Expro Gulf Ltd.., New Delhi V. ADIT, Dehradun

ITA 5561/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86716 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Assessee Lawyers: AMIT ARORA SURAJ NANGIA CAS
• Keywords: Permanent establishment
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE S H.J.S.REDDY , ACCOUNTANT MEMBER AND SH. GEORGE GEROGE.K, JUDICIAL MEMBER I.T.A .NO. 5561/ DEL/201 1 (ASSESSMENT YEAR - 2008 - 09 ) M/S EXPRO GUL F LIMITED, C/O - NANGIA & COMPANY, CHARTERED ACCOUNTANTS, SUITE - 4A, PLAZA M - 6, JASOLA, NEW DELHI - 110025 PAN - AAACE5272B ( APPELLANT) VS ACIT, INTERNATIONAL TAXATION, SUBHASH ROAD, DEHRADUN, UTTARAKHAND - 248001 (RESPONDENT) I.T.A .NO. 4650/ DEL/201 3 (ASSESSMENT YEAR - 2010 - 11 ) ADIT, INTERNATIONAL TAXATION, 13A - SUBHASH ROAD, AAYKAR BHAWAN, DEHRADUN - 248001 ( APPELLANT) VS M/S EXPRO GULF LTD., 75/7, RAJPUR ROAD, DEHRADUN PAN - AAACE5272B (RESPONDENT) C.O. NO. - 29 /DEL/201 4 (IN I.T.A .NO. 4650 / DEL/201 3 ) (ASSESSMENT YEAR - 20 1 0 - 11 ) M/S EXPRO GUL F LIMITED, C/O - NANGIA & COMPANY, CHARTERED ACCOUNTANTS, SUITE - 4A, PLAZA M - 6, JASOLA, NEW DELHI - 110025 ( APPELLANT) VS ACIT, INTERNATIONAL TAXATION, SUBHASH ROAD, DEHRADUN, UTTARAKHAND - 248001 (RESPONDENT) APPELLANT BY SH. AMIT ARORA, SURAJ NANG I A, CAS RESPONDENT BY SH. SANJEEV SHARMA, CIT DR ORDER PER J.S.REDDY , A M ITA NO. - 5561/DEL/2011 IS FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER PASSED BY THE AO U/S 144C R.W.S 143 OF THE INCOME TAX ACT FOR THE 2008 - 09 ASSESSMENT YEAR. ITA NO. - 4650/DEL/2013 IS AN APPEAL FILED BY THE REVENUE 2 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 DIRECTED AGAINST THE CIT(A) - II, DE HRADUN DATED 21.05.2013 FOR THE ASSESSMENT YEAR 2010 - 11. CO NO. - 29/DEL/2014 IS A CROSS - OBJECTION FILED BY THE ASSESSEE. FACTS AND BRIEFS 2. THE ASSESSEE IS A COMPANY INCORPORATED IN THE CYPRUS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES AND FACILITIES IN CONNECTION WITH, AND ALSO PLANT AND M ACHINERY ON HIRE, USED OR TO BE USED IN THE PROSPECTING FOR, AND EXTRACTION AND EXPLOITATION OF MINERAL OILS WORLDWIDE. D URING THE PREVIOUS YEAR 2002 - 03, THE ASSESSEE OPERATED IN INDIA IN TERMS OF THE FOLLOWING CONTRACTS: - CONTRACT NO.2006/B/F/D/1004 WITH BG EXPLORATION AND PRODUCTION INDIA LIMITED THE SCOPE OF WORK AWARDED TO THE ASSESSEE IS PROVISION OF RIG BASED SURFACE W ELL, TESTING EQUIPMENT AND ALONG WITH OPERATING PERSONNEL IN RESPECT OF DRILLING OF 5 WELLS IN MID TAPTI. CONTRACT NO.RV7CA000015A WITH CAIRN ENERGY INDIA PTY LIMITED THE SCOPE OF WORK AWARDED TO THE ASSESSEE IS PROVISION OF EQUIPMENT AND PERSONNEL FOR SUR FACE WELL TESTING IN RESPECT OF DEVELOPMENT DRILLING CAMPAIGN IN RAVVA FIELD OF THE EAST COAST OF INDIA. CONTRACT NO.10025 WITH JUBILAN T OIL AND GAS PRIVATE LIMITED THE SCOPE OF WORK AWARDED TO THE ASSESSEE IS PROVISION OF WELL TESTING EQUIPMENT AND OPERAT ING PERSONNEL IN RESPECT OF EXPLORATORY 3 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 DRILLING CAMPAIGN IN BLOCK CB - ONN - 2002/2 LOCATED IN MEHSANA, GUJARAT. 3. THE ASSESSEE FILED A RETURN OF INCOME ON 04.02.2010 DECLARING TOTAL INCOME OF RS.2,58,05,345/ - U/S 44 BB OF THE INCOME TAX ACT (HEREINAFTER REF ERRED TO AS ACT ). THE AO PASSED A DRAFT ASSESSMENT ORDER U/S 144C PROPOSING TO REJECT THE ASSESSEE S CLAIM U/S 44BB AND ASSESS THE TOTAL INCOME AS FEE FOR TECHNICAL SERVICES U/S 9(1)(VII) OF THE ACT. THE AO OBSERVED THAT THE SERVICES RENDERED BY THE AS SESSEE ARE TECHNICAL IN NATURE AND THEREFORE NOT COVERED U/S 44BB. THE CLAIM OF THE ASSESSEE IS THAT , ITS CASE IS COVERED THAT THE DECISION OF THE HON BLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT VS ONGC (AS AGENT OF SCAN DRILLING COMPANY IN ITR NO. - 2 OF 2001 . THE ASSESSEE HAD PROVIDED A RIG ON HIRE ALONG WITH PERSONNEL FOR DRILLING OPERATIONS AND FOR EXTRACTION OF OIL. HOWEVER THE AO HELD THAT , IN THE PRESENT CASE , THE ASSESSEE IS NOT HIRING A SHIP AND IT IS NOT CLEAR FROM THE SUBMISSIONS, IF THE SERV ICES RENDERED ARE THAT OF , DRILLING OR INTIMATELY CONNECTED WITH THE DRILLING. AFTER PERUSING THE CONTRACT THE DRP CAME TO THE CONCLUSION THAT THE ASSESSEE HAS GIVEN EQUIPMENT ON HIRE AND SERVICES TO COMPANIES WHICH ARE DIRECTLY ENGAGED IN THE BUSINESS O F OIL AND GAS EXPLORATION AND PRODUCTION LIKE BG EXPLORATION AND PRODUCTION INDIA LTD. AND CAIRN ENERGY INDIA AND ARE PARTNERS IN A PRODUCTION SHARING CONTRACT. ON FACTS IT HELD AS FOLLOWS: - A PERUSAL OF THE SCOPE OF WORK OF THE CONTRACT WITH B.G. EXPLO RATION IN SECTION B - 1 SERVICES SHOWS THAT THE ASSESSEE IS TO SUPPLY EQUIPMENT AND SERVICES FOR SAFE AND EFFICIENT WELL TESTING OPERATION . SIMILARLY PERUSAL OF PARA 5 AND 5.1 OF THE 4 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 CONTRACT WITH CAIRN INDIA WHICH LAY DOWN THE SCOPE OF WORK SHOWS THAT THE ASSESSEE IS TO PROVIDE EQUIPMENTS TO PERFORM SURFACE TESTING SERVICES, SERVICE TECHNICIANS AND FACILITIES FOR TESTING EQUIPMENT STORAGE, EQUIPMENT SERVICING ETC. PARA 5 OF THE CONTRACT WITH JUBILANT OIL PROVIDES THE SCOPE OF WORK FOR THAT CONTRACT. A PERUSAL OF THIS SHOWS THAT THE ASSESSEE IS TO PROVIDE WELL TESTING EQUIPMENT AND SERVICES AND SUCH TESTING IS TO BE DONE USING A FULL SLIMHOLE DST STRING OR WITH A PRODUCTION TEST STRING INCORPORATING A WIRELINE RET RIEVABLE DOWNHOLE IN TOOL. THUS THE SERVICES PROVIDED UNDER ALL THE THREE CONTRACTS RELATE TO WELL TESTING BY WIRELINE OR SIMILAR PROCEDURES. 4. THEREAFTER IT FOLLOWED THE PANELS DECISION IN THE CASE OF M/S PRECISION NHC SERVICES LTD. FOR THE ASSESSMENT YEAR 2007 - 08 AND HELD THAT THE INCOME IN QUESTION IS ASSESSABLE AS FEE FROM TECHNICAL SERVICES AND NOT U/S 44BB. ON T HE ISSUE OF LEVY OF INTEREST U/S 234B AND 234C, THE DRP REFUSED TO FOLLOW, THE JUDGEMENT OF THE HON BLE UTTARAKHAND HIGH COURT AND BOMBAY HIGH COURT AND UPHELD THE PROPOSAL SENT BY THE AO. ON THE GROUND THAT THE REVENUE HAS NOT ACCEPTED THE SAME. 5 . AGGRIEVED THE ASSESSEE FILED THIS APPEAL ON THE FOLLOWING GROUNDS: - BASED UPON THE FACTS OF THE CASE, THE ASSESSEE RESPECTFULLY SUBMITS THE FOLLOWING GROUNDS WHICH ARE WITHOUT PREJUDICE TO AND INDEPENDENT OF EACH OTHER: ADDITION QUA SERVICES IN CONNECTION WITH EXPLORATION/PROSPECTING/EXTRACTION OF MINERAL OIL 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN COMPLETING ASSESSMENT UNDER SECTION 144C/143(3) OF THE INCOME - TAX ACT, 1961 ('THE ACT') AT AN INCOME OF RS.64,513,361/ - AS AGAINST THE INCOME OF RS. 25,805,350/ - RETURNED BY THE APPELLANT. 2. THAT T HE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN ASSESSING INCOME OF RS.258,053,446/ - ARISING FROM SERVICES RENDERED BY THE APPELLANT IN CONNECTION WITH EXPLORATION/PROSPECTING/EXTRACTION OF MINERAL OIL UNDER SECTION 9(1 )(VII) OF THE ACT AS OPPOSED TO SE CTION 44BB OF THE ACT. LEVY OF INTEREST 5 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 1. THAT THE ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN LEVYING INTEREST UNDER SECTION 234B ESPECIALLY WHEN THERE WAS NO LIABILITY ON THE ASSESSEE TO PAY ADVANCE TAX UNDER SECTION 209(1)( D) OF THE INCO ME - TAX ACT, 1961. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 6 . FOR THE ASSESSMENT YEAR 2010 - 11, ON THE VERY SAME FACTS THE FIRST APPELLATE AUTHORITY HELD THAT THE ISSUE IS COVERED IN FAVOUR O F T HE ASSESSEE BY A DECISION OF LD. CIT(A) IN APPEAL NO. - 281/CIT(A) - II/2011 - 12 ORDER DATED 08.11.2012 FOR THE ASSESSMENT YEAR 2009 - 10. HE FOLLOWED THIS ORDER AND GRANTED RELIEF. 7 . AGGRIEVED THE REVENUE FILED AN APPEAL ON THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISION OF WELL TESTING EQUIPMENTS AND SERVICES WAS NOT IN THE NATURE OF FEE FOR TECHNICAL SERVICES (FTS) SQUARELY COVERED UNDER SECTION 9(1 )(VII) OF THE IT ACT, 1961. LD. CIT(A) HAS SIMPLY FOLLOWED HIS OWN DECISION IN ASSESSEE'S OWN CASE FOR ASSTT YEAR 2009 - 10, IGNORING THE FACT THAT APPEAL HAS BEEN FOLLOWED BEFORE THE HON'BLE ITAT AGAINST HIS DECISIO N FOR ASSTT YEAR 2009 - 10. 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 TAXABLE UNDER THE PROVISIONS OF SEC 44BB OF THE IT ACT, 1961 WITHOUT ADJUDICATING THE ASPECT OF ELIGIBIL ITY IN TERMS OF SECOND LIMB OF THE EXCLUSIONARY PROVISO (EXPLANATION TO SECTION 9(1 )(VII) OF THE IT ACT, 1961) I.E. 'FOR A PROJECT UNDERTAKEN BY THE RECIPIENT' AS CONFIRMED BY HON'BLE DELHI HIGH COURT IN DIT VS RIO TINTO TECHNICAL SERVICES [2012 - TII - 01 - H C - DEL - INTL]. 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 SEC 44BB IGNORING THE FACT THAT TAXABILITY UNDER SECTION 44BB SHALL NOT AP PLY IN RESPECT OF INCOME REFERRED TO IN SECTION 44DA OF THE I.T. ACT IN VIEW OF THE CLARIFICATORY PROVISO TO SEC 44 BB AND SEC. 44 DA AND CORROBORATED BY CLARIFICATORY PROVISO TO SEC. 44BB AND SEC 44DA . 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT (A) HAS ERRED IN ITS INTERPRETATION OF THE LEGISLATIVE INTENT BEHIND THE SCHEME OF TAXATION ENVISAGED IN 9(1)(VII) READ WITH SECTIONS 44DA AND 44BB, IGNORING THE DECISION IN THE CASE OF CIT 6 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 VS. M/S ONGC AS AGENT OF M/S FORAMER FRANCE [(2008) 299 ITR 438 UTTARAKHAND]. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN IGNORING THE DISTINCT SCHEME OF TAXATION OF FTS/ROYALTY AND DISREGARDING THE INSERTION OF PROVISOS IN SECTION 44BB/44DA/115A AND THE RATIONALE BEHIND THE INTRODUCTION OF SAID CLARIFICATORY PROVISOS IN THE FINANCE BILL 2010 WHEN RELYING ON THE CASE OF M/S CGG VERITAS TO HOLD THAT THE INCOME OF THE ASSESSEE COMPANY WAS COVERED UNDER THE PROVISIONS OF SECTION 44BB. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN RELYING ON THE CASE OF M/S BJ SERVICES CO (ME) LTD IGNORING THE FACT THAT THE DECISION OF THE HON'BLE HIGH COURT IN THE SAID CASE HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND A SPECIAL LEAVE PETITION IS BEING FILED A GAINST THE JUDGMENT. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN APPRECIATING THE FINDING GIVEN BY THE AO WHO HAD HELD THAT THE FEE FOR TECHNICAL SERVICES/ROYALTY RECEIVED BY THE ASSESSEE WHICH IS A NON - RESIDENT COMPANY W AS CORRECTLY ESTIMATED @ 25% OF GROSS RECEIPTS AS PER THE REQUIREMENTS OF RULE 10 OF THE INCOME TAX RULES, 1962, IN THE ABSENCE OF BOOKS OF ACCOUNTS AND TAXED ACCORDINGLY. 8. WHETHER THE CIT (A) HAS ERRED IN NOT APPRECIATING THAT PROVISO TO SECTION 4488 I S NOT INSERTED 'PER MAJOREM CAUTELAM' BUT EXPLAINS AND CLARIFIES THE MAIN PROVISION AS THE TERM SERVICES OR FACILITIES USED THEREIN ARE NOT DEFINED AND THE TWO TERMS USED ARE TOO GENERAL IN NATURE AND THUS ONCE THE PAYMENTS ARE CHARACTERIZED AS FTS UNDER S ECTION 9(1)(VII), THEY GO OUTSIDE THE PURVIEW OF SECTION 4488 AND HAVE TO BE TAXED AS FTS AT APPLICABLE FTS RATES AS PRESCRIBED UNDER THE ACT AND/OR DT AA. 9. WHETHER THE CIT (A) HAS ERRED IN NOT APPRECIATING THAT SINCE SECTION 44DA BEING THE SPECIAL PROV ISION FOR TAXATION OF INCOME IN THE NATURE OF ROYALTIES AND FTS WHERE THESE ARE EFFECTIVELY CONNECTED WITH A PE, THEN IF A SPECIAL PROVISION IS MADE RESPECTING A CERTAIN MATTER THAT MATTER IS EXCLUDED FROM THE GENERAL PROVISION UNDER THE RULE OF 'GENERALLI A SPECIALIBUS NON DEROGANT'. 1 0 . 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 2010 WAS ONLY CLARIFICATORY IN NATURE AND ITS APPLICATION HAS TO BE READ INTO THE MAIN PROVISIONS WITH EFFECT FROM THE TIME THE MAIN PROVISION CAME INTO EFFECT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SEDCO FOREX INTERNATIONAL DRILLING V / S CIT. 7 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 11. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APPEAL. 8 . THE ASSESSEE FILED CROSS - OBJECTION S . 9 . AS THE ISSUE RAISED IN ALL THE CASES ARE IDENTICAL, FOR THE SAKE OF CONVENIENCE , THEY ARE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS COMMON ORDER. 10 . WE HAVE HEARD THE SR. SANJEEV SHARMA, LD. CIT DR ON BEHALF OF THE REVENUE AND SH. A M IT ARORA, THE LD. COUNSEL ON BEHALF OF THE ASSESSEE. THE SUBMISSION OF THE REVENUE ARE EXTRACTED FOR READY - REFERENCE: - A BRI EF OF THE ARGUMENTS/REPLIES OF THE REVENUE IN THE CASES OF EXPO GULF LIMITED ON THE ISSUE OF NON - APPLICABILITY OF SECTION 44BB ASSESSMENT YEARS: 2008 - 9 TO 2010 - 11 1. DURING THE YEARS THE ASSESSEE EARNED REVENUE FROM ITS CONTRACTS WITH ONGC LTD, CAIRN E NERGY LIMITED, HALLIBURTON OFFSHORE SERVICES INC, BG EXPLORATION AND PRODUCTION INDIA LIMITED AND JUBILANT OIL AND GAS PRIVATE LIMITED. 2. THE RECEIPTS WERE OFFERED TO TAX AS PER PROVISIONS OF SECTION 44BB OF THE ACT; HOWEVER, THE SAME WERE TAXED AS FEE FOR TECHNICAL SERVICES BY THE ASSESSING OFFICER. IN ABSENCE OF THE AUDITED ACCOUNTS MAINTAINED BY THE ASSESSEE ESTIMATED AT 25% OF THE RECEIPTS. FOR AY 2008 - 09, THE ASSESSEE IS IN APPEAL AND FOR OTHER TWO YEARS (AY 2009 - 10 AND AY 2010 - 10). 3. THE NATUR E OF SERVICES RENDERED BY THE ASSESSEE IS OF TECHNICAL IN NATURE AND TAXABILITY OF SIMILAR ISSUE IS DECIDED THE DELHI BENCH OF HON'BLE TRIBUNAL IN THE CASE OF CGG VERITAS SA (2012) (50S0T 3335) IN ITS ORDER DATED 25 JANUARY 2012. THIS ORDER IS RELIED ON BY THE CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE. IN PARAGRAPH 40 OF THE ORDER, THE HON'BLE TRIBUNAL AFTER CONSIDERING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF RIO TINTO TECHNICAL SERVICES (2012 - TII - 01 - HC - DEL - INTL) AND OTHER DECISIO NS OF THE ITAT ON THE ISSUE HAS HELD THAT RECEIPTS FOR SERVICES PROVIDED BY THE ASSESSEE IS OF THE NATURE OF FEE FOR TECHNICAL SERVICES. THE HON'BLE TRIBUNAL IN PARAGRAPH 41 HELD 8 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 THAT THE CBDT INSTRUCTION NO.1862 DATED 22.10.1990 IS OF NO HELP TO THE ASSES SEE. 4. IN PARAGRAPH 43 OF THE ORDER THE HON'BLE TRIBUNAL HAS NOTED THAT THE WORD 'SERVICES' IN SECTION 44BB INCLUDE BOTH TECHNICAL AND NON - TECHNICAL SERVICES. IT WAS HELD THAT THE PROVISO TO SECTION 44BB (1) WILL BE PRESSED INTO SERVICE IN CASE OF THE A SSESSEE WHOSE RECEIPTS BEING OF THE NATURE OF FTS AND THE INCOME IS REQUIRED TO BE COMPUTED IN ACCORDANCE WITH SECTION 44D OR 44DA OR SECTION 115A OR SECTION 293. IT IS NOT OUT OF PLACE TO MENTION THAT HAD THESE NOT BEING TECHNICAL SERVICES, THE PROVISO WI LL NOT BE PRESSED FOR THE EXCLUSION. 5. IN PARAGRAPH 46 THE HON'BLE TRIBUNAL SUMMARIZED THE TAXATION OF FTS ON THIS ISSUE AND HELD THAT THE FTS EFFECTIVELY CONNECTED WITH THE PERMANENT ESTABLISHMENT IS TAXABLE UNDER THE SECTION 44DA AND NOT UNDER SECTI ON 44BB, HOWEVER, THIS WOULD BE APPLICABLE FROM ASSESSMENT YEAR 2011 - 12 AND FOR THE ASSESSMENT YEARS 2004 - 05 TO 2010 - 11 THE FTS ALSO WOULD BE TAXABLE UNDER SECTION 44BB (1). 6. IN PARAGRAPH 47 THE HON'BLE TRIBUNAL VERY RIGHTLY HELD THAT ONCE ANY RECEIPT OF THE NON - RESIDENT FALLS WITHIN THE DEFINITION OF FTS THEN THE TAX IS TO BE DETERMINED THEREON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44DA OR SECTION 115A OF THE ACT DEPENDING ON WHETHER THE FTS IS EFFECTIVELY CONNECTED WITH THE PERMANENT ESTABLISH MENT OR NOT. 7. IN PARAGRAPH 50 OF THE ORDER, THE HON'BLE TRIBUNAL HAS HELD THAT THE CONSIDERATION OF THE NATURE OF FEE FOR TECHNICAL SERVICES OTHER THAN THOSE COVERED U/S 44DA WILL BE ASSESSABLE U/S 115 A(L)(B) OF THE ACT. THIS WOULD THE CASE FOR FTS NOT BEING EFFECTIVELY CONNECTED WITH THE PE. 8. THE HON'BLE HIGH COURT IN THE CASE OF OHM LTD (PAGE 33 TO 35 OF THE PB) ALSO ARRIVED AT THE SIMILAR FINDING THAT FTS, TAXABLE UNDER SECTION 44DA, WILL BE TAX ABLE UNDER SECTION 44BB AS AMENDMENT IN THE SECTION 44BB AND 44DA IS APPLICABLE FROM ASSESSMENT YEAR 2011 - 12 AND HAS PROSPECTIVE APPLICATION. 9. THE HON'BLE DELHI HIGH COURT HAS PASSED AN ORDER DATED 09.07.2014 IN THE CASE OF PGS GEOPHYSICAL AS VS ADDL. DIRECTOR OF INCOME TAX (2014 - TII - 3 5 - HC - DEL - INTL) WHEREIN THE HON'BLE COURT HAS CONFIRMED THE FINDING OF TREATING THE CONSIDERATION FOR RENDERING ACQUISITION AND PROCESSING OF 2 - D AND 3 - D SEISMIC DATA SERVICES AS FEE FOR TECHNICAL SERVICES AND LAID DOWN LA W REGARDING TAXABILITY OF FTS FOR THE ASSESSMENT YEARS PRIOR TO 2011 - 12. THE SERVICES RENDERED BY THE ASSESSEE TO RELIANCE INDUSTRIES LIMITED IS SIMILAR TO THAT AS IN CASE OF PGS GEOPHYSICAL AND THEREFORE THE 9 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 RECEIPTS OF THE ASSESSEE ARE ALSO IN THE NATURE OF FEE FOR TECHNICAL SERVICES. 10. IN RESPECT OF AY 2009 - 10, AS PER THE OBSERVATIONS OF THE HON'BLE DELHI HIGH COURT IN PARAGRAPH 20 (PGS GEOPHYSICAL) THE AO WOULD SPECIFICALLY HAVE TO DETERMINE (A) WHETHER THE ASSESSEE HAD A PE IN INDIA DURING THE RELE VANT PERIOD; AND (B) IF SO, WHETHER THE CONTRACTS ENTERED INTO BY THE APPELLANT WITH RIL WERE EFFECTIVELY CONNECTED WITH THE APPELLANT'S PE IN INDIA. ONLY ON THE SATISFACTION OF THE SAID TWO CONDITIONS THE INCOME WOULD BE COMPUTED UNDER SECTION 44BB (1) OF THE ACT. HOWEVER, IF SUCH CONDITIONS ARE NOT SATISFIED THEN THE INCOME TAX PAYABLE BY THE APPELLANT WOULD BE COMPUTED IN ACCORDANCE WITH SECTION 115 A (1) (B) OF THE ACT. 11. THE AO ON PAGE 4 OF THE ORDER HAS NOTED THAT, 11 SINCE THE PAYMENT UNDER THIS C ONTRACT ARE IN RESPECT OF FTS AS HELD ABOVE THEY ARE COVERED BY THE PROVISIONS OF SECTION 44D/44DA OF I.T.ACT, SUCH RECEIPTS WOULD BE TAXABLE AS BUSINESS PROFITS. IN ABSENCE OF THE AUDITED ACCOUNTS FOR ITS PERMANENT ESTABLISHMENT IN INDIA, THE PROFIT EARNE D ON SUCH FEE FOR TECHNICAL RECEIPTS HAVE TO BE ESTIMATED'. 12. TO SUMMARIZE, THE CONSIDERATION RECEIVED BY THE ASSESSEE IS OF THE NATURE OF FEE FOR TECHNICAL SERVICES AND THIS IS TAXABLE UNDER SECTION 115 A OR SECTION 44DA DEPENDING ON THE FACT OF NO PE OR EXISTENCE OF PE AND FEE BEING EFFECTIVELY CONNECTED WITH SUCH A PE. 11 . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS NOT MORE RES INTEGRA AS IT IS COVERED BY THE DECISION OF THIS BENCH IN ITA NO. - 5283/DEL/2010 & 420/DEL/2010 & OTHER B ATCH OF CASES. 1 2 . THE CONTENTION OF THE REVENUE THAT IT IS TO BE DETERMINED WHETHER THE ASSESSEE HAD A PE IN INDIA DURING THE RELEVANT PERIOD . IT IS ARGUED THAT THIS HAS TO BE LOOKED INTO . THIS ARGUMENT IN OUR VIEW HAS NO MERIT FOR THE REASON THAT, THE ADMI TTED POSITION IS THAT THE ASSESSEE HAS A PE IN INDIA. AN R.O.I WAS FILED AND ASSESSMENT WERE FRAMED ON THAT BASIS. 10 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 1 3 . THE DRP HAD F OLLOWED ITS OWN ORDER IN THE CASE OF M/S PRECISION ENERGY SERVICES LTD. FOR ASSESSMENT YEAR 2007 - 08 AND HELD THAT THE INCOME IN QUESTION IS TAXABLE AS FTS U/S 9(1)(VI) OF THE ACT. THE ITAT, DELHI BENCH REVERSED THIS ORDER OF THE DRP IN THE CASE OF PRECISIONS ENERGY SERVICES LTD. OF ASSESSMENT YEAR 2007 - 08 IN ITA NO. - 5286/DEL/2010 AND HELD THAT UNDER THE FACTS AN D CIRCUMSTANCES OF TH E CASE , THE INCOME IS TAXABLE U/S 44BB OF THE ACT. T HE REASON IS THAT THE SCOPE OF WORK AS PER THE CONTRACTS REQUIRES, THE ASSESSEE TO PROVIDE A RIG BASED SURFACE WELL, TESTING EQUIPMENT ALONGWITH OPERATING PERSONNEL. THUS THE ORDER OF THE DRP IN THE CASE OF M/S PRECISION ENERGY SERVICES LTD. IS NO MORE GOOD LAW. HENCE WE HAVE TO REVERSE THIS IMPUGNED ORDER OF THE DRP. 1 4 . HENCE C ONSISTENT WITH THE VIEW TAKEN BY THE CO - ORDINATE BENCH IN ITA NO. - 5286/DEL/2010, ITA NO. - 5283/DEL/2010 A ND OTHER CASES , VIDE ORDER DATED 11.07.2014 AND APPLYING THE PROPOSITIONS LAID DOWN BY THE HON BLE U T TARAKHAND HIGH COURT AND HON BLE DELHI HIGH COURT IN SIMILAR SITUATION TO THE FACTS OF THE PRESENT CASE, WE REVERSE THE ORDER OF THE DRP FOR ASSESSMENT YEA R 2008 - 09 . W E UPH O LD THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2010 - 11 DATED 05.03.2013 . HENCE WE DISMISS THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010 - 11 . 1 5 . W E ALLOW THE APPEAL OF THE ASSESSEE IN ITA NO. - 5561/DEL/2011 FOR THE ASSESSMENT YEAR 2008 - 09. 1 6 . THE CO - 29/DEL/2014 FOR THE ASSESSMENT YEAR 2010 - 11 IS DISMISSED AS NOT PRESSED. 11 I.T.A .NO. 5561 /DEL/201 1, 4650/DEL/2013 & C.O. NO. - 29 /DEL/201 4 1 7 . IN THE RESULT , THE APPEAL OF THE ASSESSEE I.E ITA NO. - 5561/DEL/2011 IS ALLOWED AND APPEAL OF THE REVENUE I.E. ITA NO. - 4650/DEL/2013 AND CROSS - OBJECTION O F THE ASSESSEE I.E CO NO. - 29/DEL/2014 ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12 TH OF FEBRUARY 2015. SD/ - SD/ - ( GEORGE GEORGE K ) ( J.S.REDDY ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 / 0 2 /201 5 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI