE FOR TECHNICAL SERVI CES OTHER THAN INCOME REFERRED TO IN SUB-SECTION (1) OF SECTION 44DA'. THIS MEANS THAT IF FTS FALLS UNDER PURVIEW OF SECTION 44DA, THEN NORMAL TAX RATES APPLICABLE T O FOREIGN COMPANY ARE TO BE APPLIED AND IF FTS IS OTHER THAN AS REFERRED TO IN SECTION 44DA, THEN AS PER CLAUSE (BB) OF SECTION 115A(1)(B), TAX RATE WILL BE 10% IF CONTRACT IS DATED AFTER 01-06- 2005. THIS FTS IS TO BE TAXED ON GROSS BASIS AT A L OWER RATE OF 10% AND NO DEDUCTION FOR EXPENDITURE IS TO ALLOWED AS PER 115A (3). THE DEFINITION OF FTS FOR PURPOSES OF SECTION 115A IS SAME AS GIVEN IN EXPLAN ATION 2 TO SECTION 9(1)(VII) AS PER PROVISIONS CONTAINED IN EXPLANATION (A) TO SECT ION 115A. 22 I. T. APPEAL NO. 4653 (DEL) OF 2010 18. LD. CIT(DR) ON THE BASIS ABOVE HAS SUBMITTED TH AT LEGAL FRAME WORK FOR TAXING RECEIPTS OF NON-RESIDENT ENGAGED IN BUSINESS OF PROVIDING SERVICES IN CONNECTION WITH PROSPECTING FOR, EXTRACTION OR PROD UCTION OF MINERAL OILS IS DESIGNED IN SUCH A MANNER THAT IF SERVICES PROVIDED ARE OF NATURE OF FEE FOR TECHNICAL SERVICES AS PER EXPLANATION 2 TO SECTION 9(1 )(VII), THEN RECEIPTS WILL BE TAXABLE AS FTS UNDER SECTION 44DA OR 115A AND IF SE RVICES CANNOT BE QUALIFIED AS TECHNICAL SERVICES, THEN PROVISIONS OF 44BB(1) WILL BE APPLICABLE. 19. LD. CIT(DR) REFERRING TO CONTRACT NO. MR/WOB/MM /SC/3D/16/2005/EB- 2094 WITH ONGC HAS DRAWN OUR ATTENTION TO CERTAIN T ERMS OF THE CONTRACT. THE 'SCOPE OF WORK' REQUIRES THAT AFTER ACQUISITION A ND PROCESSING OF DATA, CONTRACTOR WILL ARRANGE FOR PACKING, INSURANCE, CUSTOMS AND OT HER FORMALITIES AND SAFE TRANSPORTATION OF DATA TAPE CARTRIDGES TO HANDOVER THE DATA (IN DUPLICATE) ALONG WITH OTHER TECHNICAL INFORMATION AS DESCRIBED IN CLAUSE 7 OF ANNEXURE II AT CORPORATION'S PREMISES, MUMBAI OR ANY OTHER DESIGNATED PREMISES O F CORPORATION. AS PER 'WORK AREA' THE CONTRACTOR SHALL MAKE AVAILABLE THE SERVI CES OF COMPETENT AND QUALIFIED EXPERTS FOR PLANNING, DESIGNING THE PROPOSED 3D SUR VEYS FOR IMPROVEMENTS AND REFINING, IF REQUIRED ANY, WITHIN 10 DAYS OF LETTER OF AWARD (LOA). FROM THE 23 I. T. APPEAL NO. 4653 (DEL) OF 2010 REQUIREMENT OF THE WORK AREA UNDER THE CONTRACT IT IS CLEAR THAT THE ASSESSEE HAS PROVIDED SERVICES OF TECHNICAL PERSONNEL ALSO WHICH IS COVERED IN DEFINITION OF FTS. UNDER THE HEAD 'WORK', THE TERMS OF CONTRACT R EQUIRE THAT: 'THE WORK THAT THE CONTRACTOR WILL PERFORM SHALL CO MPRISE OF OBTAINING AND RECORDING OF (ADHERING TO THE QUALITY SPECIFICATION ) 1. 3D CDP SEISMIC REFLECTION DATA. 2.NAVIGATION AND POSITIONING DATA UNAMBIGUOUSLY TIE D WITH SEISMIC AND BATHYMETRIC DATA. 3. BATHYMETRIC DATA ALONG WITH NAVIGATION DATA. 4. ON BOARD PROCESSING OF SEISMIC TRACE DATA FOR QC .' LD. CIT(DR) ON THE BASIS OF TERMS & CONDITIONS RELA TING TO THE WORK TO BE PERFORMED BY THE ASSESSEE CONTRACTOR SUBMITTED THAT THE ASSESSEE WAS REQUIRED TO DO 3D SEISMIC SURVEY, PROCESS & PACK THE DATA ON CD AND HAND IT OVER TO ONGC. ADMITTEDLY, THE JOB ASSIGNED TO ASSESSEE IS HIGHLY TECHNICAL. IT COULD ONLY BE DONE BY A PERSON HAVING SPECIALIZED TECHNICAL KNOWLEDGE AND NOT BY ANY OTHER PERSON. THE ASSESSEE HAS ALSO PROVIDED THE SERVICES OF TECH NICAL PERSONNEL. THUS, THE SERVICES PROVIDED BY THE ASSESSEE ARE TECHNICAL SER VICES WITHIN THE DEFINITION AS 24 I. T. APPEAL NO. 4653 (DEL) OF 2010 GIVEN IN EXPLANATION 2 OF SECTION 9(1)(VII). THE SE RVICES BEING OF TECHNICAL NATURE, PER SE HAS NOT BEEN DISPUTED BY THE ASSESSEE. 20. AS REGARDS THE CONTENTION OF LD. AR OF THE ASS ESSEE THAT PROVISO BECOMES UNWORKABLE IN ABSENCE OF SECTION 44DA IS NOT CORREC T. RULE OF INTERPRETATION OF STATUTE SAYS THAT IF MEANING OF A WORD USED IS UNAM BIGUOUS, THEN ITS NATURAL MEANING IS TO BE CONSIDERED AND A PROVISO BEING A Q UALIFICATION TO A SECTION HAS TO BE GIVEN ITS MEANING SO AS TO MAKE IT WORKABLE IN H ARMONY WITH MAIN PROVISION. IN PROVISO TO SECTION 44BB(1), THE WORD 'OR' IS USED B ETWEEN VARIOUS SECTIONS I.E SECTIONS 42, 44D, 44DA, 115A, 293A. NATURAL MEANING HAS TO BE ASSIGNED TO THE WORD 'OR' AND NO OTHER MEANING CAN BE SUBSTITUTED F OR IT. BECAUSE OF WORD 'OR', APPLICABILITY OF SECTION 44D OR 44DA OR 115A EXCLUD ES THE APPLICABILITY OF MAIN PROVISIONS OF SECTION 44BB(L). FURTHER, SECTION 115 A IS AN INDEPENDENT COMPLETE CODE IN ITSELF WHICH PROVIDE FOR TAXATION OF FTS OT HER THAN THAT REFERRED TO IN SECTION 44DA, ON GROSS BASIS AT A FLAT LOWER RATE O F 10% IF CONTRACT IS DATED AFTER 01-06-2005. SECTION 44DA IS INDEPENDENT COMPUTATION MACHINERY WHICH PROVIDES THAT IF NON-RESIDENT HAS A PE IN INDIA AND CONTRACT IS EFFECTIVELY CONNECTED WITH PE, THEN FTS IS COMPUTED AS PER NORMAL PROVISIONS OF CO MPUTATION OF BUSINESS INCOME AND THEN IT WILL BE TAXED AT NORMAL RATE APPLICABLE TO FOREIGN CORPORATION. SECTION 25 I. T. APPEAL NO. 4653 (DEL) OF 2010 44DA IS NOT APPLICABLE IN ASSESSEE'S CASE AS THERE IS NO CONTENTION OF ASSESSEE REGARDING SATISFACTION OF TWO CONDITIONS AND AO HAS TAXED FTS @ 10% U/S 115A. IT IS NOT THE CONTENTION OF THE ASSESSEE THAT ITS C ASE FALLS U/S 44DA OF THE ACT. SECTION 44D IS NOT APPLICABLE IN THE PRESENT CASE A S ALL CONTRACTS HAVE BEEN ENTERED INTO AFTER 31-03-2003. THEREFORE, IT CAN BE SEEN TH AT SECTION 115A STANDS INDEPENDENT ON ITS LEGS AND THEREFORE, PROVISO DOES NOT BREAK DOWN AS CONTENDED BY THE LD. COUNSEL OF THE ASSESSEE. THE ASSESSEE HA S RELIED ON THE DECISION OF ITAT DELHI IN THE CASE OF CRAY RESEARCH INDIA LTD. 136 I TJ 1, FOR THE PREPOSITION THAT SEC. 44D NEEDS TO BE READ WITH S. 115A AND HENCE 11 5A CAN NOT OPERATE INDEPENDENTLY. THIS RELIANCE IS MISPLACED BECAUSE C ONTRACT IN CASE OF CRAY RESEARCH INDIA LTD. IS DATED 31-05-1988 WHEN SECTIO N 44D WAS IN OPERATION. THIS SECTION IS NOT APPLICABLE TO ASSESSEE'S CASE AS CON TRACTS ARE DATED AFTER 31-03-2003. THERE IS NO NEED TO SAY THAT SECTION 44DA HAS TO BE READ WITH 115A. RATHER, SECTION 115A EXCLUDES 44DA FROM ITS PURVIEW BY ITS VERY FIRST SENTENCE. THEREFORE 44DA AND 115A OPERATE IN SEPARATE INDEPENDENT FIELD S. HENCE, PROVISO TO SECTION 44BB(1) STANDS AND IT LIMITS THE APPLICABILITY OF M AIN PROVISIONS OF 44BB(1). RELIANCE OF ASSESSEE ON DECISIONS OF B C SRINIVAS S HETTY AND ELI LILY IS MISPLACED AS SECTION 115A IS BOTH COMPUTATION AND CHARGING SE CTION AND IT IS A COMPLETE CODE IN ITSELF. THEREFORE, IT CANNOT BE SAID THAT THERE IS NO SECTION AVAILABLE FOR 26 I. T. APPEAL NO. 4653 (DEL) OF 2010 COMPUTATION OF FTS. BOTH COMPUTATION OF FTS AND CAL CULATION OF TAX PAYABLE ARE CONTAINED IN 115A ITSELF. 21. THE SECOND CONTENTION OF LD. COUNSEL FOR ASSESS EE IS THAT SERVICES PROVIDED ARE NOT FTS BECAUSE FIRST EXCEPTION TO DEFINITION O F FTS AS CONTAINED IN EXPLANATION 2 TO SECTION 9(1)(VII) OPERATES. IN THI S REGARD, NATURE OF WORK DONE BY THE ASSESSEE HAS TO BE CONSIDERED. PAGE 78 OF PAP ER BOOK II PROVIDES DEFINITION OF 'PROSPECTING'. PAGE 80 OF THE SAME PROVIDES DEFINIT ION OF 'EXPLORATION OPERATIONS', WHICH SPECIFICALLY CONTAINS SEISMIC SURVEYS. PAGE 7 9 OF THE SAME TALKS ABOUT 'EXPLORING LICENCE', 'PROSPECTING LICENCE' AND 'MIN ING LEASE', WHICH MEANS THAT FOR UNDERTAKING WORK OF PROSPECTING, EXPLORATION OR MIN ING, LICENCE / LEASE IS NEEDED. IN CASE UNDER CONSIDERATION, LICENCE IS HELD BY ONG C AND IT IS AN ADMITTED FACT. IT MEANS THAT OWNER OF THE PROJECT IS ONGC AND NOT THE ASSESSEE. THE LD. COUNSEL HAS RELIED ON CBDT'S INSTRUCTION NO. 1862 FOR THE CONTE NTION THAT SERVICES PROVIDED FOR PROSPECTING OR EXPLORATION OF MINERAL OIL CONSTITUT E MINING OR LIKE PROJECT AS CONTEMPLATED IN FIRST EXCEPTION TO DEFINITION OF FT S. IN PARA 2 OF SAID INSTRUCTION, IT IS MENTIONED THAT THE QUESTION WHETHER PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OIL CAN BE TERMED AS MINING OPERATIONS, WAS REFERRED TO THE AG OF INDIA FOR HIS OPINION. THE AG HAS OPINED THAT SUCH OPERAT IONS ARE MINING OPERATIONS AND 27 I. T. APPEAL NO. 4653 (DEL) OF 2010 THE EXPRESSIONS 'MINING PROJECT OR LIKE PROJECT' OC CURRING IN EXPLANATION 2 TO SECTION 9(1)(VII) OF IT ACT WOULD COVER RENDERING O F SERVICES LIKE IMPARTING OF TRAINING AND CARRYING OUT DRILLING OPERATIONS FOR E XPLORATION OR EXPLOITATION OF OIL AND NATURAL GAS. HERE, IT IS TO BE NOTED THAT FIRST EXCEPTION TO DEFINITION OF FTS AS CONTAINED IN EXPLANATION 2 TO SECTION 9(1)(VII) HAS TWO LIMBS, FIRSTLY IT SHOULD BE CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT AN D SECONDLY, THIS PROJECT SHOULD BE UNDERTAKEN BY THE ASSESSEE. IN INSTRUCTION NO. 1 862, QUESTION REFERRED WAS REGARDING DEFINITION OF MINING OR LIKE PROJECT ON LY AND SECOND LIMB OF THE EXCEPTION WAS NOT SUBJECT MATTER OF SAID INSTRUCTIO N. THEREFORE, RELIANCE PLACED BY ASSESSEE ON SAID INSTRUCTION IS MISPLACED. ASSUMING THAT THE SERVICES PROVIDED BY THE ASSESSEE CONSTITUTE MINING OR LIKE PROJECT, THE ESSENTIAL CONDITION THAT PROJECT IS UNDERTAKEN BY THE ASSESSEE IS NOT SATISFIED. THE PR OJECT IS OWNED BY ONGC AND THE ASSESSEE IS JUST PROVIDING SOME TECHNICAL SERVICES IN RESPECT OF THAT PROJECT. THE LD. COUNSEL HAS ARGUED THAT EVEN IF PROJECT IS OWNED BY ONGC, IT AMOUNTS TO PROJECT UNDERTAKEN BY ASSESSEE AS TERM 'UNDERTAKEN' HAS A D IFFERENT MEANING THAN OWNERSHIP. THIS CONTENTION IS FALLACIOUS AS THE WOR DS 'UNDERTAKEN BY THE RECIPIENT' AS APPEARING IN THE SECTION HAS TO BE GIVEN ITS MEA NING. IF OWNER OF PROJECT IS IRRELEVANT, THEN WHAT WAS THE NEED OF INSERTING THE SE WORDS IN THE SECTION? IF, AS ACCORDING TO THE ASSESSEE, RECEIPTS FROM PROJECT NO T OWNED BY ASSESSEE ARE ALSO ELIGIBLE FOR EXCEPTION FROM BEING FTS, THEN THE WOR DS 'UNDERTAKEN BY THE RECIPIENT' 28 I. T. APPEAL NO. 4653 (DEL) OF 2010 SHOULD NOT BE THERE IN THE LANGUAGE OF STATUTE. LET 'S IMAGINE A SITUATION WHERE LANGUAGE OF THE SECTION DOES NOT CONTAIN THE WORDS 'UNDERTAKEN BY THE RECIPIENT'. IN SUCH A SITUATION, RECEIPTS FROM MINING OR LIKE PROJ ECT WHETHER OWNED OR NOT BY THE RECIPIENT WILL BE OUT OF DEFINITION OF FTS. NOW, IN ACTUAL SITUATION, WHERE THESE WORDS ARE THERE IN THE LANGUAGE OF STATUTE, THE LD. COUNSEL FOR ASSESSEE CONTENDS THAT IT MEANS THE SAME THING AS IN EARLIER SITUATIO N. THIS MEANS THAT THESE WORDS ARE IRRELEVANT WITHOUT ANY MEANING WHICH CANNOT BE REGA RDED AS CORRECT INTERPRETATION OF STATUTE. SINCE LEGISLATURE HAS CONSCIOUSLY USED THIS PHRASE, THESE WORDS CANNOT BE JUST IGNORED AND THEIR NATURAL MEANING HAS TO BE AS SIGNED. THE ASSESSEE HAS NO STAKES IN THE PROJECT OF PROSPECTING FOR OR EXPLORA TION OF MINERAL OIL. IT HAS NO TAKE- AWAY RIGHTS AND NO OTHER VESTED INTEREST IN THE SAI D PROJECT. THE ASSESSEE SUFFERS NO RISKS EVEN IF PROJECT OF PROSPECTING FOR OR EXPLORA TION FOR MINERAL OIL DOES NOT SUCCEED. THE ASSESSEE COULD NOT DEMONSTRATE THAT TH E PROJECT IS OWNED BY IT. THE JOB OF THE ASSESSEE IS WELL DEFINED BY THE CONTRACT . OBVIOUSLY, IT CANNOT BE SAID THAT THE PROJECT IS UNDERTAKEN BY THE ASSESSEE EVEN IF I T IS ASSUMED THAT SERVICES PROVIDED BY THE ASSESSEE AMOUNT TO MINING OR LIKE PROJECT. HENCE, FIRST EXCEPTION TO DEFINITION OF FTS AS CONTAINED IN EXPLANATION 2 TO SECTION 9(L)(VII) IS NOT AVAILABLE TO THE ASSESSEE. THE SECOND EXCEPTION IS ALSO NOT AVAILABLE AS RECEIPTS ARE NOT TAXABLE UNDER THE HEAD SALARY. THEREFORE, RECEI PTS ARE IN NATURE OF FTS AND 29 I. T. APPEAL NO. 4653 (DEL) OF 2010 HENCE BECAUSE OF PROVISO TO SECTION 44BB(L), PROVIS IONS OF SECTION 44BB(1) ARE NOT APPLICABLE. 22. REGARDING THE NEXT CONTENTION OF LD. COUNSEL OF THE ASSESSEE THAT SINCE SERVICES PROVIDED ARE IN CONNECTION WITH PROSPECTIN G FOR, OR EXPLORATION OF MINERAL OIL, SECTION 44BB(1) BEING SPECIAL PROVISION IS AVA ILABLE TO THE ASSESSEE, LD. CIT(DR) SUBMITS THAT THE BENEFIT OF 44BB(1) IS AVA ILABLE WHERE SERVICES PROVIDED ARE IN CONNECTION WITH PROSPECTING FOR, OR EXTRACTI ON OR EXPLORATION OF MINERAL OIL BUT IT IS SUBJECT TO PROVISO TO THE SAID SECTION. C OMBINED READING OF 44BB(L) AND IT PROVISO SHOWS THAT IF SERVICES ARE OF NATURE OF FTS , THEN 44BB(L) IS NOT APPLICABLE. FOR THIS LEGAL PROPOSITION, HE PLACED RELIANCE ON T HE FOLLOWING DECISIONS: L. AAR NO. P/6 OF 1995, 234 ITR 371 2. CIT V ONGC 299 ITR 438 (UTTARAKHAND HC), 3. CIT V ROLLS ROYCE P. LTD. 170 TAXMAN 563 (UTTARA KHAND). 23. AS REGARDS THE DECISION OF ITAT DELHI BENCH IN CASE OF ACIT V PARADIGM GEOPHYSICAL P. LTD. (SUPRA) RELIED BY THE LD. COUNS EL FOR THE ASSESSEE, LD CIT(DR) HAS SUBMITTED THAT THIS DECISION OF ITAT IS NOT APP LICABLE TO THE FACTS OF THE 30 I. T. APPEAL NO. 4653 (DEL) OF 2010 ASSESSEE. IN THIS CASE, IT HAS BEEN HELD THAT THE B ENEFIT OF SECTION 44BB(1) IS AVAILABLE TO ASSESSEE WHO IS IMPARTING TRAINING TO THE EMPLOYEES OF RIL FOR OPERATING THE GEOLOG SOFTWARE. THE TRIBUNAL GOES ON TO SAY THAT SECTION 44D IS NOT APPLICABLE BECAUSE NO ARGUMENTS WERE ADVANCED BY CI T(DR) TO SHOW THAT ASSESSEE'S CASE WAS COVERED BY SECTION 44D AND THER EFORE, PROVISO TO SECTION 44BB(1) DOES NOT COME INTO OPERATION. THIS CASE LA W IS CLEARLY DISTINGUISHABLE AS THE CASE UNDER CONSIDERATION IS ON DIFFERENT FOOTIN G WHERE IT HAS BEEN DEMONSTRATED THAT PROVISIONS 115A ARE APPLICABLE AND RECEIPTS AR E IN NATURE OF FTS. 24. AS REGARDS THE DECISION OF ITAT DELHI IN THE CA SE OF ONGC AS REPRESENTATIVE ASSESSEE OF ALBERTA RESEARCH COUNCIL , CANADA V JCIT (SUPRA) RELIED BY THE ASSESSEE, LD. CIT (DR) SUBMITS THAT IN PARAG RAPH 43 AND 44 OF THE SAID ORDER THE ITAT HAD NOT CONSIDERED UTTARAKHAND HIGH COURT DECISION IN CASE OF CIT V ROLLS ROYCE (SUPRA) WHILE HOLDING THAT THE SERVICES PROVIDED BY THE ASSESSEE WERE IN CONNECTION WITH EXTRACTION OF MINERAL OIL AND HE NCE, SECTION 44BB WAS APPLICABLE. THE ITAT HAS NOT CONSIDERED THE IMPORT OF PROVISO TO SECTION 44BB(L). HE, THEREFORE, SUBMITTED THAT SINCE THE TRIBUNAL HA S NOT JUST APPLIED THE RATIO OF DECISION OF HON'BLE UTTARAKHAND HIGH COURT THAT IF SERVICES ARE IN NATURE OF FTS, THEN PROVISIONS OF SECTION 44BB WILL NOT BE APPLICA BLE BECAUSE OF OPERATION OF ITS 31 I. T. APPEAL NO. 4653 (DEL) OF 2010 PROVISO. HENCE THIS CASE LAW ALSO DOES NOT HELP THE ASSESSEE. LD. COUNSEL FOR ASSESSEE HAS ALSO ARGUED THAT SECTION 44BB IS AVAIL ABLE TO CONTRACTORS LIKE THE ASSESSEE AND SECTION 42 IS AVAILABLE TO PERSONS LIK E ONGC. HERE, IT IS RELEVANT TO NOTE THAT SECTION 44BB(1) IS SUBJECT TO ITS PROVIS O AND BOTH HAVE TO BE READ TOGETHER. 25. IN REJOINDER, AT THE OUTSET LD. AR OF THE ASSES SEE HAS AGREED WITH THE LD. CIT (DR) THAT SUB-SEC. (3) OF SEC. 115A PROVIDES FOR C OMPUTATION OF INCOME BY WAY OF FTS ETC. HE, THEREFORE, HAS WITHDRAWN HIS ALTERNATE PLEA THAT IN THE ABSENCE OF SECTION 44D OR SEC.44DA COMPUTATION OF INCOME U/S 1 15A WILL NOT BE POSSIBLE. 26. LD. AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT( DR) HAS ADMITTED THE FACT THAT THE ASSESSEE'S ACTIVITIES UNDER THE IMPUGNED C ONTRACTS ARE WITHOUT DOUBT 'IN CONNECTION WITH' PROSPECTING FOR OR EXTRACTION OF M INERAL OIL AND FALL UNDER THE SCOPE OF MAIN PROVISION CONTAINED IN SEC. 44BB(1). SINCE, ADMITTEDLY, THE ASSESSEE IS COVERED BY THE MAIN PROVISION OF SEC. 44BB(1), T HE DISPUTE SHOULD IDEALLY REST THERE ITSELF. THIS STAND IS ALSO IN CONFORMITY WITH SEVERAL DECISIONS RELIED UPON BY HIM AS ALSO THE DECISION OF JURISDICTIONAL HIGH COU RT IN THE CASE OF SCAN DRILLING (SUPRA). HOWEVER, LD CIT (DR) HAS CONTENDED THAT BUT FOR THE PROVISO TO SEC. 32 I. T. APPEAL NO. 4653 (DEL) OF 2010 44BB (1), THE ASSESSEE WOULD HAVE BEEN TAXABLE UNDE R THE MAIN PROVISION. ACCORDING TO CIT (DR), SINCE THE NATURE OF SERVICES PROVIDED BY THE ASSESSEE IS TECHNICAL IN NATURE, PROVISO TO SEC. 44BB (1) GETS TRIGGERED. HENCE THE SAME IS TAXABLE UNDER SEC. 9(1) (VII) OF THE ACT. LD. CIT (DR) IN ORDER TO SUPPORT HIS CONTENTION HAS ARGUED THAT THE ASSESSEE IS COVERED BY PROVISO TO SEC. 44BB (1) READ WITH SEC. 115A AND SEC. 9(1)(VII)(B) OF THE ACT. T HE IMPUGNED CONTRACTS DO NOT CONSTITUTE 'PROJECT' AS ENVISAGED UNDER THE EXPLANA TION 2 TO SEC. 9(1) (VII). FURTHER, THE WORK UNDER THE IMPUGNED CONTRACTS IS 'EXPLORATI ON OPERATION' AND NOT 'PROSPECTING'. HENCE, THE IMPUGNED CONTRACTS ARE NO T 'MINING OR LIKE PROJECT' FOR THE PURPOSE OF EXPLANATION 2 TO SECTION 9(1)(VII). NO AUTHORITIES WERE CITED BY THE LD CIT (DR) TO SUBSTANTIATE THIS PROPOSITION, WHICH IS HIS OWN INTERPRETATION OF THE WORD 'PROJECT' AND 'MINING'. 27. LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE CIT( DR) HAS LAID GREAT EMPHASIS ON THE PHRASE 'UNDERTAKEN BY THE RECIPIENT ' IMMEDIATELY FOLLOWING THE PHRASE 'MINING OR LIKE PROJECT' IN EXPLANATION 2 TO SEC. 9(1)(VII) OF THE ACT. ACCORDING TO CIT(DR) THE EXCLUSIONARY LIMB OF THE E XPLANATION 2 REFERS TO THE ACTUAL MINING OR LIKE PROJECT AND NOT TO THE SERVIC ES 'IN CONNECTION WITH' MINING OR LIKE PROJECT. THE WORD 'UNDERTAKEN', ACCORDING TO C IT (DR)'S UNDERSTANDING, MEANS 33 I. T. APPEAL NO. 4653 (DEL) OF 2010 ONLY OWNERSHIP OF THE PROJECT. IT WAS, THEREFORE, A SSERTED BY HIM THAT THE QUESTION AS TO 'WHO OWNS THE MINING OR LIKE PROJECT' ASSUMES IMPORTANCE. ON THE BASIS OF SUCH AN INTERPRETATION, THE CIT DR HAS CONCLUDED TH AT SINCE ONGC OWNED THE MINING PROJECT AND THE ASSESSEE PROVIDED SERVICES F OR THAT PROJECT, ONGC WOULD BE COVERED BY THE EXCLUSIONARY LIMB OF THE EXPLANATION 2 TO 9 (L)(VII) AND NOT THE ASSESSEE WHO IN FACT ONLY PROVIDED SERVICES IN CONN ECTION WITH THE SAID PROJECT AS ENVISAGED UNDER THE SAID PROVISION. INDEED, THE CIT (DR) HAS MERELY REPHRASED THE CONTENTION OF THE AO. THIS HAS ALSO BEEN THE STAND OF THE REVENUE IN SEVERAL CASES. 28. LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE S COPE OF OPERATIONS UNDER THE IMPUGNED CONTRACTS IS SUCH THAT THEY CONSTITUTE SEL F CONTAINED INDEPENDENT 'PROJECT'. HE PLACED RELIANCE ON THE DICTIONARY MEANING OF THE WORD 'PROJECT' - A PLANNED UNDERTAKING (THE LAW LEXICON); AN ENTERPRISE CAREFU LLY PLANNED TO ACHIEVE A PARTICULAR AIM; A PROPOSED OR PLANNED UNDERTAKING ( CONCISE OXFORD DICTIONARY). HE ALSO RELIES ON THE DECISION OF APEX COURT IN THE CA SE OF UNION OF INDIA VS. INDIAN CHARGE CHROME AND ANR. (SUPRA) FOR THE DEFINITION O F WORD PROJECT. THE QUESTION AS TO WHETHER THE WORK UNDERTAKEN BY THE CONTRACTOR CONSTITUTES A 'PROJECT' MUST BE DECIDED ON THE BASIS OF THE TERMS, MAGNITUDE AND TH E ELEMENT OF PLANNING CONTAINED IN THE CONTRACT. FURTHER, THE ENTIRE PROJECT, FROM INCEPTION TO TERMINATING IN THE 34 I. T. APPEAL NO. 4653 (DEL) OF 2010 DELIVERY OF THE 'DELIVERABLES', AS ENVISAGED IN THE SUBJECT CONTRACTS IS UNDERTAKEN BY THE ASSESSEE AT ITS OWN RISK AND IT IS ACCOUNTABLE AND RESPONSIBLE FOR ALL ITS ACTIONS DURING THE TERM OF THE PROJECT BY THE LAWS OF INDIA INCLUDING CUSTOMS, INCOME TAX, ENVIRONMENT AND LABOUR LAWS ETC. HENCE, THE ASSESSE E HAS UNDERTAKEN PROJECT UNDER THE IMPUGNED CONTRACTS. IT IS SUBMITTED THAT THE SURVEY OPERATIONS UNDERTAKEN BY THE ASSESSEE ARE SEARCHING FOR AND WINNING MINER AL DEPOSITS AS ENVISAGED UNDER 'MINING' AND 'MINING OPERATIONS' UNDER THE MINES AC T. IN ADDITION TO BEING SELF- CONTAINED MINING OPERATIONS, THESE OPERATIONS ARE A LSO INTEGRAL TO THE PROSPECTING OPERATIONS UNDERTAKEN BY THE ONGC AND LIKE COMPANIE S EITHER THEMSELVES OR BY AWARDING A CONTRACT FOR SUCH A PROJECT TO INDEPENDE NT CONTRACTORS. EVEN OTHERWISE, IT IS A UNIVERSAL FACT THAT SEVERAL INDEPENDENT PRO JECTS ARE INTEGRATED INTO AN OVERALL PROJECT FOR PRODUCTION OF MINERAL OIL. 29. THE ASSESSEE CONTENDS THAT ITS SERVICES ARE COV ERED BY THE MAIN PROVISION OF SEC. 44BB AND NOT BY THE PROVISO TO THAT SECTION. H ENCE, 10% OF THE GROSS RECEIPTS ARE LIABLE TO BE TAXED AS TOTAL INCOME. AND EVEN IF THE NATURE OF THE SERVICES IS SUCH THAT SEC. 9(1)(VII) WERE TO APPLY TO THE PRESENT CA SE, THE EXPLANATION 2 TO SEC. 9(1)(VII)(B) SPECIFICALLY EXCLUDES INCOME FROM 'MIN ING OR LIKE PROJECTS'. HE REITERATED HIS ARGUMENTS IN THIS REGARD. 35 I. T. APPEAL NO. 4653 (DEL) OF 2010 30. COMING TO THE CONTENTION OF THE LD. CIT(DR) THA T THE MINING PROJECTS WERE UNDERTAKEN BY ONGC/ ENI AND NOT BY THE ASSESSEE, LD . AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE UNDERTAKEN AN INDEPEN DENT PROJECT FOR PROVIDING SUCH SERVICES AS ARE ENVISAGED IN SEC. 44BB OF THE ACT. THE EXPLANATION 2 TO SEC. 9(1)(VII) CLEARLY REQUIRES THAT A MINING OR LIKE PR OJECT SHOULD BE UNDERTAKEN BY THE RECIPIENT OF THE FEES. THE WORK 'UNDERTAKEN' IS CLE ARLY USED AS A VERB AND NOT A NOUN. 'UNDERTAKEN' IS THE PAST TENSE OF 'UNDERTAKE' . DICTIONARY MEANING OF THE WORD 'UNDERTAKE' IS 'COMMIT ONESELF TO AND BEGIN (AN ENT ERPRISE OR RESPONSIBILITY); TAKE ON. THE WORD 'UNDERTAKING' MEANS 'A FORMAL PLEDGE O R PROMISE; A TASK THAT IS TAKEN ON'. (CONCISE OXFORD DICTIONARY). HENCE, IT IS CLEA R THAT THE CONTENTION OF THE LD. CIT( DR) THAT THE WORD 'UNDERTAKEN' SHOULD BE CONST RUED TO MEAN THAT THE PROJECT SHOULD BE OWNED BY THE ASSESSEE IS TOTALLY MISCONCE IVED. FURTHER, SEC. 9(1)(VII) DEALS WITH THE 'RECIPIENT OF FEE' FROM SUCH OPERATI ONS AS ENUMERATED THERE-UNDER AND NOT THE RECIPIENT OF SERVICES (WHICH IN THIS CA SE WOULD BE THE ONGC OR ENI).THE CONSTRICTION PLACED BY THE LD.CIT( DR) WOU LD MAKE THE PROVISIONS OF SECTION 44BB ABSOLUTELY INFRUCTUOUS BECAUSE THE SO CALLED 'OWNER' OF THE PROJECT (NAMELY, ONGC, ENI ETC.) ARE COVERED BY S. 42 READ WITH NOTIFICATIONS ISSUED U/S 293A OF THE ACT AND NOT BY SECTION 44BB OF THE ACT. FOR INSTANCE, THE ENTIRE 36 I. T. APPEAL NO. 4653 (DEL) OF 2010 PAYMENT TO THE ASSESSEE FOR CARRYING OUT STIPULATED 3D SEISMIC SURVEY WOULD CONSTITUTE CAPITAL EXPENDITURE IN THE HANDS OF ONGC , WHICH WILL BE ALLOWED WHILE COMPUTING ITS INCOME IN ACCORDANCE WITH THE PROVISI ONS OF SECTION 42 OF THE ACT. THIS PROPOSITION OF LAW IS IN ACCORDANCE WITH THE J UDGMENT OF HONBLE UTTARANCHAL HIGH COURT IN CIT VS. ENRON EXPAT SERVICES INC. 327 ITR 626. 31. ASSESSEE HAS PLACED RELIANCE ON INSTRUCTION NO. 1862 ISSUED BY CBDT ON 22.1 0.1990 WHICH HAS BEEN APPLIED IN SEVERAL DECIS IONS BY VARIOUS JUDICIAL FORUMS. THE CIT (DR) BRUSHED ASIDE INSTRUCTION NO . 1862 ISSUED BY CBDT ON 22.10.1990 BY ALLEGING THAT THE SAID INSTRUCTION OF THE CBDT HAS BEEN MISAPPLIED BY THE COURTS. NO REASON/EXPLANATION HAS BEEN GIVEN AS TO HOW THE SAID INSTRUCTION NO. 1862 HAS BEEN MISAPPLIED. THE REVENUE HAS BEEN REPEATEDLY TRYING TO DISTINGUISH THE EFFECT OF NOTIFICATION NO. 1862 OF 1990 BUT THE AAR HAS ONCE AGAIN REJECTED THE STAND OF THE REVENUE IN THE CASE OF SE ABIRD EXPLORATION (320 ITR 286). THE SAID INSTRUCTION LAYS EMPHASIS ON MINING OR LIK E 'OPERATIONS' AND THE CONSIDERATION RECEIVED IN RESPECT OF SUCH OPERATION S WILL NOT BE TREATED AS FTS. THIS NOTIFICATION IS BINDING ON THE TAX AUTHORITIES . HENCE, THE ASSESSEE IS COVERED BY THE EXCLUSIONARY LIMB OF EXPLANATION 2 TO SEC. 9 (L)(VII). HENCE, EVEN IF THE NATURE OF SUBJECT SERVICES IS TECHNICAL IN NATURE, IT GETS EXCLUDED FROM THE SCOPE OF 37 I. T. APPEAL NO. 4653 (DEL) OF 2010 SEC. 9(L)(VII) AND THEREFORE, FALLS UNDER THE MAIN PROVISION OF SEC. 44BB(1) OF THE ACT. 32. AS REGARDS THE DECISIONS RELIED BY THE REVENUE IN THE CASE OF ONGC AS REPRESENTATIVE FOR FORAMER 299 ITR 438 (UTT.) AND R ULING OF AAR IN P/ 6 OF 1995 (SUPRA) IT HAS BEEN SUBMITTED THAT THE TWO CASES A RE COMPLETELY DISTINGUISHABLE NOT ONLY ON THE FACTS BUT ALSO ON THE QUESTIONS BEFORE THE TWO AUTHORITIES IN THE SAID CASES. THAT APART, THE INSTRUCTION NO. 1862 HAS NOT BEEN CONSIDERED IN THE SAID TWO DECISIONS. HENCE, ABOVE MENTIONED TWO DECISIONS ARE NOT APPLICABLE IN THE ASSESSEE'S CASE. IN ADDITION TO THE CASE-LAW RELIE D UPON BY THE ASSESSING OFFICER THE LD. CIT(DR) HAS RELIED UPON THE DECISION OF UTTERAK HAND HIGH COURT IN THE CASE OF ROLLS ROYCE (SUPRA). IN THIS REGARD, IT HAS BEEN SU BMITTED BY THE LD. AR OF THE ASSESSEE THAT THE SAID DECISION, JUST AS THE OTHER TWO, DEALS WITH THE FEES EARNED ON PER DIEM BASIS FOR DEPUTING PERSONNEL/EXPERTS FOR R ENDERING ADVICE AND TECHNICAL CONSULTANCY TO ONGC. HENCE, DISTINGUISHABLE FROM TH E FACTS OF THE PRESENT CASE WHERE THE SUBJECT CONTRACTS ARE FOR EXECUTING 'MINI NG' OR AT LEAST 'LIKE' PROJECTS. THE LATER DECISION OF UTTRANCHAL HIGH COURT IN THE CASE OF ONGC AS A REPRESENTATIVE OF SCAN DRILLING (SUPRA); ITAT DECISION IN ALBERTA RES EARCH COUNCIL (SUPRA); AND RULING OF AAR IN GEOPHYZIKA & SEABIRD FULLY SUPPOR T THE CASE OF THE ASSESSEE. 38 I. T. APPEAL NO. 4653 (DEL) OF 2010 33. WITH RESPECT TO THE GROUND NO. 1.5 RELATING TO THE PROJECT UNDERTAKEN BY THE ASSESSEE FOR ENI, THE SCOPE OF SERVICES IS THE SAME AS UNDER THE CONTRACTS WITH ONGC. ONLY DIFFERENCE BEING THAT ENI IS A NON-RESI DENT COMPANY. LD AO CONTENDS THAT ASSESSEE IS EXCLUDED BY THE EXPRESSIO N 'MINING OR LIKE PROJECT' AS IT HAS RENDERED TECHNICAL SERVICES. THEREFORE, IT IS A BUSINESS RECEIPT TAXABLE U/S 28 OF THE ACT. THE ASSESSEE HAS NO OBJECTION TO TREATMENT OF INCOME FROM THESE CONTRACTS AS BUSINESS INCOME. HOWEVER, THE CONTENTION OF THE ASSESSEE IS THAT SINCE THE INCOME IS FROM BUSINESS, IT SHOULD BE ASSESSED U/S 44BB, WHICH OVERRIDES THE PROVISIONS OF SECTION 28 TO 43C OF THE ACT. HE PLAC ED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HYUNDAI HEAVY INDUSTRIES LTD REPORTED AS 291 ITR 482. 34. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE MATERIAL AVAILABLE ON RECORDS. THE ASSESSEE DURING THE YEAR UNDER CONSIDE RATION HAS CARRIED OUT SEISMIC SURVEYS AND HAS SUBMITTED ITS REPORTS TO ONGC AND E NI. THE AMOUNTS RECEIVED HAVE BEEN OFFERED TO TAX UNDER SECTION 44BB (1) OF THE ACT. HOWEVER, THE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SECTION 115A READ WITH SECTION 9(1)(VII) OF THE ACT AND ASSESSED THE SAID RECEIPTS AS FEE FOR T ECHNICAL SERVICES. SECTION 39 I. T. APPEAL NO. 4653 (DEL) OF 2010 9(1)( VII ) REFERS TO INCOME BY WAY OF FEES FOR TECHNICAL SER VICES PAYABLE BY THE GOVERNMENT OR A RESIDENT COMPANY OR NON-RESIDENT CO MPANY IN CERTAIN CIRCUMSTANCES. THE PAYMENTS FOR FEE FOR TECHNICAL S ERVICES BY RESIDENT TO NON- RESIDENT FALL UNDER SECTION 9(1)(VII)(B) OF THE ACT . THE EXPRESSION FEE FOR TECHNICAL SERVICES IS DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VII) O F THE ACT WHICH READS AS UNDER: EXPLANATION 2. FOR THE PURPOSES OF THIS CLAUSE, FEES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATION (INCLUDING ANY LU MP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIEN T CHARGEABLE UNDER THE HEAD SALARIES. 35. FROM THE DEFINITION OF FEE FOR TECHNICAL SERVI CES IT IS CLEAR THAT THE FIRST LIMB OF THE DEFINITION INCLUDES THE SERVICES LIKE M ANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER 40 I. T. APPEAL NO. 4653 (DEL) OF 2010 PERSONNEL), THE CONSIDERATION IN RESPECT THEREOF, W ILL BE CHARGEABLE TO TAX AS FEE FOR TECHNICAL SERVICES AND SECOND LIMB OF THE DEFINITI ON EXCLUDES CERTAIN SERVICES FROM ITS AMBIT. THE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES WILL NOT FALL UNDER THE DEFINITION OF FEE FOR TECHNICAL SERVICES. THE AFORESAID EXCLUSION STATES THAT THE CONSIDERATI ON RECEIVED BY AN ASSESSEE FOR CONSTRUCTION, ASSEMBLY, MINING O R LIKE PROJECT IS NOT FEE FOR TECHNICAL SERVICES. THE WORDS ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT IN EXCLUSIONARY CLAUSE ARE QUALIFIED BY THE WORDS UNDERTAKEN BY THE RECIPIENT. THEREFORE, THE ACTIVITIES OF ANY CONSTRUCTION, ASSE MBLY, MINING OR LIKE PROJECT SHOULD BE CARRIED OUT BY THE RECIPIENT ASSESSEE HIM SELF. FURTHER, THE WORD MINING AND WORDS LIKE PROJECT ARE SEPARATED BY WORD OR . THEREFORE, THE WORDS LIKE PROJECT WOULD MEAN ACTIVITIES SIMILAR TO MINING I. E. EXTRACTION OF MINERALS / OARS FROM EARTH. THE ACTIVITIES LIKE DIGGING OR DRILLING WILL FALL UNDER LIKE PROJECT. THEREFORE, IN ORDER TO FALL UNDER EXCLUSIONARY LIMB OF THE DEFINITION, THE ACTIVITIES OF MINING OR LIKE PROJECT SHOULD BE UNDERTAKEN BY THE ASSESSEE HIMSELF. OUR VIEW IS SUPPORTED BY THE FOLLOWING DECISIONS: 41 I. T. APPEAL NO. 4653 (DEL) OF 2010 36.1 IN INCOME-TAX OFFICER VS. SMS SCHLOEMANN SIEMA G AKTIENGESELLSCHAFT DUSSELDORF 57 I.T.D. 254 (HYD.) THE ASSESSEE ENTERE D INTO TWO SEPARATE AGREEMENTS WITH AN INDIAN CONCERN [VSP], ONE IN RESPECT OF WIR E ROD MILL IN WHICH IT WAS THE PRIME CONTRACTOR AND THE OTHER IN RESPECT OF LIGHT AND MEDIUM MERCHANT MILL IN WHICH IT WAS THE CONFIRMING PARTY, ANOTHER PARTY BE ING THE MAIN CONTRACTOR. IN THE FIRST CONTRACT THE ASSESSEE WAS GIVEN THE OVER-ALL RESPONSIBILITY WITH REGARD TO THE ENTIRE WORK REFERRED TO IN THE SCOPE WHEREAS IN THE SECOND CONTRACT, THE OVER-ALL RESPONSIBILITY WAS TO BE JOINTLY SHARED BY THE ASSE SSEE AND THE MAIN CONTRACTOR. THE ASSESSEE RECEIVED VARIOUS AMOUNTS UNDER THE CON TRACTS FOR (1) EQUIPMENT AND COMMISSIONING SPARES; (2) DESIGN AND ENGINEERING FE ES INCLUDING REIMBURSEMENT OF EXPENDITURE AND FEES FOR TRAINING SERVICES; & (3) F OR SUPPLY OF SPARES FOR TWO YEARS OF OPERATION AND MAINTENANCE. THE ASSESSEES CLAIM WAS THAT THE RECEIPTS OF DESIGN AND ENGINEERING FEES AND FEES FOR IMPARTING TRAININ G ABROAD WAS NOT TAXABLE AS RECEIPTS FOR THE SERVICES RENDERED ABROAD FORMED PA RT OF THE COMMERCIAL PROFIT OF THE ASSESSEE; THAT SEPARATE PAYMENTS WERE STIPULATE D FOR SUPPLY OF MACHINERY AND FOR SUPPLY OF ENGINEERING SERVICES RELATING AND INC IDENTAL TO SUPPLY OF MACHINERY. HOWEVER, THE ASSESSING OFFICER HELD THAT THE PAYMEN TS RECEIVED FOR RENDERING SERVICES IN CONNECTION WITH ERECTION OF THE PLANT W OULD ATTRACT PROVISIONS OF SECTION 9(1)(VII) AS FEE FOR TECHNICAL SERVICES. ON APPEAL THE LD. CIT (APPEALS) HELD THAT THE ENGINEERING FEES RECEIVED BY THE ASSESSEE WERE ATTRIBUTABLE FOR FEES FOR 42 I. T. APPEAL NO. 4653 (DEL) OF 2010 TECHNICAL SERVICES UNDER THE FIRST PART OF THE EXPL ANATION 2 TO SECTION 9(1)(VII), BUT THE SAME WOULD NOT BE TAXABLE BECAUSE THE SERVICES RENDERED WERE IN CONNECTION WITH THE CONSTRUCTION AND ERECTION OF A PROJECT FAL LING WITHIN THE EXCLUSIONARY CLAUSE CONTAINED IN THE LAST PART OF THE SAID EXPLA NATION. ON APPEAL, ITAT, HYDERABAD BENCH HELD THAT THE MERE CONNECTION OF SU PERVISORY SERVICES UNDERTAKEN BY THE ASSESSEE WOULD NOT TANTAMOUNT OF UNDERTAKING THE CONSTRUCTION OR ASSEMBLY OF PLANT, WHICH COULD BE EXCLUDED FROM THE DEFINITION OF FEE FOR TECHNICAL SERVICES GIVEN IN EXPLANATION 2 TO SECT ION 9(1)(VII) OF THE ACT. TO BE ELIGIBLE FOR BEING EXCLUDED FROM THE DEFINITION OF FEES FOR TECHNICAL SERVICES, THE RECEIPT OF CONSIDERATION HAS TO BE FOR CONSTRUCTION AND ASSEMBLY UNDERTAKEN BY THE ASSESSEE ITSELF AND NOT FOR ITS SUPERVISION ALONE. 36.2 IN ADITYA BIRLA NUVO LTD. VS. ASSTT. DIRECTO R OF INCOME-TAX [INTERNATIONAL TAXATION] 3(1), MUMBAI, 44 SOT 601(MUM), THE ASSES SEE WAS ENGAGED IN THE BUSINESS OF VISCOSE FILAMENT YARN, CARBON BLACK, BR ANDED GARMENTS, FERTILIZERS, TEXTILES AND INSULATORS. IT HAD A TEXTILE UNIT CAL LED GTA, A COMPANY UNDER THE LAWS OF ITALY, WHICH CARRIED ON BUSINESS AS MANUFAC TURER AND AN INTERVENTION SERVICE PROVIDER FOR TEXTILE AUTOMATION AND BALING PRESS. GTA HAD SUPPLIED AND INSTALLED A MACHINERY BALING PRESS AT STUCKEN IN SO UTH AFRICA. SUCH MACHINERY HAD TO BE RE-INSTALLED AT THE ASSESSEES FACTORY PREM ISES. IN THIS REGARD THE ASSESSEE 43 I. T. APPEAL NO. 4653 (DEL) OF 2010 APPROACHED GTA, WHO HAD AGREED TO DEPLOY ITS TECHNI CIANS I.E. SKILLED ENGINEERS [MECHANIC, HYDRAULIC AND ELECTRONIC SOFTWARE] FOR R E-ASSEMBLING AND COMMISSIONING OF THE SAID MACHINERY. UNDER THE AGR EEMENT THE ASSESSEE WAS LIABLE TO PAY CONSIDERATION FOR RE-INSTALLATION AND RE-COMMISSIONING OF THE MACHINERY IN INDIA. THE ASSESSEE APPLIED TO THE AS SESSING OFFICER FOR A NO- OBJECTION CERTIFICATE FOR REMITTING MONEY TO GTA W ITHOUT DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE HOLDING THAT SERVICES PROVIDED BY GTA WERE OF TECHNICAL NATURE AND IT WAS NOT CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY RECIPIENT. TH E ASSESSING OFFICER HELD THAT PAYMENT IN QUESTION WAS TAXABLE IN INDIA IN THE HAN DS OF GTA UNDER ARTICLE 13(2) OF DTAA. ON APPEAL, THE LD. CIT (APPEALS) CONFIRME D THE ORDER OF THE ASSESSING OFFICER. IT WAS NOTED BY HIM THAT TECHNICIANS CAME TO INDIA TO SUPERVISE AND GIVE ADVICE ON RE-ASSEMBLY, ERECTION AND COMMISSIONING O F MACHINERIES AND THEY RENDERED SERVICES BY THEIR TECHNICAL SKILL FOR WHIC H PAYMENT WAS TO BE MADE BY THE ASSESSEE. IT WAS THUS APPARENT THAT PAYMENT IN QUE STION WAS IN CONSIDERATION OF SUPERVISORY SERVICES RENDERED. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT THE TECHNICAL FEE WAS FOR THE TECHNICAL ADVICE IN CONNE CTION WITH ERECTION AND THE ACTUAL ERECTION WAS DONE BY OTHERS. THE PAYMENT OF FEE WAS ONLY FOR GIVING TECHNICAL ADVICE IN CONNECTION WITH THE ERECTION AN D NOT FOR UNDERTAKING THE ERECTION. IT WAS THUS HELD THAT THE PAYMENT IN QUE STION COULD NOT BE SAID TO BE A 44 I. T. APPEAL NO. 4653 (DEL) OF 2010 PAYMENT FOR ASSEMBLY OF MACHINES. THUS, THE PAYMEN T IN QUESTION COULD NOT BE SAID TO FALL WITHIN THE EXCLUSIONARY CLAUSE OF EXPL ANATION 2 TO SECTION 9(1)(VII) OF THE ACT. 36.3 IN SOUTH WEST MINING LTD. 278 ITR 233 AAR, THE ASSESSEE WAS AN OWNER OF MINES AND WAS ENGAGED IN PROSPECTING AND E XTRACTING EXTRACTION OF MINERALS, METALS, OARS ETC. AND CARRIED ON BUSINESS OF EXPORTING MINERALS. THE ASSESSEE GOT ANALYSIS OF SAMPLES AND OARS CONDUCTED FROM THE TECHNICAL LAB OF A CONSULTANT IN CANADA. UNDER THE AGREEMENT WITH THE CONSULTANT, THE MATERIAL REQUIRED TO BE ANALYZED AND TESTED IN THE LABORATOR Y IN CANADA IN RESPECT OF SPECIFIC CONTENTS HAD TO BE SENT TO THE CONSULTANT, WHO FORW ARDED REPORTS TO THE ASSESSEE FROM TIME TO TIME. FOR THE TECHNICAL SERVICES REND ERED OUTSIDE INDIA, CONSULTANT AND LABORATORY FEES WERE REQUIRED TO BE PAID BY THE ASSESSEE IN DOLLARS IN CANADA. THE TECHNICAL CONSULTANTS ALSO VISITED INDIA AT DIF FERENT INTERVALS FOR COLLECTING RANDOM SAMPLES AT THE MINING HEAD OF THE PROPOSED M INING AREAS OF THE ASSESSEE FOR WHICH THE ASSESSEE HAD TO BEAR ALL EXPENSES AND PROVIDE ASSISTANCE AND FACILITIES OF TRAVEL FREE OF COST. ON THESE FACTS THE ASSESSE E SOUGHT THE RULING OF THE AUTHORITY ON QUESTIONS, INTER ALIA, (I) WHETHER THE SERVICES RENDERED BY THE CONSULTANT WAS DEEMED TO BE RENDERED IN INDIA, AND (II) WHAT WOULD BE THE RATE APPLICABLE FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE. ON THESE FA CTS THE AAR RULED THAT THE FEES 45 I. T. APPEAL NO. 4653 (DEL) OF 2010 WERE BEING PAID TO THE CONSULTANTS FOR RENDERING TE CHNICAL AND CONSULTANCY SERVICES AND NOT AS CONSIDERATION FOR ANY CONSTRUCTION, ASSE MBLY, MINING OR LIKE PROJECT UNDERTAKEN BY IT. NOR WOULD THE INCOME OF THE CONS ULTANT BE CHARGEABLE UNDER THE HEAD SALARIES. THE ASSESSEE WAS NOT UTILIZING TH E SERVICES OF THE CONSULTANT FOR THE PURPOSE OF MAKING OR EARNING ANY INCOME ANY SOURCE OUTSIDE INDIA. THE FEES PAID BY THE ASSESSEE TO THE CONSULTANT SATISFIED ALL THE REQUIREMENTS OF FEE FOR TECHNICAL SERVICES WITHIN THE MEANING OF EXPLANATION 2 TO SEC TION 9(1)(VII)(B) OF THE ACT AND WOULD BE INCOME DEEMED TO ACCRUE TO THE CONSULTANT IN INDIA. 36.4 IN JOINT STOCK COMPANY ZANGAS V ADIT (INTERNAT IONAL TAXATION) 47 SOT 175 (URO)(AHD), THE ASSESSEE ENTERED INTO AN AGREEM ENT WITH KPTL. AFTER THAT GAIL AWARDED A CONTRACT (PDPL PROJECT) TO CONSORTIU M OF ASSESSEE AND KPTL. SUBSEQUENTLY, BOTH PARTIES OF CONSORTIUM ENTERED IN TO A CO-OPERATION AGREEMENT IN RESPECT OF PDPL PROJECT OF GAIL. AS PER CO-OPERATIO N AGREEMENT, ASSESSEE PROVIDED ITS TECHNICAL GUIDANCE AND CONSULTANCY FOR PROJECT MANAGEMENT WHEREAS ENTIRE WORK TO BE EXECUTED ON CONTRACT WAS UNDERTAK EN BY KPTL BY DEPLOYING ALL REQUIRED INPUT RESOURCES. AS PER SCOPE OF ACTIVITIE S, ASSESSEE WAS REQUIRED TO PROVIDE DESIGN AND ENGINEERING OF VARIOUS ASPECTS A ND WAS ALSO REQUIRED FOR PREPARING WELDING PROCEDURE AND WAS ALSO REQUIRED T O REVIEW WORK PROCEDURE FOR PIPELINE LAYING AND IN ADDITION TO THAT, ASSESSEE W AS REQUIRED TO DEPUTE EXPERTS FOR 46 I. T. APPEAL NO. 4653 (DEL) OF 2010 SITE REVIEW AND IMPLEMENTATION BY KPTL. MANNER OF S HARING CONSIDERATION HAD BEEN PRESCRIBED IN RATIO OF 3 PER CENT FOR ASSESSEE , 96 PER CENT OF KPTL AND BALANCE 1 PER CENT WAS RESERVED FOR COMMON EXPENSES OF CONSORTIUM. REGARDING 1 PER CENT, IT WAS ALSO AGREED THAT IF THERE WAS ANY DEFICIT, IT WOULD BE MADE GOOD BY KPTL. ASSESSEE HAD SHOWN INCOME FROM PDPL PROJECT A S TECHNICAL FEE (FTS) AND OFFERED SAME FOR TAX AT RATE OF 10 PER CENT U/S 115 A OF THE ACT. ASSESSING OFFICER HELD THAT INCOME DERIVED FROM PDPL PROJECT WAS FROM CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECTS AND THEREFORE, AS PER EXPL ANATION 2 TO SECTION 9(1)(VII), INCOME COULD NOT BE CONSIDERED AS FTS AND TAXED SAM E AS BUSINESS INCOME AT RATE OF 40 PER CENT AS AGAINST 10 PER CENT OFFERED BY AS SESSEE. ON APPEAL LD CIT(A) UPHELD THE VIEW OF THE ASSESSING OFFICER. ON FURTHE R APPEAL THE TRIBUNAL FOUND FROM CO-OPERATION AGREEMENT, WHICH OUTLINED SCOPE OF ACT IVITIES OF ASSESSEE THAT ASSESSEE WAS ONLY REQUIRED TO PROVIDE DESIGN AND ENGINEERING OF VARIOUS ASPECTS; TO DEPUTE EXPERT FOR SITE REVIEW AND IMPLEMENTATION BY KPTL A ND ENTIRE CONSTRUCTION WORK WAS TO BE UNDERTAKEN BY KPTL AND MOREOVER ASSESSING OFFICER DID NOT BRING ANYTHING ON RECORD TO SHOW THAT ANYTHING EXTRA WAS DONE BY ASSESSEE. IT WAS HELD THAT THE ASSESSEE HAD NOT UNDERTAKEN ANY CONSTRUCTI ON WORK AND THEREFORE, SCOPE OF WORK ACTUALLY UNDERTAKEN BY ASSESSEE DID NOT FAL L WITHIN EXCLUSION CATEGORY OF EXPLANATION 2 TO SECTION 9(1)(VII). THE INCOME OF A SSESSEE WAS LIABLE TO BE TAXED AS PER PROVISIONS OF SECTION 115A AT RATE OF 10 PER CE NT AS CLAIMED BY ASSESSEE. 47 I. T. APPEAL NO. 4653 (DEL) OF 2010 36.5 IN THE CASE OF VOITH SIEMENS HYDRO KRAFTWERKSTECHNIK GMBH & CO. V. ADIT IN I.T. APPEAL NO. 2353/DELHI/2008 DATED 5-3-2010 IT WAS HELD BY THE TRIBUNAL THAT ALTHOUGH AS PER THE TERMS OF CONTRACT WITH OHPC, THE ASSESSEE COULD BE ASSUMED BE LIABLE TO DO ASSEMBLY ERECTION, TESTI NG AND COMMISSIONING OF POWER PROJECT AS ALSO THE SUPERVISION THEREOF, IN THE ABS ENCE OF BEING ANY EVIDENCE THAT ASSESSEE HAVING DONE ANY SUCH ACTIVITY OTHER THAN S UPERVISION SIMPLICITOR, ERECTION AND TESTING AND COMMISSIONING, THE ACTIVITIES OF TH E ASSESSEE CANNOT BE SAID TO FALL WITHIN THE MEANING OF TERM 'BUSINESS OF ERECTION OF PLANT & MACHINERY AND TESTING AND COMMISSIONING' AS PROVIDED IN THE PROVISIONS OF SECTION 44BBB AND TO FALL WITHIN THE MEANING OF TERM 'CONSTRUCTION AND ASSEMB LY' AS PROVIDED IN THE EXCLUSION PROVIDED IN EXPLANATION 2 TO SECTION 9(1)( VII ) OF THE ACT. HENCE IN THAT CASE, IT WAS NOTICED BY THE TRIBUNAL THAT ALTHOUGH AS PER THE TERMS OF CONTRACT WITH OHPC, IT COULD NOT BE ASSUMED THAT THE ASSESSEE WAS LIABLE TO DO THE ASSEMBLY, ERECTION, TESTING AND COMMISSIONING OF POWER PROJEC T AS ALSO THE SUPERVISION THEREOF BUT THE ACTUAL ACTIVITIES UNDERTAKEN BY THE ASSESSEE COMPANY IN THAT CASE WAS SUPERVISION SIMPLICITOR AND ASSEMBLY, ERECTION, TESTING AND COMMISSIONING AND HENCE SUCH ACTIVITIES OF THE ASSESSEE DID NOT FALL WITHIN THE MEANING OF TERM 'CONSTRUCTION AND ASSEMBLY' AS PROVIDED IN THE EXCL USION PROVIDED IN EXPLANATION 2 TO SECTION 9(1)( VII ) OF THE INCOME-TAX ACT, 1961. 48 I. T. APPEAL NO. 4653 (DEL) OF 2010 36.6 HONBLE DELHI HIGH COURT IN RECENT DECISION D ATED 4.1.2012 IN ITA NO. 486/2011, 491/2011 & 492/2011 IN THE CASE OF RIO T INTO TECHNICAL SERVICES HAS HELD THAT THE USE OF THE WORD PROJECT IN THE EXP RESSION IS RELEVANT AND SIGNIFICANT AND THEREFORE, THE WORD PROJECT IN THE SAID EXPR ESSION REQUIRES AND MANDATES THAT THERE SHOULD BE CONSTRUCTION PROJECT, ASSEMBLY PROJ ECT OR A MINING PROJECT OR A LIKE PROJECT UNDERTAKEN BY THE RECIPIENT AND THE CONSIDE RATION PAID SHOULD BE ON THE SAID ACCOUNT. 37. FROM THE ABOVE JUDICIAL PRONOUNCEMENTS IT IS CL EAR THAT IN ORDER TO FALL UNDER THE EXCLUSIONARY CLAUSE OF EXPLANATION (2) TO SECTI ON 9(1)(VII) THE ASSESSEE SHOULD HAVE EITHER UNDERTAKEN THE BUSINESS OF CONSTRUCTION , ASSEMBLY, MINING OR LIKE PROJECT OR THE INCOME RECEIVED SHOULD BE CHARGEABLE TO TAX UNDER THE HEAD SALARIES. ACCORDING TO ASSESSEE THE MINING PROCES S MEANS WINNING OF MINERALS WHICH CAN BE FOUND FROM THE EARTH SURFACE OR FROM T HE EARTH CRUST. MINING OPERATIONS ARE DIFFERENT FROM COLLECTION OF SEISMIC DATA AND PROCESSING THEREOF. THEREFORE, THE DECISIONS OF HONBLE SUPREME COURT R ELIED UPON BY THE ASSESSEE IN THE CASES OF GUJARAT POTTERY WORKS (SUPRA) AND SRI TARKESHWAR SIO THAKUR 49 I. T. APPEAL NO. 4653 (DEL) OF 2010 JIU(SUPRA) ARE OF NO HELP. THE LEGISLATURE HAS USE D TWO DIFFERENT EXPRESSIONS IN SECTION 44BB (1) AND SECOND LIMB OF EXPLANATION 2 T O SECTION 9(1)(VII) OF THE ACT. IN EXCLUSIONARY CLAUSE OF EXPLANATION 2 TO SECTION 9(1)(VII) THE WORDS USED ARE UNDERTAKEN BY THE RECIPIENT WHEREAS IN SECTION 44 BB(1) THE WORDS USED ARE IN CONNECTION WITH.. THE SCOPE AND IMPORT OF BOTH THE EXPRESSIONS IS DIFFERENT AND DOES NOT MEAN THE SAME. THE NECESSARY CONDITION TO BE SATISFIED FOR BRINGING THE INCOME UNDER SECTION 44BB (1) IS THAT THE SERVI CES OR FACILITIES SHOULD BE RENDERED IN CONNECTION WITH PROSPECTING FOR OR EXTR ACTION OR PRODUCTION OF MINERAL OILS. HOWEVER, IN ORDER TO FALL UNDER EXCLUSIONARY CLAUSE OF EXPLANATION 2 TO SECTION 9(1)(VII), THE ACTIVITIES OF MINING OR A PROJECT SIMILAR TO THAT SHOULD BE UNDERTAKEN BY THE ASSESSEE HIMSELF. HENCE, THE SERV ICES RENDERED IN CONNECTION WITH. CANNOT BE READ AS UNDERTAKEN BY THE RECIP IENT. THEREFORE, IN A CASE WHERE AN ASSESSEE IS ENGAGED IN THE BUSINESS OF PR OVIDING SERVICES OR FACILITIES IN CONNECTION WITH FOR PROSPECTING FOR OR EXTRACTION O R PRODUCTION OF MINERAL OIL, SUCH SERVICES OR FACILITIES CANNOT BE EQUATED TO MINING OR LIKE PROJECTS UNDERTAKEN BY THE ASSESSEE HIMSELF. 38. AT THIS STAGE WE WILL EXAMINE THE NATURE OF SER VICES RENDERED BY THE ASSESSEE IN RESPECT OF WHICH THE CONSIDERATION HAS BEEN RECE IVED BY IT. THERE IS NO DISPUTE 50 I. T. APPEAL NO. 4653 (DEL) OF 2010 ABOUT THE FACT THAT TERMS AND CONDITIONS OF ALL THE CONTRACTS WITH ONGC AND ENI ARE IDENTICAL. WE HAVE GONE THROUGH THE TERMS AND CONDI TIONS OF CONTRACT NO. MR/WOB/MM/SC/3D/16/2005/EB-2094 BETWEEN THE ASSESSE E AND ONGC ENTERED INTO ON 23.11.2005 FOR EXECUTION OF WORK FOR THE CO MPLETION OF 3-D SEISMIC DATA ACQUISITION AND ONBOARD DATA PROCESSING IN WESTERN AND EASTERN OFFSHORE, INDIA. THE FOLLOWING DOCUMENTS FORM INTEGRAL PART OF THE C ONTRACT: (1) ANNEXURE-I : CONTRACT D EFINITIONS & INTERPRETATION (2) ANNEXURE-II :CONTRACT C ONDITIONS (3) ANNEXURE-III :WORK VOLUME (4) ANNEXURE-IV :SCOPE OF WO RK (A) APPENDIX-A :SPECIFICATION OF 3-D SEISMIC DA TA ACQUISITION (B) APPENDIX-AI :TECHNICAL SPECIFICATION OF 3-D SEISMIC DATA PROCESSING (C) APPENDIX-B : TECHNICAL DETAILS OF EQUIPMENT (D) APPENDIX-C :GENERAL INFORMATION OF VESSELS (E) APPENDIX-D-1 :PRICE SCHEDULE FOR DATA ACQUISI TION & PROCESSING (F) APPENDIX-E :LOCATION MAPS OF SURVEY BLOCKS 51 I. T. APPEAL NO. 4653 (DEL) OF 2010 (G) APPENDIX-F-1 :PROFORMA FOR DAILY PROGRESS REP ORT (DATA ACQUISITION) (H) APPENDIX-F-2 :PROFORMA FOR PROCESSING DPR (I) APPENDIX-G :PROFORMA FOR ACCEPTANCE OF PRODUC TION LKM (J) APPENDIX-H :FORMAT FOR BATHYMETRY DATA (K) APPENDIX-J :FORMAT FOR METEOROLOGICAL DATA (L) APPENDIX-K :FORMAT FOR DELIVERABLES (M) APPENDIX-L :FORMAT FOR VESSEL ACCEPTANCE (N) APPENDIX-M :FORMAT FOR COMPLETION CERTIFICAT E (O) APPENDIX-N :FORMAT FOR DEMOBILIZATION CERTIF ICATE (O) APPENDIX-O :FORMAT FOR DATA LOAD SHEET (5) ANNEXURE-V :COST OF VESSEL(S) & EQUIPMENTS (6) ANNEXURE-VI :COPY OF PERFORMANCE BANK GUARANT EE 39.1 THE SCOPE OF WORK AS PER ANNEXURE-II (GENERAL CONTRACT CONDITIONS) OF CONTRACT IS REPRODUCED AS UNDER: 52 I. T. APPEAL NO. 4653 (DEL) OF 2010 CONTRACTOR SHALL WITH HIS OWN PERSONNEL AND EQUIPME NT, PLAN AND EXECUTE ACQUISITION OF 3D SEISMIC DATA AND BASIC 3D SEISMIC DATA PROCESSING IN DIFFERENT SURVEY AREAS IN SECTOR-II (MAHANADI & KG OFFSHORE), AS PER DETAILS INDICATED IN THE ANNEXURE-III AND AS SPECIF IED IN APPENDIX A, A1 & B WITH PROFESSIONAL COMPETENCE AND IN EFFICIENT MANNER, AND PROVIDE CORPORATION WITH THE BEST STANDARDS OF WORK CUSTOMA RILY PROVIDED BY REPUTED GEOPHYSICAL CONTRACTORS TO MAJOR OIL COMPANIES IN THE OIL INDUSTRY. ADHERENCE TO THE QUALITY CONTROL OF THE SURVEY IS T HE RESPONSIBILITY OF THE CONTRACTOR. HOWEVER, CORPORATION'S REPRESENTATIVES WILL BE ASSO CIATED WITH THE WORK THROUGHOUT THE CONTRACT PERIOD TO ENSURE SECURITY, CONFIDENTIALITY AND QUALITY CONTROL OF DATA TO BE ACQUIRED AND PROCESSED AND FOR OVERALL COORDI NATION OF THE ACTIVITY. THE CONTRACTOR WILL DO THE PROCESSING OF THE DATA A CQUIRED ONBOARD THE VESSEL AS DETAILED IN APPENDIX-I. AFTER ACQUISITION AND PROCESSING OF THE DATA, CONTR ACTOR WILL ARRANGE FOR PACKING, INSURANCE, CUSTOMS AND OTHER FORMALITIES AND SAFE T RANSPORTATION OF DATA 53 I. T. APPEAL NO. 4653 (DEL) OF 2010 TAPE CARTRIDGES TO HANDOVER THE DATA (IN DUPLICATE) ALONG WITH OTHER TECHNICAL INFORMATION AS DESCRIBED IN CLAUSE 7 OF A NNEXURE-IL AT CORPORATION'S PREMISES, MUMBAI OR AT ANY OTHER DESI GNATED PREMISES OF CORPORATION. 39.2 AT A.1 OF ANNEXURE IV (APPENDIX-A) WORK AREA IS SPECIFIED IN THE FOLLOWING WORDS: CONTRACTOR SHALL MAKE AVAILABLE THE SERVICES OF CO MPETENT AND QUALIFIED EXPERTS FOR PLANNING, DESIGNING THE PROPO SED 3D SURVEYS FOR IMPROVEMENT AND REFINING, IF REQUIRED ANY, WITHIN 1 0 DAYS OF LETTER OF AWARD (LOA). THE EXPERT OF THE CONTRACTOR IN ASSOCI ATION WITH COPORATIONS REPRESENTATIVES SHALL PREPARE A PROJEC T REPORT GIVING FULL DETAILS OF THE PLAN OF WORK WITHIN 10 DAYS OF LAO. THE PROJECT REPORT SHOULD ALSO CONTAIN THE FULL DESCRIPTION OF THE QUALITY MANAGEMENT METHODS TO BE EMPLOYED BY THE CONTRACTOR TO ACHIEVE THE REQUIRED QUALITY STANDARD. THE CONTRAC TOR SHALL PROVIDE PERSONNEL ONBOARD HAVING SUFFICIENT EXPERIE NCE IN THE ACQUISITION OF 3D SEISMIC DATA. 54 I. T. APPEAL NO. 4653 (DEL) OF 2010 39.3 UNDER THE HEAD 'A. 2 WORK' OF ANNEXURE-IV (APP ENDIX-A), THE TERMS OF CONTRACT REQUIRE THAT: 'THE WORK THAT THE CONTRACTOR WILL PERFORM SHALL CO MPRISE OF OBTAINING AND RECORDING OF: (ADHERING TO THE QUALITY SPECIFICATION) 1. 3D CDP SEISMIC REFLECTION DATA. 2. NAVIGATION & POSITIONING DATA UNAMBIGUOUSLY TIED WITH SEISMIC AND BATHYMETRIC DATA. 3. BATHYMETRIC DATA ALONG WITH NAVIGATION DATA. 4. ONBOARD PROCESSING OF SEISMIC TRACE DATA FOR QC. ' 40. FROM THE PERUSAL OF ABOVE MENTIONED ANNEXURES, TERMS AND CONDITIONS OF CONTRACT, SCOPE OF WORK, WORK AREA AND WORK SPECIFI CATIONS IT MAY BE SEEN THAT THE ASSESSEE HAS COLLECTED 3D SEISMIC DATA, ANALYZED IT , AND SUBMITTED THE REPORT IN THE DISKETTE TO ONGC. THE ASSESSEE HAD ALSO PROVIDED S ERVICES OF ITS PERSONNEL. SINCE THE ASSESSEE IS ENGAGED IN COLLECTION OF 3D SEISMIC DATA AND PROCESSING THEREOF, THE ACTIVITIES OF THE ASSESSEE CANNOT BE TREATED AT PAR WITH THAT OF MINING OR LIKE PROJECT OPERATIONS EVEN ON THE SURFACE OF THE EARTH. THEREF ORE, IN OUR CONSIDERED OPINION, 55 I. T. APPEAL NO. 4653 (DEL) OF 2010 THE ASSESSEE CANNOT BE SAID TO HAVE BEEN ENGAGED IN THE MINING OR LIKE PROJECT. THE ASSESSEE HAD NOT ITSELF UNDERTAKEN ANY ACTIVITY OF MINING OR LIKE PROJECT FOR EXTRACTION OR PRODUCTION OF MINERAL OIL. THE CLAUSE S OF THE AGREEMENTS WITH ONGC DO NOT DISCLOSE THAT THE ASSESSEE HAD UNDERTAKEN AN Y MINING PROJECT OR A LIKE PROJECT. NO SUCH CASE BASED ON TERMS OF CONTRACTS H AS BEEN MADE OUT BY THE LD. COUNSEL FOR THE ASSESSEE. THESE ACTIVITIES HAVE BEE N UNDERTAKEN BY ONGC. 3D SEISMIC DATA ACQUISITION AND ITS PROCESSING ONBOARD INVOLVE USE OF HIGHLY TECHNICAL INPUT, EQUIPMENTS AND PERSONNEL. FEES FOR TECHNICAL SERVICES AS PER EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT, MEANS ANY CONSID ERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TE CHNICAL OR OTHER PERSONNEL). THEREFORE, THE SERVICES PROVIDED BY THE ASSESSEE UN DER THE CONTRACTS TO ONGC SQUARELY FALL UNDER DEFINITION OF FEE FOR TECHNICAL SERVICES. SIMPLY BECAUSE THE ASSESSEE HAD PROVIDED SERVICES OR FACILITIES BY WA Y OF ACQUISITION AND PROCESSING OF 3D SEISMIC DATA ONBOARD, IT CANNOT BE SAID TO BE ENGAGED IN MINING PROJECT OR PROJECT SIMILAR TO MINING. OUR VIEW IS SUPPORTED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF RIO TINTO TECHNICAL SERVI CES (SUPRA) AND OTHER DECISIONS OF ITAT REFERRED TO ABOVE WHERE IN IT HAS BEEN HELD THAT THERE SHOULD BE CONSTRUCTION PROJECT, ASSEMBLY PROJECT OR A MINING PROJECT OR A LIKE PROJECT 56 I. T. APPEAL NO. 4653 (DEL) OF 2010 UNDERTAKEN BY THE RECIPIENT AND THE CONSIDERATION P AID SHOULD BE ON THE SAID ACCOUNT. 41. CBDT INSTRUCTION NO 1862 ISSUED ON 22.10.1990 C LARIFIES THAT THE EXPRESSIONS MINING PROJECT OR LIKE PROJECT WOUL D COVER RENDERING OF SERVICES LIKE IMPARTING OF TRAINING AND CARRYING OUT DRILLIN G OPERATIONS FOR EXPLORATION OR EXPLOITATION OF OIL AND NATURAL GAS. THE INSTRUCTIO N IN PARAGRAPH 3 REFERS TO SECTIONS 44D AND 115A. THE PROVISIONS OF SECTION 44D ARE NOT APPLICABLE IN RESPECT OF AN AGREEMENT MADE AFTER 31.3.2003. SECTION 44DA WAS IN SERTED INTO STATUTE BY THE FINANCE ACT 2003 APPLICABLE W.E.F. 1.4.2004 AND FRO M THIS DATE THE CONSIDERATION FOR FEE FOR TECHNICAL SERVICES COVERED BY PROVISION S OF SECTION 44DA IS EXCLUDED FROM SECTION 115A. SECONDLY THE INSTRUCTION IS SILE NT ABOUT THE EXPRESSION UNDERTAKEN BY THE RECIPIENT. THEREFORE, IN OUR CO NSIDERED OPINION THE INSTRUCTION CANNOT BE APPLIED TO TAKE OUT A CASE FROM AMBIT OF SECTION 115A AND PUT THE SAME IN SECTION 44BB(1). SINCE THE STATUTORY PROVISIONS AS DISCUSSED ABOVE ARE CLEAR, CBDT INSTRUCTION NO 1862 IS OF NO HELP TO THE ASSES SEE. THEREFORE, THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE OF SEISMIC SURVEY, PROCE SSING OF 3D SEISMIC DATA AND SUBMISSION OF ITS REPORT IN DESIRED MEDIA AS ALSO P ROVIDING SERVICES OF PERSONNEL 57 I. T. APPEAL NO. 4653 (DEL) OF 2010 WILL CLEARLY FALL UNDER THE DEFINITION OF FEE FOR TECHNICAL SERVICES COVERED IN FIRST LIMB OF EXPLANATION 2 TO SECTION 9(1)(VII) OF THE A CT. 42. NOW QUESTION ARISES AS TO WHETHER THE TECHNICAL SERVICES PROVIDED BY THE ASSESSEE CAN BE SAID TO BE RENDERED IN CONNECTION W ITH THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS COVERED B Y PROVISIONS OF SECTION 44BB(1) OF THE ACT. SECTION 44BB (1) AS RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION IS REPRODUCED AS UNDER: 44BB. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTA INED IN SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A, IN THE CASE OF AN AS SESSEE, BEING A NON- RESIDENT, ENGAGED IN THE BUSINESS OF PROVIDING SERV ICES OR FACILITIES IN CONNECTION WITH, OR SUPPLYING PLANT AND MACHINERY O N HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PROD UCTION OF, MINERAL OILS, A SUM EQUAL TO TEN PER CENT OF THE AGGREGATE OF THE A MOUNTS SPECIFIED IN SUB- SECTION (2) SHALL BE DEEMED TO BE THE PROFITS AND G AINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION : PROVIDED THAT THIS SUB-SECTION SHALL NOT APPLY IN A CASE WH ERE THE PROVISIONS OF SECTION 42 OR SECTION 44D OR SECTION 115A OR SECTIO N 293A APPLY FOR THE PURPOSES OF COMPUTING PROFITS OR GAINS OR ANY OTHER INCOME REFERRED TO IN THOSE SECTIONS. 58 I. T. APPEAL NO. 4653 (DEL) OF 2010 FROM PLAIN READING OF THE SECTION 44BB(1) IT IS CLE AR THAT THE PROVISIONS OF THIS SECTION HAVE OVERRIDING EFFECT ON SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A OF THE ACT. THE PROVISIONS OF SECTION 44BB(1) ARE APPLICA BLE IN THE CASE OF NON-RESIDENT ASSESSEES ENGAGED IN THE BUSINESS OF PROVIDING SERV ICES OR FACILITIES IN CONNECTION WITH, OR SUPPLYING PLANT AND MACHINERY ON HIRE USED , OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MIN ERAL OILS. THE ASSESSEE DURING THE RELEVANT PERIOD WAS ENGAGED IN ACTIVITIES OF ACQUIS ITION OF 3D SEISMIC DATA, PROCESSING THEM ONBOARD AND SUBMISSION OF THE REPOR T IN DESIRED MEDIA TO ONGC. IN ORDER TO FIND OUT THE PRESENCE OF MINERAL OIL IN THE EARTH CRUST WHICH CAN BE EXTRACTED COMMERCIALLY, 3D SEISMIC SURVEY IS CONDUC TED BY EMPLOYING SOPHISTICATED TECHNIQUES, EQUIPMENTS AND PROFESSION ALS. WITHOUT CONDUCTING SEISMIC SURVEYS IT WILL BE IMPOSSIBLE TO UNDERTAKE BUSINESS OF EXTRACTION/PRODUCTION OF MINERAL OIL. IN DCIT VS. SCHLUMBERGER SEA CO INC. 50 ITD 348(CAL), THE ASSESSEE A SUB-CONTRACTOR RENDERE D SERVICES TO ONGC FOR ITS ON- SHORE OIL-WELLS AND ALSO SUPPLIED PERSONNEL AND MAT ERIALS. THE CALCUTTA BENCH OF INCOME TAX APPELLATE TRIBUNAL HELD THAT SUCH SERVIC ES WERE IN CONNECTION WITH EXPLORATION AND EXTRACTION OF MINERAL OIL AND THERE FORE THE INCOME WAS ASSESSABLE U/S 44BB. THIS DECISION WAS FOLLOWED BY THE TRIBUNA L IN PARADIGM GEOPHYSICAL (P) LTD. 25 SOT 94 WHEREIN IT WAS HELD THAT THE COL LECTION OF 2D AND 3D SEISMIC DATA BY PARADIGM AND ITS DELIVERY TO RIL FOR THE PU RPOSE OF PROSPECTING AND 59 I. T. APPEAL NO. 4653 (DEL) OF 2010 EXTRACTION OF MINERAL OIL WAS COVERED BY THE PROVIS IONS OF SEC. 44BB OF THE ACT. FURTHER THE DICTIONARY MEANING OF WORD PROSPECTING APPEARING IN SECTION 44BB(1) MEANS SEARCHING FOR MINERALS/OARS. IN VIE W OF DECISIONS OF ITAT REFERRED TO ABOVE IT IS HELD THAT THE TECHNICAL SER VICES RENDERED BY THE ASSESSEE ARE IN CONNECTION WITH THE PROSPECTING FOR, OR EXTRACTI ON OR PRODUCTION OF MINERAL OILS. 43. NOW NEXT QUESTION ARISES AS TO WHETHER THE CONS IDERATION RECEIVED FOR FEE FOR TECHNICAL SERVICES RENDERED BY THE ASSESSEE IS ASSE SSABLE U/S 44BB(1) OF THE ACT OR U/S 115A OF THE ACT? THE LEGISLATURE HAS EMPLOYED WORD SERVICES IN SECTION 44BB (1) OF THE ACT. THE WORD SERVICES WILL INCLU DE BOTH TECHNICAL AND NON- TECHNICAL SERVICES. PROVISO TO SECTION 44BB(1) CARV ES OUT AN EXCEPTION ACCORDING TO WHICH THE PROVISIONS OF THIS SUB-SECTION SHALL NOT APPLY IN A CASE WHERE THE PROVISIONS OF SECTION 42 OR SECTION 44D OR SECTION 115A OR SECTION 293A ARE APPLICABLE FOR THE PURPOSES OF COMPUTING PROFITS OR GAINS OR ANY OTHER INCOME REFERRED TO IN THOSE SECTIONS. WE ALSO FIND THAT IN PROVISO TO SECTION 44BB(1) FOR THE RELEVANT ASSESSMENT YEAR EACH OF THE SECTIONS 4 2, 44D, 115A AND 293A ARE SEPARATED BY WORD OR. THE WORD OR IS NORMALLY USED AS DISJUNCTIVE AND HAS TO BE READ IN THE ALTERNATIVE. IT CANNOT BE READ AS CO NJUNCTIVE OR IN OTHER MEANING BECAUSE THE RESULT PRODUCED WILL BE UNINTELLIGIBLE AND ABSURD AND AGAINST THE CLEAR INTENTION OF THE LEGISLATURE. IT IS ALSO A SETTLED LAW THAT THE LEGISLATURE DOES ENACT A 60 I. T. APPEAL NO. 4653 (DEL) OF 2010 WORD IN THE STATUTE WHICH CAN BE SAID TO BE REDUNDA NT. THEREFORE, LITERAL INTERPRETATION HAS TO BE FOLLOWED FOR EXISTENCE OF WORD OR BETWEEN DIFFERENT SECTIONS APPEARING IN PROVISO TO SECTION 44BB (1) O F THE ACT. IN PROVISO TO SECTION 44BB(1) SECTION 44DA HAS BEEN INSERTED BY THE FINAN CE ACT, 2010 W.E.F. 1.4.2011. THUS IN THE CASE OF A NON-RESIDENT ASSESSEE WHERE T HE PROVISIONS OF SECTION 42 OR SECTION 44D OR 44DA OR SECTION 115A OR SECTION 293A ARE APPLICABLE FOR THE PURPOSES OF COMPUTING PROFITS OR GAINS OR ANY OTHER INCOME REFERRED TO IN THOSE SECTIONS, PROVISO TO SECTION 44BB(1) WILL BE PRESS ED INTO SERVICE. 44. THE NORMAL FUNCTION OF A PROVISO IS TO EXCEPT S OMETHING OUT OF THE MAIN ENACTMENT OR TO QUALIFY SOMETHING ENACTED THEREIN W HICH BUT FOR THE PROVISO WOULD BE IN THE PURVIEW OF THE ENACTMENT. IT IS ALSO A SE TTLED LAW THAT THE MAIN PART OF A SECTION MUST NOT BE CONSTRUED IN SUCH A WAY AS TO R ENDER A PROVISO TO THE SECTION REDUNDANT ( R V. LEEDS PRISON (GOVERNOR) EX. P. STAFFORD [1964] 2 QB 625). PROVISO SOMETIME CLARIFIES AMBIGUITY IN THE SECTION TO WHICH IT IS ATTACHED TO. SOMETIMES PROVISO CAN STAND ON ITS OWN INDEPENDENT OF MAIN ENACTMENT TO WHICH IT IS ATTACHED. HONBLE SUPREME COURT IN THE CAS E OF UP STATE ROAD TRANSPORT CORPORATION V. MOHD. ISMAIL (AIR 1991 SC 1099), WHI LE INTERPRETING THE PROVISO TO THE REGULATION 17(3) OF THE UP STATE ROAD TRANSP ORT CORPORATION HAS HELD THAT 61 I. T. APPEAL NO. 4653 (DEL) OF 2010 SOMETIMES A PROVISO IN EFFECT BECOMES A SUBSTANTIVE PROVISION. REGULATION 17(3) READS AS FOLLOWS: 17(3) THE SERVICE OF A PERSON WHO FAILS TO PASS TH E FITNESS TEST, REFERRED TO IN SUB-REGULATION (2), MAY BE DISPENSED WITH; PROVIDED THAT THE PERSONS, WHOSE SERVICES ARE DISPENSED WITH MAY, IN THE DISCRETION OF THE CORPORATION, BE OFFERED ALTERNATIVE JOBS. INTERPRETING THE ABOVE PROVISO ATTACHED TO THE REG ULATION 17(3), HONBLE SUPREME COURT OBSERVED AS UNDER: THE PROVISO WITH WHICH WE ARE CONCERNED IN REGULAT ION 17(3) DOES NOT CARVE OUT AN EXCEPTION FROM THE GENERAL RULE CONTAINED IN THE FIRST BRANCH. IT IS AN INDEPENDENT AND SUBSTANTIAL PROVISION PROVIDING DIS CRETION TO THE CORPORATION TO OFFER AN ALTERNATIVE JOB TO THE RETR ENCHED DRIVER. THIS OFFER IS TO BE MADE AFTER THE EXERCISE OF POWER UNDER THE FI RST BRANCH OF REGULATION 17(3). THERE IS, THEREFORE, NO DOUBT THAT THE SECON D BRANCH OF REGULATION 17(3) IS A SUBSTANTIAL PROVISION AND NOT IN THE NAT URE OF A PROVISO TO THE FIRST BRANCH THEREOF. EXAMINING THE CONTENTS OF PROVISO TO SECTION 44BB ( 1) IN THE LIGHT OF ABOVE LEGAL PROPOSITIONS, WE ARE OF THE VIEW THAT THE PROVISO T O SECTION 44BB(1) CAN NEITHER BE IGNORED NOR CAN BE CONSTRUED AS AN INDEPENDENT PROV ISION. IF IT IS IGNORED, THE 62 I. T. APPEAL NO. 4653 (DEL) OF 2010 CONSIDERATION IN RESPECT OF SERVICES BOTH TECHNICA L AS WELL AS NON-TECHNICAL WILL BE COVERED BY SECTION 44BB (1) MAKING PROVISIONS OF SE CTIONS 42/ 115A / 293A REDUNDANT FOR THE YEAR UNDER CONSIDERATION AND ALSO SECTION 44DA W. E. F. ASSESSMENT YEAR 2011-12. THE PROVISO CANNOT ALSO ST AND ON ITS OWN AS IT CONVEY NO MEANING INDEPENDENT OF SECTION 44BB(1) AND HENCE IT CANNOT BE CONSTRUED AS AN INDEPENDENT PROVISION. IN VIEW OF ABOVE LEGAL POSI TION WE REJECT THE CONTENTION OF THE LD AR OF THE ASSESSEE THAT THE MOMENT THE CASE FALLS U/S 44BB (1), ITS PROVISO SHOULD BE IGNORED. THE CONTENTION OF THE ASSESSEE I S ALSO REJECTED THAT WHEN THERE IS NO AMBIGUITY IN SECTION 44BB(1), THERE IS NO NEED O F PROVISO TO IT. 45. PROVISIONS OF SECTION 42 ARE APPLICABLE IN THE CASE OF AN ASSESSEE FOR THE PURPOSE OF COMPUTING THE PROFITS OR GAINS OF ANY BU SINESS CONSISTING OF THE PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINE RAL OILS IN RELATION TO WHICH THE CENTRAL GOVERNMENT HAS ENTERED INTO AN AGREEMENT WI TH ANY PERSON FOR THE ASSOCIATION OR PARTICIPATION OF THE CENTRAL GOVERNM ENT OR ANY PERSON AUTHORIZED BY IT IN SUCH BUSINESS. THE PROVISIONS OF SECTION 44D WERE IN OPERATION DURING THE PERIOD FROM 1.4.1976 TO 31.03.2003. HENCE THE PROVI SIONS OF SECTION 44D ARE NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. PROVIS IONS OF SECTION 115A ARE APPLICABLE IN CASE OF A NON-RESIDENT ASSESSEE FOR T HE PURPOSE OF LEVY OF TAX ON DIVIDENDS, ANY INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES. SECTION 63 I. T. APPEAL NO. 4653 (DEL) OF 2010 44DA WAS ALSO INSERTED IN THE STATUTE BY THE FINANC E ACT, 2003 W.E.F. 1.4.2004. BOTH THE SECTIONS 44DA (1) AND 115A(1) (B) DEAL WI TH INCOME OF NON-RESIDENT ASSESSEE RECEIVED BY WAY OF ROYALTY OR FEE FOR TE CHNICAL SERVICES AND ARE REPRODUCED AS UNDER:- 44DA. (1) THE INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES RECEIVED FROM GOVERNMENT OR AN INDIAN CONCERN IN PU RSUANCE OF AN AGREEMENT MADE BY A NON-RESIDENT (NOT BEING A COMPANY) OR A F OREIGN COMPANY WITH GOVERNMENT OR THE INDIAN CONCERN AFTER THE 31ST DAY OF MARCH, 2003, WHERE SUCH NON-RESIDENT (NOT BEING A COMPANY) OR A FOREIG N COMPANY CARRIES ON BUSINESS IN INDIA THROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN, OR PERFORMS PROFESSIONAL SERVICES FROM A FIXED PLACE O F PROFESSION SITUATED THEREIN, AND THE RIGHT, PROPERTY OR CONTRACT IN RES PECT OF WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID IS EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISHMENT OR FIXED PLACE OF PROFESSIO N, AS THE CASE MAY BE, SHALL BE COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BU SINESS OR PROFESSION IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT: PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED, (I) IN RESPECT OF ANY EXPENDITURE OR ALLOWANCE WHI CH IS NOT WHOLLY AND EXCLUSIVELY INCURRED FOR THE BUSINESS OF SUCH PERMA NENT ESTABLISHMENT OR FIXED PLACE OF PROFESSION IN INDIA; OR (II) IN RESPECT OF AMOUNTS, IF ANY, PAID (OTHERWIS E THAN TOWARDS REIMBURSEMENT OF ACTUAL EXPENSES) BY THE PERMANENT ESTABLISHMENT TO ITS HEAD OFFICE OR TO ANY OF ITS OTHER OFFICES. 64 I. T. APPEAL NO. 4653 (DEL) OF 2010 X X X X X X X X X X X 115A (1) WHERE THE TOTAL INCOME OF- (A) X X X X X X X X X X X (B) A NON-RESIDENT (NOT BEING A COMPANY) OR A FO REIGN COMPANY, INCLUDES ANY INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERV ICES OTHER THAN INCOME REFERRED TO IN SUB-SECTION (1) OF SECTION 44DA RECE IVED FROM GOVERNMENT OR AN INDIAN CONCERN IN PURSUANCE OF AN AGREEMENT MADE BY THE FOREIGN COMPANY WITH GOVERNMENT OR THE INDIAN CONCERN AFTER THE 31S T DAY OF MARCH, 1976, AND WHERE SUCH AGREEMENT IS WITH AN INDIAN CONCERN, THE AGREEMENT IS APPROVED BY THE CENTRAL GOVERNMENT OR WHERE IT RELATES TO A MATTER INCLUDED IN THE INDUSTRIAL POLICY, FOR THE TIME BEING IN FORCE, OF THE GOVERNMENT OF INDIA, THE AGREEMENT IS IN ACCORDANCE WITH THAT POLICY, THEN, SUBJECT TO THE PROVISIONS OF SUB-SECTIONS (1A) AND (2), THE INCOME-TAX PAYABLE S HALL BE THE AGGREGATE OF- (A) THE AMOUNT OF INCOME-TAX CALCULATED ON TH E INCOME BY WAY OF ROYALTY, IF ANY, INCLUDED IN THE TOTAL INCOME, AT THE RATE O F THIRTY PER CENT IF SUCH ROYALTY IS RECEIVED IN PURSUANCE OF AN AGREEMENT MA DE ON OR BEFORE THE 31ST DAY OF MAY, 1997 AND TWENTY PER CENT WHERE SUC H ROYALTY IS RECEIVED IN PURSUANCE OF AN AGREEMENT MADE AFTER TH E 31ST DAY OF MAY, 1997 BUT BEFORE THE 1ST DAY OF JUNE, 2005; (AA) THE AMOUNT OF INCOME-TAX CALCULATED ON THE INCOME BY WAY OF ROYALTY, IF ANY, INCLUDED IN THE TOTAL INCOME, AT THE RATE OF TEN PER CENT IF 65 I. T. APPEAL NO. 4653 (DEL) OF 2010 SUCH ROYALTY IS RECEIVED IN PURSUANCE OF AN AGREEME NT MADE ON OR AFTER THE 1ST DAY OF JUNE, 2005; (B) THE AMOUNT OF INCOME-TAX CALCULATED ON THE INCOME BY WAY OF FEES FOR TECHNICAL SERVICES, IF ANY, INCLUDED IN THE TOTAL I NCOME, AT THE RATE OF THIRTY PER CENT IF SUCH FEES FOR TECHNICAL SERVICES ARE RECEIVED IN PURSUANCE OF AN AGREEMENT MADE ON OR BEFORE THE 31S T DAY OF MAY, 1997 AND TWENTY PER CENT WHERE SUCH FEES FOR TECHNI CAL SERVICES ARE RECEIVED IN PURSUANCE OF AN AGREEMENT MADE AFTER TH E 31ST DAY OF MAY, 1997 BUT BEFORE THE 1ST DAY OF JUNE, 2005 ; AND (BB) THE AMOUNT OF INCOME-TAX CALCULATED ON THE INCOME BY WAY OF FEES FOR TECHNICAL SERVICES, IF ANY, INCLUDED IN THE TOTAL I NCOME, AT THE RATE OF TEN PER CENT IF SUCH FEES FOR TECHNICAL SERVICES ARE RE CEIVED IN PURSUANCE OF AN AGREEMENT MADE ON OR AFTER THE 1ST DAY OF JUNE, 2005; AND (C) THE AMOUNT OF INCOME-TAX WITH WHICH IT WOU LD HAVE BEEN CHARGEABLE HAD ITS TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME BY WAY OF ROYALTY AND FEES FOR TECHNICAL SERVICES. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) FEES FOR TECHNICAL SERVICES SHALL HAVE THE S AME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9 ; X X X X X X X X X X X X 46. ON COMBINED READING OF SECTION 44DA(1) AND 115A (1)(B) IT IS CLEAR THAT THE PROVISIONS OF SECTION 44DA(1) ARE APPLICABLE IN THE CASE OF A NON-RESIDENT ASSESSEE WHO CARRIES ON BUSINESS IN INDIA THROUGH A PERMANEN T ESTABLISHMENT, OR PERFORMS 66 I. T. APPEAL NO. 4653 (DEL) OF 2010 PROFESSIONAL SERVICES FROM A FIXED PLACE OF PROFESS ION, AND FEES FOR TECHNICAL SERVICES PAID UNDER THE CONTRACT IS EFFECTIVELY CON NECTED WITH SUCH PERMANENT ESTABLISHMENT OR FIXED PLACE OF PROFESSION IN INDIA . IN SECTION 115A(1)(B) THE FINANCE ACT, 2003 WITH EFFECT FROM 1.4.2004 SUBSTIT UTED WORDS A NON-RESIDENT (NOT BEING A COMPANY) OR A FOREIGN COMPANY INCLUDES ANY INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES OTHER THAN I NCOME REFERRED TO IN SUB-SECTION (1) OF SECTION 44DA FOR WORDS A FOREIGN COMPANY, INCLUDES ANY INCOME BY WAY OF ROYALTY OR FEES FOR TECHNICAL SERVICES . THEREFORE, W.E.F. 1.4.2004 FEE FOR TECHNICAL SERVICES WHICH IS NOT CONNECTED WITH PERM ANENT ESTABLISHMENT OF BUSINESS OR FIXED PLACE OF PROFESSION IN INDIA, WIL L BE TAXABLE U/S 115A(1)(B) OF THE ACT. AS OBSERVED EARLIER SECTION 44DA WAS INSERTED IN PROVISO TO SECTION 44BB (1) BY THE FINANCE ACT, 2010 WITH EFFECT FROM 1.4.2011 AND SIMULTANEOUSLY INSERTED SECOND PROVISO TO SECTION 44DA APPLICABLE FROM ASS ESSMENT YEAR 2011-12 ACCORDING TO WHICH PROVISIONS OF SECTION 44BB (1) W ILL NOT BE APPLICABLE IN RESPECT OF INCOME REFERRED TO THIS SECTION. ON COMBINED REA DING OF PROVISO TO SECTION 44BB (1) AND SECOND PROVISO TO SECTION 44DA IT IS C LEAR THAT THE FEE FOR TECHNICAL SERVICES RENDERED IN CONNECTION WITH PROSPECTING FO R OR EXTRACTION OR PRODUCTION OF MINERAL OIL THOUGH EFFECTIVELY CONNECTED WITH PE OR FIXED PLACE OF PROFESSION WILL FALL NOT UNDER SECTION 44BB(1) AND WILL BE ASSESSAB LE UNDER SECTION 44DA OF THE 67 I. T. APPEAL NO. 4653 (DEL) OF 2010 ACT. TO MAKE IT MORE CLEAR THE FEE FOR TECHNICAL SE RVICES CAN BE DIVIDED IN FOLLOWING CATEGORIES: (I) FEE FOR TECHNICAL SERVICES RENDERED IN CONNECT ION WITH PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OIL HAVING BUSINESS PE OR FIXED PLACE OF PROFESSION - (SECTION 44DA); (II) FEE FOR TECHNICAL SERVICES RENDERED IN CONNEC TION WITH PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OIL WITHOUT HAVING BUSINESS PE OR FIXED PLACE OF PROFESSION (SECTION 115A); (III) OTHER FEE FOR TECHNICAL SERVICES HAVING BUSI NESS PE OR FIXED PLACE OF PROFESSION - (SECTION 44DA); (IV) OTHER FEE FOR TECHNICAL SERVICES WITHOUT BUSIN ESS PE OR FIXED PLACE OF PROFESSION - (SECTION 115A); THUS IT IS ABUNDANTLY CLEAR THAT WITH EFFECT FROM ASSESSMENT YEAR 2011-12 FEE FOR TECHNICAL SERVICES WHETHER RENDERED IN CONNECTION W ITH PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OIL OR OTHERWIS E WILL BE ASSESSABLE EITHER U/S 44DA OR SECTION 115A OF THE ACT DEPENDING ON FACT W HETHER SUCH RECEIPTS ARE EFFECTIVELY CONNECTED WITH PE OR FIXED PLACE OF PRO FESSION, OR NOT. HOWEVER, FOR ASSESSMENT YEAR 2004-05 TO 2010-11 THE CONSIDERATIO N RECEIVED FOR FEE FOR 68 I. T. APPEAL NO. 4653 (DEL) OF 2010 TECHNICAL SERVICES RENDERED IN CONNECTION WITH PROS PECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OIL THOUGH EFFECTIVELY CONNEC TED WITH PE OR FIXED PLACE OF PROFESSION WILL FALL OUTSIDE THE SCOPE OF SECTION 4 4DA AND WILL BE ASSESSABLE UNDER SECTION 44BB (1) OF THE ACT FOR THE SIMPLE REASON T HAT PROVISO TO SECTION 44BB(1) DOES NOT CONTAIN SECTION 44DA FOR THESE YEARS. 47. THUS FROM ABOVE DISCUSSION THE SCHEME OF TAXATI ON WITH REGARD TO PAYMENTS TO NON-RESIDENTS IS CLEAR AND UNAMBIGUOUS. SECT ION 9 IS A CHARGING SECTION AND LAYS DOWN THE INCOME DEEMED TO BE ACCRUED AND ARISI NG IN INDIA. SECTION 9(1)(VII) OF THE ACT TAXES THE INCOME BY WAY OF FEES FOR TECH NICAL SERVICES. FEES FOR TECHNICAL SERVICES IS DEFINED IN EXPLANATION TO SE CTION 9(1)(VII) TO INCLUDE ANY CONSIDERATION FOR RENDERING ANY MANAGERIAL, TECHNIC AL OR CONSULTANCY SERVICES. HOWEVER, THE DEFINITION OF FEES FOR TECHNICAL SERVI CES EXCLUDES CONSIDERATION RECEIVED FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT. 47.1 ONCE ANY RECEIPT OF THE NON-RESIDENT FALLS WIT HIN THE DEFINITION OF `FEES FOR TECHNICAL SERVICES, THEN TAX IS DETERMINED THEREON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44DA OR SECTION 115A OF THE A CT. PROVISIONS OF SECTION 115A LAY DOWN TAXATION OF `FEES FOR TECHNICAL SERVI CES ON GROSS BASIS AT PRESCRIBED 69 I. T. APPEAL NO. 4653 (DEL) OF 2010 RATES. THE ONLY CASE WHERE PROVISIONS OF SECTION 1 15A OF THE ACT WOULD NOT APPLY IS A SITUATION WHERE THE PROVISIONS OF SECTION 44DA OF THE ACT ARE APPLICABLE. SECTION 44DA OF THE ACT IS APPLICABLE ONLY IN A SIT UATION WHERE THE FOREIGN ENTERPRISE CARRIES OUT BUSINESS IN INDIA THROUGH A PERMANENT ESTABLISHMENT. ACCORDINGLY, THE ONLY SITUATION WHERE `FEES FOR TEC HNICAL SERVICES CAN BE TAXED AT NET BASIS IS WHERE THE NON-RESIDENT ASSESSEE HAS A PERMANENT ESTABLISHMENT IN INDIA AND SUCH FEES FOR TECHNICAL SERVICES IS EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISHMENT. IN NO OTHER CIRCUMSTANCES CAN `FEES FOR TECHNICAL SERVICES BE TAXED ON NET BASIS. 47.2 THE ASSESSEES CASE DOES NOT FALL IN THE EXCLU SION TO THE DEFINITION OF `FEES FOR TECHNICAL SERVICES FOR DETAILED REASONS DISCUS SED IN THE ORDER SEPARATELY. ONCE IT IS CERTAIN THAT THE PAYMENT RECEIVED BY THE ASSE SSEE WAS `FEES FOR TECHNICAL SERVICES, THE ONLY SITUATION IN WHICH SUCH RECEIPT S CAN BE TAXED ON NET BASIS IS WHERE THE ASSESSEE HAS A PERMANENT ESTABLISHMENT IN INDIA AND SUCH RECEIPTS ARE EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISH MENT. IT IS NOT THE CASE OF THE ASSESSEE THAT DURING THE PERIOD UNDER CONSIDERATION IT HAD A PERMANENT ESTABLISHMENT IN INDIA. ACCORDINGLY, THE PROVISION S OF SECTION 44DA OF THE ACT DO NOT APPLY IN THE ASSESSEES CASE. THUS, THE ONLY W AY IN WHICH THE ASSESSEE COULD BE TAXED IS SECTION 115A OF THE ACT. IT IS CLEARLY ST ATED IN LAW THAT THE PROVISIONS OF 70 I. T. APPEAL NO. 4653 (DEL) OF 2010 SECTION 44BB OF THE ACT DO NOT APPLY WHERE THE PROV ISIONS OF SECTION 115A ARE APPLICABLE. THE PRINCIPLE OF TAXING FEES FOR TECHN ICAL SERVICES IRRESPECTIVE OF THE BUSINESS TO WHICH IT RELATES IS ALSO CLARIFIED IN T HE MEMORANDUM TO FINANCE BILL 2010 AS BELOW. COMBINED EFFECT OF THE PROVISIONS OF SECTIONS 44BB , 44DA AND 115A IS THAT IF THE INCOME OF A NON-RESIDENT IS IN THE NATU RE OF FEE FOR TECHNICAL SERVICES, IT SHALL BE TAXABLE UNDER THE PROVISIONS OF EITHER SECTION 44DA OR SECTION 115A IRRESPECTIVE OF THE BUSINESS TO WHICH IT RELATES. SECTION 44BB APPLIES ONLY IN A CASE WHERE CONSIDERATION IS FOR S ERVICES AND OTHER FACILITIES RELATING TO EXPLORATION ACTIVITY WHICH ARE NOT IN T HE NATURE OF TECHNICAL SERVICES. HOWEVER, OWING TO JUDICIAL PRONOUNCEMENT S, DOUBTS HAVE BEEN RAISED REGARDING THE SCOPE OF SECTION 44BB VIS--VI S SECTION 44DA AS TO WHETHER FEE FOR TECHNICAL SERVICES RELATING TO THE EXPLORATION SECTOR WOULD ALSO BE COVERED UNDER THE PRESUMPTIVE TAXATION PROV ISIONS OF SECTION 44BB. IN ORDER TO REMOVE DOUBTS AND CLARIFY THE DISTINCT SCHEME OF TAXATION OF INCOME BY WAY OF FEE FOR TECHNICAL SERVICES, IT IS PROPOSED TO AMEND THE PROVISO TO SECTION 44BB SO AS TO EXCLUDE THE APPLIC ABILITY OF SECTION 44BB TO THE INCOME WHICH IS COVERED UNDER SECTION 44DA. SI MILARLY, SECTION 44DA 71 I. T. APPEAL NO. 4653 (DEL) OF 2010 IS ALSO PROPOSED TO BE AMENDED TO PROVIDE THAT PROV ISIONS OF SECTION 44BB SHALL NOT APPLY TO THE INCOME COVERED UNDER SECTION 44DA. 48. IN THE CASE OF ASSESSEE THE ASSESSMENT YEAR IN VOLVED IS 2006-07 AND ADMITTEDLY THE RECEIPTS ARE NOT CONNECTED WITH PE I N INDIA AND HENCE THE FEE FOR TECHNICAL SERVICES RENDERED IN CONNECTION WITH PROS PECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OIL WILL BE ASSESSABLE U/S 11 5A OF THE ACT. THUS, WE DO NOT FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT I T SHOULD BE TAXED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44BB OF THE ACT. 48. THE CASE LAWS RELIED BY THE ASSESSEE ARE OF NO HELP TO THE ASSESSEE. IN THE CASE OF GEOFIZYCA TORUN (SUPRA) THE AUTHORITY FOR ADVANCE RULING ON IDENTICAL FACTS HAS HELD THAT IF THE NON-RESIDENT WAS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES IN CONNECTION WITH THE PROSPECTING, ETC., OF MINERAL OILS, THE COMPUTATION PROVISION RELATING TO FEE FOR TECHNICAL SERVICES IN SECTION 44DA HAD TO YIELD TO SECTION 44BB. IF THE BUSINESS WAS OF SPECIFIC NATU RE ENVISAGES BY SECTION 44BB, THE COMPUTATION PROVISIONS THEREIN WOULD PREVAIL OV ER THOSE IN SECTION 44DA. IN THIS CASE THE AUTHORITY FOR ADVANCE RULING HAS NOT DISCUSSED THE EFFECT OF THE PROVISO TO SECTION 44BB(1) UNDER WHICH IF THE INCOM E IS ASSESSABLE UNDER SECTION 42 OR SECTION 44-D OR SECTION 44DA, SECTION 115A O R SECTION 293A, THE PROVISIONS 72 I. T. APPEAL NO. 4653 (DEL) OF 2010 OF SECTION 44BB(1) WILL NOT BE APPLICABLE. SINCE T HE AUTHORITY FOR ADVANCE RULING IN THE CASE OF GEOFIZYCA TORUN (SUPRA) HAD NOT CONS IDERED THE EFFECT OF PROVISO TO SECTION 44BB(1) THE RELIANCE PLACED BY THE ASSESSEE ON THIS DECISION IS OF NO HELP. SIMILAR IS THE CASE WITH REFERENCE TO THE OTHER DEC ISIONS FOR AUTHORITY FOR ADVANCE RULING AS THEY HAVE NOT CONSIDERED THE PROVISO TO S ECTION 44BB (1). WE, THEREFORE, ARE IN AGREEMENT WITH THE ARGUMENTS ADVANCED BY THE LD. CIT(DR) THAT DECISION OF GEOFIZYCA TORUN (SUPRA) IS NOT APPLICABLE TO THE F ACTS OF THE ASSESSEES CASE. DECISION OF ITAT IN THE CASE OF ALBERTA RESEARCH CO UNCIL (SUPRA) IS ALSO INAPPLICABLE IN VIEW OF DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF RIO TINTO TECHNICAL SERVICES (SUPRA) WHEREIN IT HAS BEE N HELD THAT IN ORDER TO FALL IN SECOND LIMB OF EXPLANATION 2 TO SECTION 9(1)(VII) T HERE SHOULD BE CONSTRUCTION PROJECT, ASSEMBLY PROJECT OR A MINING PROJECT OR A LIKE PROJECT UNDERTAKEN BY THE RECIPIENT AND THE CONSIDERATION PAID SHOULD BE ON T HE SAID ACCOUNT. THE UNREPORTED DECISION OF HONBLE UTTARAKHAND HIGH COU RT IN THE CASE OF ONGC AS AGENT OF SCAN DRILLING COMPANY (INCOME TAX REFERENC E NO 2 OF 2001) IS ALSO NOT APPLICABLE TO THE FACTS OF ASSESSEES CASE AS IN TH AT CASE THE ASSESSEE WAS NOT CARRYING OUT 3D SEISMIC SURVEYS TO FIND OUT THE AVA ILABILITY OF MINERAL OIL BUT WAS ASSISTING ONGC IN DRILLING OPERATIONS. THE COURT HE LD THAT MANNING, MANAGEMENT AND OPERATION OF DRILL SHIPS FOR EXPLORATION PURPOS E WOULD FALL WITHIN THE AMBIT OF MINING OR LIKE PROJECT AND ACCORDINGLY FALL OUTSI DE THE PURVIEW OF FTS. THUS 73 I. T. APPEAL NO. 4653 (DEL) OF 2010 FACTS OF THE CASE BEFORE US ARE DISTINGUISHABLE FRO M THE FACTS OF THE CASE IN SCAN DRILLING COMPANY. 49. ANOTHER CONTENTION OF THE ASSESSEE IS THAT ASSE SSING OFFICER HAD NOT FOLLOWED THE PRINCIPLE OF CONSISTENCY. IN THIS REGARD WE WOU LD LIKE TO MENTION THAT PRINCIPLE OF CONSISTENCY DOES NOT OPERATE AGAINST LAW. WHEN A PARTICULAR BENEFIT IS NOT CONFERRED ON THE ASSESSEE BY THE STATUTE AND ASSESS ING OFFICER ALLOWS SUCH BENEFIT THE ASSESSEE CANNOT CLAIM SUCH BENEFIT AS A MATTER OF RIGHT ON THE PRINCIPLE OF CONSISTENCY. IN THIS REGARD IT WILL BE APPROPRIATE TO REFER TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DISTRIBUTOR (BARODA) P . LTD V UNION OF INDIA 155 ITR 120 (SC) THEIR LORDSHIP SUMMARIZED THEIR VIEWS AT PAGE 124 IN FOLLOWING WORDS:- ..TO PERPETUATE AN ERROR IS NO HEROISM. TO RECTIF Y IT IS THE COMPULSION OF THE JUDICIAL CONSCIENCE. IN THIS, WE DERIVE COMFORT AND STRENGTH FROM THE WISE AND INSPIRING WORDS OF JUSTICE BRONSON IN PIERCE V . DELAMETER (A.M.Y. AT PAGE 18): ' A JUDGE OUGHT TO BE WISE ENOUGH TO KNO W THAT HE IS FALLIBLE AND, THEREFORE, EVER READY TO LEARN: GREAT AND HONEST E NOUGH TO DISCARD ALL MERE PRIDE OF OPINION AND FOLLOW TRUTH WHEREVER IT MAY LEAD : AND COURAGEOUS ENOUGH TO ACKNOWLEDGE HIS ERRORS '. 74 I. T. APPEAL NO. 4653 (DEL) OF 2010 IN VIEW OF DECISION OF HONBLE SUPREME COURT IT IS CLEAR THAT MISTAKE COMMITTED EARLIER BY THE ASSESSING OFFICER IN APPLYING THE CO RRECT LAW CANNOT BE ALLOWED TO BE PERPETUATED. HENCE, THIS CONTENTION OF THE ASSESSEE IS DISMISSED. 50. THE NEXT CONTENTION OF THE ASSESSEE IS THAT TH E PROVISIONS OF SECTION 44BB (1) ARE SPECIAL PROVISIONS AND PROVISIONS OF SECTION 11 5A ARE GENERAL AND HENCE THE FORMER WILL YIELD TO THE LATTER. SECTION 44BB (1) I S A PRESUMPTIVE TAXATION PROVISION UNDER WHICH 10% OF THE RECEIPTS WILL BE TREATED AS INCOME. HOWEVER, W. E. F. 1.4. 2004, THE FINANCE ACT, 2003 INSERTED SUB-SECTION (3 ) IN SECTION 44BB (1) UNDER WHICH A NON RESIDENT ASSESSEE CAN OPT FOR ASSESSMEN T UNDER NORMAL PROVISIONS OF LAW FOR WHICH HE HAS TO MAINTAIN REGULAR BOOKS OF A CCOUNTS AS PROVIDED IN SECTION 44AA(2) AND GET THEM AUDITED UNDER SECTION 44AB OF THE ACT. THEREFORE, AFTER INSERTION OF SUB- SECTION (3) IN SECTION 44BB (1) T HE PRESUMPTIVE TAXATION PROVISION, IN OUR CONSIDERED OPINION, CANNOT BE TRE ATED AS SPECIAL PROVISION. EVEN PRIOR TO INSERTION OF SUB SECTION (3) IN THE PRESEN CE OF PROVISO SECTION 44BB CANNOT ALSO BE SAID TO BE A SPECIAL PROVISION HAVING OVERR IDING EFFECT ON SECTION 115A OF THE ACT. THE PRESUMPTIVE TAXATION PROVISIONS WILL B E APPLICABLE SUBJECT TO THE SECTIONS COVERED UNDER PROVISO AND SUB SECTION (3) OF SECTION 44BB (1). THE PROVISIONS OF SECTION 115A ARE ALSO SPECIAL PROVISI ONS. THEREFORE, THE CONSIDERATION 75 I. T. APPEAL NO. 4653 (DEL) OF 2010 FOR FEE FOR TECHNICAL SERVICES OTHER THAN THOSE COV ERED U/S 44DA WILL BE ASSESSABLE U/S 115A (1)(B) OF THE ACT. 51. AS REGARDS THE ISSUE RELATING CONSIDERATION RE CEIVED FROM ENI, IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER IN THE ABSENCE OF COPY OF ACCOUNT IN RESPECT OF REVENUES EARNED FROM ENI LTD, HAS ASSESS ED AS BUSINESS INCOME U/S 28 OF THE ACT @ 25% OF THE RECEIPTS ON ESTIMATE BASIS. T HE CONTENTION OF ASSESSEE IS THAT ALL THE TERMS OF CONTRACT ARE SIMILAR TO THAT OF ON GC WITH ONLY DIFFERENCE THAT ENI IS A NON-RESIDENT COMPANY. LD. CIT(DR) BEFORE US CO ULD NOT REBUT THE CONTENTION OF THE ASSESSEE. LD AR OF THE ASSESSEE HAS NO OBJEC TION TO ASSESS AS BUSINESS INCOME BUT U/S 44BB (1) OF THE ACT. THE ASSESSING O FFICER HAS NOT DISCUSSED AS TO HOW THE AMOUNTS RECEIVED FROM ENI CONTRACT SHOULD B E ASSESSED AS BUSINESS INCOME. SINCE THE TERMS OF AGREEMENT WITH ENI ARE S IMILAR, THE AMOUNT RECEIVED BY THE ASSESSEE WILL BE ASSESSABLE IN THE NATURE OF FE E FOR TECHNICAL SERVICE AND WILL BE ASSESSABLE U/S 115A (1)(B) OF THE ACT. THE ASSESSI NG OFFICER IS DIRECTED ACCORDINGLY. 52. THE NEXT ISSUE FOR CONSIDERATION RELATES TO N OT PROVIDING CREDIT TO THE ASSESSEE IN RESPECT OF TAXES DEDUCTED AT SOURCE BY ONGC AND ENI AS PER THE 76 I. T. APPEAL NO. 4653 (DEL) OF 2010 PROVISIONS OF SECTION 195 OF THE ACT. SINCE INCOME FROM FEE FOR TECHNICAL SERVICES HAS BEEN ASSESSED IN THE HANDS ASSESSEE, THE ASSESS ING OFFICER IS DIRECTED TO ALLOW CREDIT OF TDS AGAINST THE TAX PAYABLE BY THE ASSESS EE. 53. AS REGARDS THE LEVY OF INTEREST U/S 234B, THE A SSESSING OFFICER HAS CHARGED INTEREST TREATING THE SAME AS MANDATORY. HE HAS NOT EXAMINED THE CASE IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS TO THE EFFECT THAT IF AM OUNT WAS SUBJECT TO TDS, WHETHER ANY INTEREST WAS STILL CHARGEABLE UNDER THE SE SECTIONS. WE, THEREFORE, DIRECT THE ASSESSING OFFICER EXAMINE THE CHARGEABILITY OF INTEREST U/S 234B IN THE LIGHT OF PROVISIONS OF LAW AND JUDICIAL PRONOUNCEMENTS ON TH E ISSUE. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 25.01. 2012 . SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25.01. 2012. *MEHTA * 77 I. T. APPEAL NO. 4653 (DEL) OF 2010 COPY OF THE ORDER FORWARDED TO : - 1. APPLICANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.