ADIT, Dehradun V. M/s. Oil & Natural Gas Corporation Ltd. as Representative Assessee of M/s. Asset Management Solutions Inc, USA, Dehradun

ITA 4654/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7371 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 01-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: KAVISH SYAL
• Keywords: Question of law
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E, NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NOS.4998, 4652, 4654/DEL/2013 (ASSESSMENT YEARS 2009-10 & 2010-11) ADIT, VS. OIL & NATURAL GAS CORPN. LTD., INTERNATIONAL TAXATION, AS REPRESENTATIVE ASSESSEE OF 13-A, SUBHASH ROAD, M/S. GX TECHNOLOGY EAME LTD AAYAKAR BHAWAN, ONGC LTD., CORPORATE TAX DVN. DEHRADUN-248001 ROM NO.244, TEL BHAWAN, DEHRADUN. GIR / PAN :AAACO1598A (APPELLANT) (RESPONDENT) APPELLANT BY :SH. P. DAM KANUNJNA, SR. DR RESPONDENT BY :SH. KAVISH SYAL, CA DATE OF HEARING: 02.06.2016 DATE OF PRONOUNCEMENT: 23.06.2016 ORDER PER BENCH: ALL THESE APPEALS ARE FILED BY THE REVENUE DIRECTED AGAINST SEPARATE BUT IDENTICAL ORDERS OF THE COMMISSIONER OF INCOME TAX (A)-II, DEHRADUN D ATED 16.1.2012. AS THE ISSUES ARISING FOR OUR CONSIDE RATION ARE IDENTICAL IN ALL THESE CASES, FOR THE SAKE OF 2 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 CONVENIENCE THEY ARE HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS COMMON ORDER. 2. FACTS OF THE CASE :- FOR THE YEARS UNDER CONS IDERATION, OIL AND NATURAL GAS CORPORATION LIMITED (ONGC) HAD, ENTERED INTO FOLLOWING CONTRACTS AS UNDER: CONTRACT NO./ PURCHASE ORDER DATE OF ORDER / AGREEMENT A.Y. PAYMENTS MADE 5010032478 29.08.2007 2009-10 1,73,17,818/- 9010010789 12.12.2008 2010-11 1,25,65,908/- MUM/NSE/OPT/ MN/SCON/VA&SI/ GCA/NOMI/08- 09/245 14.11.2008 2010-11 16,30,88,322 UK NIR/MM/MH/SCO N/77/NOMI/GCA/ 08-09/PB-6003 04.07.2009 2010-11 THE NON-RESIDENTS TO WHOM THE PAYMENTS HAVE BEEN MA DE ARE RESIDENT OF UNITED KINGDOM (UK) IN ITA NO. 4998/DEL/12 AND 4652/DEL/13 AND OF USA ITA NO.4654/DEL/13. 2.1. THE NATURE OF WORK OF THE CONTRACT WERE AS U NDER: I.T.A. NO. NATURE OF WORK 4998/ DEL/ 2012 THE NON-RESIDENT WAS ENGAGED TO PROCESS THREE DIMENSIONAL (3D) SEISMIC DATA OF THE BLOCK NEC-DWN- 2002/2 IN MAHANADI BASIN AT ITS PREMISES IN UK. SEISMIC DATA INDICATES EXISTENCE OF HYDROCARBONS DE EP INSIDE THE EARTH AND HELPS TO IDENTIFY WHERE TO DRI LL FOR THE SAME. 4652/ DEL/ 2013 UNDER CONTRACT DATED 04.07.2009: ASSOCIATION IN REDEVELOPMENT AND MANAGEMENT OF MUMBAI HIGH REDEVELOPMENT PROJECT FOR OPTIMAL EXPLOITATION OF HYDROCARBON RESOURCES OF ONGC. 3 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 UNDER CONTACT DATED 14.11.2008: ASSIST ONGC IN HIRING INTEGRATED CONSULTANT FOR VASHISHTA AND S1 FIELD DEVELOPMENT. 4654/ DEL/2013 ASSIST ONGC IN HIRING INTEGRATED CONSULTANT FOR VASHISTHA AND SI FIELD DEVELOPMENT 2.2 THE LD. A.O. HELD THAT THE SERVICES PROVIDED BY THE NON-RESIDENT COMPANY TO ASSESSEE ARE COVERED U/S 44 DA OF THE ACT. ON APPEAL BEFORE LD. CIT(A), THE ASSES SEE RELIED UPON THE ORDER DATED 27.12.2011 FOR A.Y. 200 8- 09. THE LD. CIT(A) HELD THAT THE SERVICES RENDERE D BY THE NON-RESIDENT COMPANY TO ASSESSEE WOULD FALL WITHIN THE AMBIT OF SECTION 44BB OF THE ACT. HE ALSO RELIED U PON THE DECISION OF ITAT, DELHI BENCH IN THE CASE OF CGG VE RITAS REPORTED AT 50 SOT 335 (DEL.). AGGRIEVED BY THE OR DER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL ON THE FOL LOWING GROUNDS: 3. GROUNDS: I.T.A.NO. 4998/DEL/2012 (ASSESSMENT YEAR 2009-10): 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE NATURE OF SERVICES PROVIDED BY THE ASSESSEE FOR IN RENDERING PROCESSING OF 3D DATA IN RESPECT OF BLOCK EC-DWN-2002 IN MAHANADI BASIN VIDE PURCHASE ORDER DATED 29.08.2007 TO ONGC WERE NOT IN THE NATURE OF FEE FOR TECHNICAL SERVICES AS DEFINED IN SEE 9(L)(VII) OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSEE WAS NOT TAXABLE UNDER THE PROVISIONS OF SECTION 44DA R.W.S 115A OF THE ACT, 1961, EVEN THOUGH THE NATURE OF SERVICES RENDERED B Y 4 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 THE ASSESSEE WERE TECHNICAL IN NATURE AND WERE NOT FOR A PROJECT UNDERTAKEN BY THE ASSESSEE, AS REQUIR ED BY EXPLANATION 2 TO SECTION 9(L)(VII). 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HAD DEEMED PE AS PER PROVISO TO ARTICLE 5( 2) OF THE INDO-UK DT AA BY VIRTUE OF WHICH THE INCOME OF THE ASSESSEE WAS TAXABLE UNDER THE PRESUMPTIVE PROVISIONS OF SEC. 44BB AND IGNORING THE FACT THAT TAXABILITY UNDER SECTION 44 BB SHALL NOT APPLY IN RESPECT OF INCOME REFERRED TO IN SECTION 44DA IN VI EW OF THE CLARIFICATORY PROVISO TO SEC. 44BB AND SEC. 44DA. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN NOT APPRECIATING T HE FACT THAT PROVISO TO SECTION 44DA BROUGHT ABOUT BY THE FINANCE ACT 2011 WAS ONLY CLARIFICATORY IN NATURE A ND ITS APPLICATION HAS TO BE READ INTO THE MAIN PROVIS IONS WITH EFFECT FROM THE TIME THE MAIN PROVISION CAME I NTO EFFECT IN VIEW OF THE DECISION OF THE HON'BLE SUPRE ME COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRIL LING VS. CIT, DELIVERED ON 17.11.2005. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN DELETING THE INTEREST U/S 2 34B BY RELYING UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF JACABS CIVIL INCORPORATION! MITSUBISHI CORPORATION (2010) ITR 578 (DELHI) WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AGAINST WHICH SLP HAS FILED BEFORE THE APEX AGAINST IN THE CASE OF JACABO CIVIL INCORPORATED/MITSUBISHI INVOLV ING SIMILAR ISSUE. 3.1 FOR THE YEAR UNDER CONSIDERATION, THE NON-RESID ENT WAS ENGAGED TO PROCESS THREE DIMENSIONAL (3D) SEISM IC DATA OF THE BLOCK NEC-DWN-2002/2 IN MAHANADI BASIN AT 5 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 ITS PREMISES IN UK. SEISMIC DATA INDICATES EXISTEN CE OF HYDROCARBONS DEEP INSIDE THE EARTH AND HELPS TO IDE NTIFY WHERE TO DRILL FOR THE SAME. 3.2 LD. A.R. SUBMITS THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER PASSED BY HON'BLE SUPREME COURT IN ASSESSEES OWN CASE , REPORTED IN (2015) 59 TAXMAN.COM 01/ 376 ITR 306. 3.3 WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW, ARGUMENTS ADVANCED BY BOTH THE S IDE AND THE DECISION PASSED BY HON'BLE SUPREME COURT IN THE ASSESSEES OWN CASE. THE ONLY ISSUE THAT ARISES FR OM THE GROUNDS OF APPEAL FILED BY THE REVENUE IS IN RESPEC T OF THE TAXABILITY OF THE AMOUNT PAID TO THE NON-RESIDENT / FOREIGN COMPANIES UNDER THE CONTRACT WAS TO BE ASSESSED U/S 44BB OR 44DA OF THE ACT. 3.4 HON'BLE SUPREME COURT HAS DEALT WITH THE SUBSTANTIAL QUESTION OF LAW RELATING TO THE ASSESSA BILITY OF THE AMOUNTS PAID TO THE NON-RESIDENT U/S 44BB AND H AVE ANSWERED THE QUESTIONS IN FAVOUR OF THE ASSESSEE AN D HELD AS UNDER: A CAREFUL READING OF THE PROVISIONS OF SECTION 44B B(1) SHOWS THAT IN CASE OF A NON-RESIDENT PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH OR SUPPLY ING PLANT AND MACHINERY USED OR TO BE USED IN PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OI LS, THE PROFIT AND GAINS FROM SUCH BUSINESS CHARGEABLE TO TAX IS TO BE CALCULATED AT A SUM EQUAL TO 10 PER CE NT OF THE AGGREGATE OF THE AMOUNTS PAID OR PAYABLE TO SUC H NON-RESIDENT ASSESSEE AS MENTIONED IN SUB-SECTION (2). ON THE OTHER HAND, SECTION 44D CONTEMPLATES TH AT 6 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 IF THE INCOME OF A FOREIGN COMPANY WITH WHICH THE GOVERNMENT OR AN INDIAN CONCERN HAD AN AGREEMENT EXECUTED BEFORE 1-4-1976 OR ON ANY DATE THEREAFTER THE COMPUTATION OF INCOME WOULD BE MADE AS CONTEMPLATED UNDER THE AFORESAID SECTION 44D. EXPLANATION (A) TO SECTION 44D, HOWEVER, SPECIFIES THAT 'FEES FOR TECHNICAL SERVICES' AS MENTIONED IN SECTI ON 44D WOULD HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SECTION 9(1). THE SAID EXPLANA TION AS QUOTED ABOVE DEFINES 'FEES FOR TECHNICAL SERVICE S' TO MEAN CONSIDERATION FOR RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES. HOWEVER, THE LAT ER PART OF THE EXPLANATION EXCLUDES FROM CONSIDERATION FOR THE PURPOSES OF THE EXPRESSION, I.E., 'FEES FOR TECHNICAL SERVICES' ANY PAYMENT RECEIVED FOR CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE CHARGEABLE UNDER THE HEAD 'SALARIES'. FEES FOR TECHNICAL SERVICES, THEREFORE, BY VIRTUE OF THE AFORESAID EXPLANATION WILL NOT INCLUDE PAYMENTS MADE IN CONNECTION WITH A MINING PROJECT. 1. THE INCOME-TAX ACT DOES NOT DEFINE THE EXPRESSIONS 'MINES' OR 'MINERALS'. THE SAID EXPRESS IONS ARE FOUND DEFINED AND EXPLAINED IN THE MINES ACT, 1952 AND THE OIL FIELDS (DEVELOPMENT AND REGULATION ) ACT, 1948. WHILE CONSTRUING THE SOMEWHAT PARI- MATERIA EXPRESSIONS APPEARING IN THE MINES AND MINERALS (DEVELOPMENT AND REGULATION) ACT, 1957 REGARD MUST BE HAD TO THE PROVISIONS OF ENTRIES 53 AND 54 OF LIST I AND ENTRY 22 OF LIST II OF THE 7TH SCHEDULE TO THE CONSTITUTION TO UNDERSTAND THE EXCLUSION OF MINERAL OILS FROM THE DEFINITION OF MINERALS IN SECTION 3(A) OF THE 1957 ACT. REGARD MU ST ALSO BE HAD TO THE FACT THAT MINERAL OILS IS SEPARA TELY DEFINED IN SECTION 3(B) OF THE 1957 ACT TO INCLUDE NATURAL GAS AND PETROLEUM IN RESPECT OF WHICH THE PARLIAMENT HAS EXCLUSIVE JURISDICTION UNDER ENTRY 5 3 OF LIST I OF THE 7TH SCHEDULE AND HAD ENACTED AN EARLIER LEGISLATION, I.E., OIL FIELDS (REGULATION A ND 7 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 DEVELOPMENT) ACT, 1948. READING SECTION 2 (J) AND 2 W) OF THE MINES ACT, 1952 WHICH DEFINE MINES AND MINERALS AND THE PROVISIONS OF THE OIL FIELDS (REGULATION AND DEVELOPMENT) ACT, 1948 SPECIFICALLY RELATING TO PROSPECTING AND EXPLORATION OF MINERAL OILS, EXHAUSTIVELY REFERRED TO EARLIER, IT IS ABUNDANTLY CLEAR THAT DRILLING OPERATIONS FOR THE PURPOSE OF PRODUCT ION OF PETROLEUM WOULD CLEARLY AMOUNT TO A MINING ACTIVITY OR A MINING OPERATION. 2. THE FACTS INDICATE THAT THE PITH AND SUBSTANCE O F EACH OF THE CONTRACTS/AGREEMENTS IS INEXTRICABLY' CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTIO N OF MINERAL OIL. THE DOMINANT PURPOSE OF EACH OF SUCH AGREEMENT IS FOR PROSPECTING, EXTRACTION OR PRODUCT ION OF MINERAL OILS THOUGH THERE MAY BE CERTAIN ANCILLA RY WORKS CONTEMPLATED THEREUNDER. IF THAT BE SO, WE WI LL HAVE NO HESITATION IN HOLDING THAT THE PAYMENTS MAD E BY ONGC AND RECEIVED BY THE NON-RESIDENT ASSESSEES OR FOREIGN COMPANIES UNDER THE SAID CONTRACTS IS MO RE APPROPRIATELY ASSESSABLE UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D. 3.5 RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2009-10 STANDS DISMISSED. 4. GROUNDS: I.T.A.NO. 4652/DEL/2013 (ASSESSMENT YEAR 2010-11): 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE SERVICES RENDERED BY THE ASSESSEE TO ONGC UNDER CONTRACT DATED 94.07.2009 (HIRING OF CONSULTANCY SERVICES FOR ASSOCIATION IN MANAGEMENT OF REDEVELOPMENT PROJECT OF MUMBAI HIGH FIELD OF ONGC) AND CONTRACT DATED 14.11.2008 (CONSULTANCY SERVICES 8 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 TO ASSIST ONGC IN HIRING OF INTEGRATED CONSULTANT F OR DEVELOPMENT OF VASHISTHA AND S1 FIELDS) WERE NOT IN THE NATURE OF FEES FOR TECHNICAL SERVICES AS DEFINE D IN SEC. 9(1 )(VII) OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSEE WAS NOT TAXABLE UNDER THE PROVISIONS OF SEC. 44DA R.W.S 115A EVEN THOUGH THE NATURE OF SERVICES RENDERED BY THE ASSESSEE WERE TECHNICAL IN NATURE LIABLE TO TAX UNDER SECTION 44D A OF THE I.T. ACT., 1961. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSEE WAS TAXABLE UNDER THE PRESUMPTIVE PROVISIONS OF SEE 4488 IGNORING THE FAC T THAT TAXABILITY UNDER SECTION 4488 SHALL NOT APPLY IN RESPECT OF INCOME REFERRED TO IN SECTION 44DA IN VI EW OF THE CLARIFICATORY PROVISO TO SEC. 4488 AND SEC. 44DA. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT PROVISO TO SECTION 44DA BROUGHT ABOUT BY THE FINANCE ACT, 2011 WAS ONLY CLARIFICATORY IN NATURE AND ITS APPLICATION HAS TO BE READ INTO THE MAIN PROVISIONS WITH EFFECT FROM THE TIME THE MAIN PROVI SION CAME INTO EFFECT IN VIEW OF THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING VS. CIT. 4.1 IN I.T.A.NO. 4652/DEL/2013, THE NON-RESIDENT / FOREIGN COMPANY WAS ENGAGED IN THE PROCESS OF DISCOVERING OIL AND GAS FIELDS NEED TO BE DEVELOPED BY DRILLING APPROPRIATE NUMBER OF WELLS, ESTABLISHING COLLECTION, PROCESSING AND EVACUATION FACILITIES, E TC. SO 9 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 THAT OPTIMAL PRODUCTION CAN BE TAKEN FROM THE SAME. RE- DEVELOPMENT IS THE PROCESS OF CARRYING OUT FURTHER DEVELOPMENT ACTIVITIES IN AN ALREADY PRODUCING FIEL D TO OPTIMIZE PRODUCTION. THE NON-RESIDENT RENDERED CONSULTANCY SERVICES IN THIS REGARD UNDER CONTRACT DATED 04.07.2009 AND 14.11.2008. 4.2 LD. A.R. SUBMITS THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER PASSED BY HON'BLE SUPREME COURT IN ASSESSEES OWN CASE , REPORTED IN (2015) 59 TAXMAN.COM 01/ 376 ITR 306. 4.3 WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW, ARGUMENTS ADVANCED BY BOTH THE S IDE AND THE DECISION PASSED BY HON'BLE SUPREME COURT IN THE ASSESSEES OWN CASE. THE ASSESSEE HAS RECEIVED SER VICES FOR THE PURPOSE OF ACTIVITIES RELATING TO PROSPECTI NG FOR OR EXPLORATION OF MINERAL OILS. THE ONLY ISSUE THAT A RISES FROM THE GROUNDS OF APPEAL FILED BY THE REVENUE IS IN RESPECT OF THE TAXABILITY OF THE AMOUNT PAID TO THE NON- RESIDENT / FOREIGN COMPANIES UNDER THE CONTRACT WAS TO BE ASSESSED U/S 44BB OR 44DA OF THE ACT. 4.4 HON'BLE SUPREME COURT HAS DEALT WITH THE SUBSTANTIAL QUESTION OF LAW RELATING TO THE ASSESSA BILITY OF THE AMOUNTS PAID TO THE NON-RESIDENT U/S 44BB AND H AVE ANSWERED THE QUESTIONS IN FAVOUR OF THE ASSESSEE AN D HELD AS UNDER: 1. THE INCOME-TAX ACT DOES NOT DEFINE THE EXPRESSIONS 'MINES' OR 'MINERALS'. THE SAID EXPRESS IONS 10 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 ARE FOUND DEFINED AND EXPLAINED IN THE MINES ACT, 1952 AND THE OIL FIELDS (DEVELOPMENT AND REGULATION ) ACT, 1948. WHILE CONSTRUING THE SOMEWHAT PARI- MATERIA EXPRESSIONS APPEARING IN THE MINES AND MINERALS (DEVELOPMENT AND REGULATION) ACT, 1957 REGARD MUST BE HAD TO THE PROVISIONS OF ENTRIES 53 AND 54 OF LIST I AND ENTRY 22 OF LIST II OF THE 7TH SCHEDULE TO THE CONSTITUTION TO UNDERSTAND THE EXCLUSION OF MINERAL OILS FROM THE DEFINITION OF MINERALS IN SECTION 3(A) OF THE 1957 ACT. REGARD MU ST ALSO BE HAD TO THE FACT THAT MINERAL OILS IS SEPARA TELY DEFINED IN SECTION 3(B) OF THE 1957 ACT TO INCLUDE NATURAL GAS AND PETROLEUM IN RESPECT OF WHICH THE PARLIAMENT HAS EXCLUSIVE JURISDICTION UNDER ENTRY 5 3 OF LIST I OF THE 7TH SCHEDULE AND HAD ENACTED AN EARLIER LEGISLATION, I.E., OIL FIELDS (REGULATION A ND DEVELOPMENT) ACT, 1948. READING SECTION 2 (J) AND 2 W) OF THE MINES ACT, 1952 WHICH DEFINE MINES AND MINERALS AND THE PROVISIONS OF THE OIL FIELDS (REGULATION AND DEVELOPMENT) ACT, 1948 SPECIFICALLY RELATING TO PROSPECTING AND EXPLORATION OF MINERAL OILS, EXHAUSTIVELY REFERRED TO EARLIER, IT IS ABUNDANTLY CLEAR THAT DRILLING OPERATIONS FOR THE PURPOSE OF PRODUCT ION OF PETROLEUM WOULD CLEARLY AMOUNT TO A MINING ACTIVITY OR A MINING OPERATION. 2. THE FACTS INDICATE THAT THE PITH AND SUBSTANCE O F EACH OF THE CONTRACTS/AGREEMENTS IS INEXTRICABLY' CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTIO N OF MINERAL OIL. THE DOMINANT PURPOSE OF EACH OF SUCH AGREEMENT IS FOR PROSPECTING, EXTRACTION OR PRODUCT ION OF MINERAL OILS THOUGH THERE MAY BE CERTAIN ANCILLA RY WORKS CONTEMPLATED THEREUNDER. IF THAT BE SO, WE WI LL HAVE NO HESITATION IN HOLDING THAT THE PAYMENTS MAD E BY ONGC AND RECEIVED BY THE NON-RESIDENT ASSESSEES OR FOREIGN COMPANIES UNDER THE SAID CONTRACTS IS MO RE APPROPRIATELY ASSESSABLE UNDER THE PROVISIONS OF SECTION 44BB AND NOT SECTION 44D. 11 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 4.5 RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2010-11 STANDS DISMISSED. 5. GROUNDS: I.T.A.NO. 4654/DEL/2013 (ASSESSMENT YEAR 2010-11): 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN BRINGING TO TAX THE RECEIPTS OF NON-RESIDENT FROM DESIGN, COMPOSITION A ND IMPLEMENTATION OF MULTI- DISCIPLINARY TEAMS (MDT), DEFINING TEAM MEMBERS ROLES AND RESPONSIBILITIES, DEVELOPING TEAM CHARTERS, COACHING THE TEAM LEADS, IDENTIFICATION OF SKILL GAPS, DESIGNING A FOOTPRINT OF FUNCTIONAL EXCELLENCE, PROVIDING TRAINING IN THE AR EA OF ASSET MANAGEMENT TO THE MDT, ASSISTING ONGC'S EXECUTIVE COMMITTEE IN RESOLUTION OF ISSUES RELATIN G TO CRC INITIATIVE ETC UNDER SECTION 44BB OF THE ACT, INSTEAD OF FEES FOR TECHNICAL SERVICES (FTS) AS COV ERED UNDER SECTION 9(1 )VII OF THE ACT AND DULY TAXED AS SUCH BY THE AO. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN HOLDING THAT THE INCO ME OF THE ASSESSEE WAS TAXABLE UNDER THE PRESUMPTIVE PROVISIONS OF SEC 44BB IGNORING THE FACT THAT TAXAB ILITY UNDER SECTION 44BB SHALL NOT APPLY IN RESPECT OF INCOME IN THE NATURE OF FTS, FOR A PROJECT NOT UNDERTAKEN BY THE ASSESSEE, WHICH IS SQUARELY COVERED UNDER SECTION 44DA AND CORROBORATED BY CLARIFICATORY PROVISO TO SEC. 44BB AND SEC 44DA. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ACCEPTING THE CLAIM O F ASSESSEE REGARDING EXISTENCE OF PE IN APPEAL WHEN THE ASSESSEE HAD FAILED TO DECLARE THIS IN HIS RETU RN OR BEFORE THE ASSESSING OFFICER, TO PREVENT PROPER ENQ UIRY AND AVOID HIGHER RATE OF TAX UNDER SECTION 44DA. 12 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN HOLDING THAT READING OF RETROSPECTIVITY CANNOT BE SUPPORTED WITHOUT APPRECIATING THE FACT THAT PROVISO TO SECTION 44DA BROUGHT IN BY THE FINANCE ACT 2011 WAS CLARIFICATOR Y AND ITS APPLICATION HAS TO BE READ INTO THE STATUTE IN VIEW OF APEX COURT DECISION IN SEDCO FOREX INTERNATIONAL DRILLING VIS CIT. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT (A) HAS ERRED IN RELYING ON THE CASE O F GLOBAL INDUSTRIES PACIFIC PTE. LIMITED, WHICH IS DISTINGUISHABLE ON FACT IGNORING THAT AAR RULINGS A RE CASE AND FACT SPECIFIC. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN RELYING UPON THE DECIS ION OF THE ITAT IN THE CASE OF M/S CGG VERITAS SERVICES , SA IN ITA NO. 4653/0EL/2010 (ON THE ISSUE THAT ONCE A PE IS ESTABLISHED TO BE IN PLACE THEN THE INCOME HAS TO BE TREATED AS BUSINESS PROFITS AND ASSESSABLE UNDER SECTION 44 BB) WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 6. WITHOUT PREJUDICE, WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN N OT HOLDING THAT THE AMOUNT RECEIVED BY THE ASSESSEE WA S DIRECTLY RELATED TO THE EXCLUSION PROVIDED UNDER EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT I.E. 'ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT' AND AS THE PROJECT WAS NOT UNDERTAKEN BY THE ASSESSEE BUT BY ONGC, THE AMOUNT RECEIVED WAS TO BE TREATED AS FTS CHARGEABLE TO TAX UNDER SECTIO N 440A RATHER THAN SECTION 44BB OF THE ACT. 5.1 IN I.T.A.NO. 4654/DEL/2013, THE NON-RESIDENT / FOREIGN COMPANY WAS ENGAGED IN EXPLORATION & PRODUC TION (E&P) OPERATIONS OF ONGC ARE HANDLED BY BASINS AND 13 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 ASSETS, RESPECTIVELY. A WORK CENTRE WHICH IS PRIMA RILY ENGAGED IN EXPLORATION IS TERMED AS A BASIN WHEREAS A WORK CENTRE WHICH IS PRIMARILY ENGAGED IN PRODUCTIO N IS TERMED AS AN ASSET. MULTIDISCIPLINARY TEAMS (MDTS) OF VARIOUS TECHNICAL PERSONNEL WORK IN ASSETS AND BASI NS TO CARRY OUT THE E&P OPERATIONS SMOOTHLY. THE NON-RES IDENT WAS ENGAGED TO PROVIDE CONSULTANCY SERVICES REGARDE D THE FUNCTIONING OF MDTS AND TRAIN ONGC PERSONNEL IN THE AREA OF ASSET MANAGEMENT SO THAT ONGC CAN INCREASE ITS PRODUCTION AND BECOME A WORLD CLASS COMPANY. 5.2 LD. A.R. SUBMITS THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER PASSED BY HON'BLE SUPREME COURT IN ASSESSEES OWN CASE , REPORTED IN (2015) 59 TAXMAN.COM 01/ 376 ITR 306. 5.3 WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW, ARGUMENTS ADVANCED BY BOTH THE S IDE AND THE DECISION PASSED BY HON'BLE SUPREME COURT IN THE ASSESSEES OWN CASE. IT HAS BEEN OBSERVED THAT THE SERVICES RECEIVED BY THE ASSESSEE WERE IN RELATION TO PROSPECTING FOR OR EXPLORATION OF MINERAL OILS. TH E ISSUE THAT ARISES FROM THE GROUNDS OF APPEAL FILED BY THE REVENUE IS IN RESPECT OF THE TAXABILITY OF THE AMOU NT PAID TO THE NON-RESIDENT / FOREIGN COMPANIES UNDER THE CONTRACT WAS TO BE ASSESSED U/S 44BB OR 44DA OF THE ACT. 5.4 HON'BLE SUPREME COURT HAS DEALT WITH THE SUBSTANTIAL QUESTION OF LAW RELATING TO THE ASSESSA BILITY OF 14 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 THE AMOUNTS PAID TO THE NON-RESIDENT U/S 44BB AND H AVE ANSWERED THE QUESTIONS IN FAVOUR OF THE ASSESSEE. 5.5 THE FACTS RELATING TO THIS APPEAL ARE IDENTICAL TO THE FACTS INVOLVED IN THE ASSESSEES APPEAL IN I.T.A. N O. 4652/DEL/.2013 (SUPRA), SO RESPECTFULLY FOLLOWING T HE SAME, WE DISMISS THE GROUND RAISED BY THE REVENUE I N THIS APPEAL. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2010-11 STANDS DISMISSED. 6. IN THE RESULT, APPEALS FILED BY THE REVENUE IN I.T.A.NOS. 4998/DEL/2012, 4652/DEL/2013 AND 4654/DEL/2013 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2016. SD./- SD./- (N. K. SAINI) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 23.06. 2016 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER 15 I.T.A.NOS.4998/DEL/2012 I.T.A.NOS/4652 & 4654/DEL/2013 (ITAT, NEW DELHI S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 13/6 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 23/6/16 AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 23/6 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 24/6 SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER