Louis Dreyfus Armateures SAS, Gurgaon V. ADIT, Dehradun

ITA 5814/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86790 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Presumptive income; Recovery proceedings; Residential status; Double taxation relief; Maximum Marginal Rate; Rule of consistency; Deemed to accrue or arise in india; Permanent establishment
• Section: 234B; 90

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI T.S.KAPOOR , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 5814 /DEL/ 201 0 (ASSESSMENT YEAR: 2007 - 08 ) LOUIS DREYFUS ARMATEURES SAS, C/O.S.R.BATLIBOI& CO, CA GOLF VIEW CORPORATE TOWER - B, SECTOR 42, SECTOR ROAD, GURGAON, PAN:AABCL0290R VS. ADIT INTERNATIOINAL TAXATION, 13A, SUBHASH ROAD, DEHRADUN (APPELLANT) (RESPONDENT) O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS APPEAL ARISES FROM AN ORDER PASSED BY ADIT ( INTERNATIONAL TAXATION, DELHI U/S 143(3)/ 144C(13) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) FOR ASSESSMENT YEAR 2007 - 08 DATED 25 TH OCTOBER 2010, PURSUANT TO THE DIRECTION S OF DRP DATED 27.09.2010 U/S 144C(5) OF THE ACT. 2. THE FACTS OF THE CASE IN BRIEF AS NOTED BY DRP READS THAT M/S. CGG SERVICES ENTERED INTO THREE CONTRACTS WITH ONGC FOR PROVIDING PERSONNEL AND EQUIPMENT, PLAN AND EXECUTE ACQUISITION OF 3D SEISMIC DATA AND BASIC 3D SEISMIC DATA PROCESSING. THE ASSESSEE M/S LOUIS DREYFUS ARRMATEURS SAS PROVIDED TWO SEISMIC SURVEY VESSELS NAMELY C GG FOHN AND C GG HARMATTAN TO M/S CGG SERVICES FOR CARRYING OUT THE SEISMIC OPERATIONS OFFSHORE INDIA. IN THE RETURN OF APPELLANT BY : DEEPAK CHOPRA, ADV RESPONDENT BY: SH. SANJEEV SHARMA, CIT DR PAGE 2 OF 46 INCOME F ILED ON 23.10.2007 SHOWING INCOME OF RS. 1,34,64,310/ - , THE ASSESSEE HAS OFFERED THE REVENUES FROM SUCH LEASING OF VESSELS AGGREGATING TO RS. 13,41,19,839 / - TO BE TAXED U/S 44 B B OF THE IT ACT. IN THE DRAFT ASSESSMENT ORDER DATED 18,12.2009, THE ASSESSING OFFICER, HOWEVER, TOOK THE VIEW THAT THE EQUIPMENT RENTAL RECEIVED BY THE ASSESSEE ARE IN THE NATURE OF 'ROYALTY' AND ARE TAXABLE U/S 9(1)(VI) OF THE IT AC T. FOR THIS PURPOSE, THE TAXABLE PROFIT OF THE ASSESSEE HAS BEEN ESTIMATED AT DEEMED PROFIT RATE OF 25% OF GROSS REVENUE. 3 . THE DRP BY WAY OF ITS DIRECTIONS DATED 27.09.2010 ISSUED THE FOLLOWING DIRECTIONS - (A) THE DRP CONCLUDED THAT IN TERMS OF THE PROVISIONS OF SECTION 44BB OF THE ACT THE RECEIPT OF ONLY SUCH NON - RESIDENT ASSESSEE WHO SUPPLIED PLANT AND MACHINERY ON HIRE USED FOR THE PURPOSES OF PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS SHALL BE ELI GIBLE FOR THE BENEFIT UNDER SECTION 44BBOF THE ACT. THE DRP HELD THAT THE TERM USED OR TO BE USED' ARE USED INCONTEXT OF PLANT AND MACHINERY AND NOT TO SPECIFY THE PERSON WHO SHALL USE IT I.E. THE TERM USE OR TO BE USED IS IN CONJUNCTION WITH THE TERM 'PR OSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS. THIS MEANS THAT THEPLANT AND MACHINERY CAN BE USED WHEN IT IS HIRED OR AT A LATER POINT OF TIME BY THE HIRER FOR PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS AND THE TERM DOES NOT IMPLY THAT IT CAN BE USED BY THE HIRER OR SUB - HIRER OR ANY OTHER HIRER IN THE CHAIN WHICH MAY UNENDING. THE DRP HELD THAT IT IS SETTLED THAT THE INTENTION OF THE LEGISLATURE SHOULD NOT BE LOOKED INTO BY RESORTING TO AIDS IN REPRESENTATION WHERE THE LANGUAGE OF THE PROVI SION IS UNAMBIGUOUS AND CLEAR. THUS, THE DRP CONCLUDED THAT THE LEGISLATURE NEVER INTENDED TO INCLUDE RECEIPTS OF SUB - HIRING UNDER THE PURVIEW OF SECTION 44BB OF THE ACT OTHERWISE THE TERM 'IN CONNECTION WITH' WOULD HAVE ALSO BEEN EXTENDED TO BE USED FOR T HE ACTIVITY OF SUPPLYING PLANT AND MACHINERY ON HIRE AS WELL. THE STATUTE IS CLEAR THAT THE TERM 'USED OR TO BE USED' IS FOR THE HIRER ONLY AND THERE IS NO SCOPE OF EXTENDING THIS PROVISION TO PAGE 3 OF 46 SUB - HIRER OR OTHER IN THE CHAIN. (B) THE DRP ALSO REFERRED TO CLAUSE (VIA) OF SECTION 9(1)(VI) OF THE ACT THAT THE EXCLUSION CARVED OUT IN THE ABOVE PROVISION COVERS ONLY REVENUES WHICH ARE COVERED UNDER SECTION 44BB OF THE ACT FAILING WHICH THE REVENUES WOULD BE BROUGHT TO TAX UNDER SECTION 9(1)(VI) OF THE ACT. THE DRP ALSO CONCLUDED THAT THE PROVISIONS OF SECTION 44BB WOULD NOT BE APPLICABLE TO THE ASSESSEE SINCE THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS. (C) THE RECEIPTS OF ASSESSEE BY WAY OF RENTALS FOR LEASING OF VESSELS WOULD CONSTITUTE ITS INCOME BY WAY OF ROYALTY U/S 9(1)(VI) UNDER IT ACT AND U/ARTICLE 13(3) OF DTAA BETWEEN INDIA AND FRANCE. (D) THE DRP HELD THAT SINCE THIS WAS A TRANSACTION BETWEEN TWO NON - RESIDENTS, THE ROYALTY INCOME ARISING IN THE HANDS OF THE ASSESSEE WOULD BE TAXABLE IN INDIA AS PER ARTICLE 13(7) OF THE DTAA BETWEEN INDIA AND FRANCE ONLY IF C GG HAS A PE IN INDIA, THE LIABILITY TO PAY SUCH ROYALTY IS INCURRED IN CONNECTION WITH SUCH ROYALTY AND SUCH ROYALTY IS BORNE BY THE PE I N INDIA (I.E. PE OF C GG IN INDIA). THE DRP FURTHER OBSERVED THAT ROYALTY PAYMENT HAS BEEN MADE BY THE PAYER I.E. C GG WHICH HAS OFFERED TO TAX ITS REVENUES UNDER SECTION 44BB OF THE ACT. THEY FURTHER CONCLUDED THAT THE PAYER IS DEEMED TO HAVE A PE AND SUCH ROYALTY HAS BEEN CHARGED TO SUCH PE AS IT IS BEING TAXED AT A DEEMED PROFIT RATE OF 10%. SINCE THE PLANT AND MACHINERY IS TO BE UTILISED BY THE PE OF THE PAYER IN INDIA THERE IS NO DOUBT THAT THE PAYMENTS WOULD BE CHARGED TO PE ONLY AND WOULD BE DEEMED TO HAVE BEEN INCLUDED UNDER SECTION 44BB OF THE ACT. AS SUCH ROYALTY RECEIPTS WERE TAXABLE IN INDIA. HERE THE APPARENT CONTRADICTION IN THE ORDER OF THE DRP MUST BE POINTED OUT. HERE THE DRP ASSUMED THAT C GG IS TAXABLE UNDER SECTION 44BB OF THE ACT AND HENCE B Y THE IMPLIED LOGIC CONCLUDES THAT THE EXPENSES OF ROYALTY PAID BY C GG TO THE ASSESSEE HAVE BEEN BORNE BY THE PE OF C GG IN INDIA. THIS ASSUMPTION WAS DRAWN TO FIT THE TAXABILITY OF THE ASSESSEE UNDER ARTICLE 13(7) OF THE DTAA SINCE ONE THE OF THE CONDITION S PRESCRIBED FOR TAXABILITY OF THE ASSESSEE IN INDIA IS THE PAGE 4 OF 46 BEARING OF THE EXPENSES ON ACCOUNT OF ROYALTY PAYMENTS TO THE ASSESSEE BY THE SAID PE IN INDIA, (E) THE ROYALTY PAYMENTS ARE BEING MADE BY THE NON - RESIDENTS FROM THE INCOME WHICH HAS BEEN OFFERE D TO TAX U / S 44BB IN INDIA. THUS, THE PAYER IS DEEMED TO HAVE A PE IN INDIA AND AS SUCH ROYALTY HAS BEEN CHARGED TO SUCH PE AS IT IS BEING TAXED AT A DEEMED PROFIT RATE OF 10%, WHICH, BY DEEMING FICTION, INCLUDES ALL EXPENSES OF THE PAYER IN RELATION TO TH E PE. SINCE THE 'PLANT AND MACHINERY' IS TO BE UTILIZED BY THE PE OF THE PAYER IN INDIA, THERE IS NO DOUBT THAT THE PAYMENTS WOULD BE CHARGED TO PE ONLY AND WOULD BE DEEMED TO HAVE BEEN INCLUDED U / S 44BB. AS SUCH, THE ROYALTY RECEIPTS OF THE SUB - LESSOR AR E TAXABLE IN INDIA. THE AO ON THE OTHER HAND HAD PROCEEDED ON THE BASIS THAT C GG IS NOT ENTITLED TO THE BENEFIT OF SECTION 44BB OF THE ACT. (F) BE THAT AS IT MAY, THE DRP CONCLUDED SINCE THERE IS A DTAA IN THE PRESENT CASE, ROYALTY SHALL BE TAXED AS PER T HE RATE PROVIDED UNDER THE RESPECTIVE DTAA, IN THIS CASE @ 10% OF THE GROSS RECEIPT. THUS, THE REVENUES OF THE ASSESSEE BY WAY OF EQUIPMENT RENTALS ON LEASING OF SEISMIC SURVEY VESSELS WILL BE TAXABLE AS EQUIPMENT ROYALTY, BOTH UNDER THE DOMESTIC LAW AS WE LL AS UNDER THE PROVISIONS OF DTAA. (G) THE DRP ALSO UPHELD THE LEVY OF INTEREST UNDER SECTION 234B OF THE ACT . 4 . THE AO FRAMED FINAL ASSESSMENT ORDER IN ACCORDANCE WITH THE DIRECTIONS OF DRP. THE INCOME OF THE ASSESSEE WAS ASSESSED @ RS. 13 ,14,72,165/ - . 5 . THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE. 1. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE DISPUTE RESOLUTION PANEL - IL, NEW DELHI ('DRP') AND THE LEARNED ASSESSING OFFICER ('LD. AO') HAVE ERRED IN LAW AND IN FACT, IN HOLDING THAT INCOME EARNED BY THE ASSESSEE FROM PROVISION OF SEISMIC SURVEY VESSELS ON HIRE TO CGG SERVICES (ERSTWHILE COMPAGNIE GENERAL DE GEOPHYSIQUE (CGG) / CGG MARINE) IS NOT TAXABLE UNDER THE PROVISION OF SECTION 44BB OF THE PAGE 5 OF 46 INCOME TAX ACT, 1961 ('ACT') AND INSTEAD, CHARGING THE INCOME EARNED FROM PROVISION OF SEISMIC SURVEY VESSELS TO TAX AS 'ROYALTY' UNDER SECTION 9(1 )(VI) OF THE ACT. 2. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASES, THE DRP AND THE LD. AO HAS IGNORED THE FACT THAT THE PROVISIONS OF SECTION 9(1)( VI) OF THE ACT PROVIDES AN EXCLUSION AND DOES NOT INCLUDES AMOUNTS COVERED UNDER SECTION 44BB OFTHE ACT. 3. THE DRP HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT THE INCOME EARNED FROM PROVISION OF SEISMIC SURVEY VESSEL IS ALSO TAXABLE AS 'ROYALTY' UNDER ARTICLE 13 OF INDIA - FRANCE DOUBLE TAX ATION AVOIDANCE AGREEMENT CDTAA ). WHILE DOING SO, THE DRP HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT THE APPELLANT IS DEEMED TO HAVE PERMANENT ESTABLISHMENT ('PE') IN INDIA AS THE APPELLANT HAS OFFERED ITS INCOME TO TAX UNDER SECTION 44BB OFTHE ACT. WITHOUT PREJUDICE TO TH E ABOVE, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DRP AND THE LD. AO WHILE ISSUING THE ASSESSMENT ORDER HAS NOT FOLLOWED THE WELL SETTLED 'JUDICIAL PRINCIPLE OF CONSISTENCY' WHICH HOLDS THAT UNLESS THERE IS A MATERIAL CHANGE IN FACTS AND CIRCUMSTANCES OF THE CASE, THE REVENUE AUTHORITY WILL NOT DEPART FROM ITS PREVIOUS DECISIONS AT THEIR OWN SWEET WILL. 4. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE DRP HAS ERRED IN LAW AND IN FACTS I N HOLDING THAT THE RECEIPTS OF THE APPELLANT ARE TAXABLE AS 'ROYALTY' UNDER ARTICLE 13 OFINDIA - FRAN C E DTAA AT THE RATE OF 10% ON GROSS BASIS. WHILE DOING SO, THE HON'BLE DRP HAS DISREGARDED THE BENEFICIAL PROVISION OF SECTION 44 BB OF THE ACT WHEREIN GROSS RECEIPTS ARE TAXED AT DEEMED PROFIT RATE OF 10% THEREBY EFFECTIVE TAX RATE COMES TO 4.223%. 6 . APROPOS GROUND NO S .1, 2 & 3 IS IN RESPECT TO APPLICABILITY OF PROVISION OF SECTION 44BB OF THE ACT VIS - A - VIS SECTION 9(I)( VI) AND ARTICLE 13 OF THE DTAA ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE DRP IN THIS REGARD HAS HELD AS UNDER: - PAGE 6 OF 46 ON CAREFUL PERUSAL OF THE PROVISIONS OF SECTION 44BB (1), IT WOULD BE OBVIOUS THAT FOR BEING ELIGIBLE FOR BENEFICIAL PROVISIONS OF TH IS SECTION, THE FOLLOWING CONDITIONS MUST BE FULFILLED: A. THE ASSESSEE SHOULD BE A NON - RESIDENT AND B. SHOULD BE ENGAGED IN THE BUSINESS OF: (I) PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH PROSPECTING/OR, OR EXTRACTION OR PRODUCTION OF. MINERA L OILS OR (II) SUPPLYING PLANT AND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS THUS THE RECEIPT OF ONLY SUCH NON - RESIDENT ASSESSEE, WHO SUPPLIES PLANT AND MACHINERY ON HIRE USED, OR TO HE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OILS SHALL BE ELIGIBLE FOR THE BENEFIT OF SEC 44BB(1). THE WORDS 'USED OR TO BE USED' ARE USED IN TERMS OF THE PLANT AND MACHINERY AND NOT TO SPECIFY THE PERSON WHO SHALL USE IT I.E. THE CLAUSE 'USED, OR TO HE USED' IS IN CONJUNCTION WITH THE CLAUSE 'IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OILS ' THIS MEANS THAT THE PLANT & MACHINERY' CAN BE USED WHEN IT IS HIRED (WHICH SIGNIFIES USE OF WORD 'USED) OR AT A LATER POI NT ILL TIME (WHICH SIGNIFIES THE USE OF CLAUSE 'TO HE USED') BY THE HIRER FOR PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OILS. THE TERM 'TO BE USED' DOES NOT IMPLY THAT IT CAN BE USED BY THE HIRER OR SUB - HIRER OR ANY OTHER HIRER IN THE CHAIN, WHICH MAY BE UNENDING, FOR THE ACTIVITIES SPECIFIED IN SEC, 44BB 0) OF THE INCOME - TAX ACT, 1961. IT IS NOW A SETTLED LAW THAT THE OBJECT OR INTENTION OF THE LEGISLATURE SHOULD NOT BE LOOKED INTO, BY RESORTING TO AIDS TO INTERPRETATION, WHERE THE LANGUAGE OF THE PROVISION IS CLEAR AND UNAMBIGUOUS AS ROWLATT J. IN CAPE BRANDY SYNDICATE V. 1RC [1921] 1 KB 64 IN CIT V. AJAX PRODUCTS LTD. [1965] 55 ITR 741 (SC) SLATED THAT 'IN A TAXING ACT ONE HAS TO LOOK AT WHAT IS CLEARLY SAID THERE IS NO ROOM FOR ANY INTENDM ENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING TO BE IMPLIED. ONE CAN LOOK AT THE LANGUAGE USED (P. 747) THUS, WHEN THE LANGUAGE OF A TAXING STATUTE IS CLEAR AND STATUTE, AN ASSESSEE FALLS WI THIN THE FOUR CORNERS OF THE STATUTE, HE IS TO BE TAXED: IF NOT, NO TAX IS TO BE LEVIED. IN OTHER WORDS, THE MEANING OF EACH WORD USED BY THE LEGISLATURE IS TO BE GIVEN ITS PLAIN AND NATURAL MEANING AND NO WORD SHOULD BE IGNORED WHILE INTERPRETING A PROVIS ION OF A STATUE, SIMILARLY NO WORD SHOULD BE IMPORTED INTO THE STATUTE TO INTERPRET THE PROVISIONS OF TAXING STATUE, IF THE LANGUAGE USED IS CLEAR AND UNAMBIGUOUS. HOWEVER, WHEN SUCH INTERPRETATION RESULTS IN ABSURDITY, THE COURTS CAN RESORT TO DIFFERENT M ETHODS OF INTERPRETATION SO AS NOT TO PROVISION ABSURD OR REDUNDANT. IN THE ISSUE BEFORE US, IT IS AMPLY CLEAR THAT THE LEGISLATURE NEVER INTENDED TO INCLUDE THE RECEIPTS OF SUB - HIRING UNDER PURVIEW OF SECTION 44BB, OTHERWISE THE CLAUSE IN CONNECTION WITH WOULD HAVE ALSO BEEN EXTENDED TO BE USED FOR THE ACTIVITY OF SUPPLYING PLANT AND MACHINERY ON HIRE AS WELL. THE STATUE IS CLEAR THAT THE TERMS USED OR TO BE USED ARE MEANT FOR THE HIRER ONLY. THERE IS NO SCOPE FOR EXTENDING THE PROVISIONS FOR THE BENEF IT OF SUB - HIRER/ SUB - LESSEE OR OTHERS IN THE CHAIN. IN THIS REGARD, IT WOULD ALSO BE APPROPRIATE TO PAGE 7 OF 46 REFER TO THE PROVISIONS OF CLAUSE (IVA) OF EXPLANATION 2 TO SECTION 9(1)(VI), WHICH ARE REPRODUCED AS UNDER: - '(IVA ) THE USE OR RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT BUT NOT INCLUDING THE AMOUNTS REFERRED TO IN SECTION 44BB;]' FROM THE ABOVE, IT IS CLEAR THAT IF AN AMOUNT OF THE TYPE REFERRED TO IN SEC 9(1)(VI) IS NOT INCLUDED IN AMOUNTS REFE RRED IN SEC 44BB, THEN SUCH AMOUNT WOULD BE TAXABLE UNDER PROVISIONS OF SEC. 9(1)(VI) OF THE INCOME - TAX ACT, 1961. THE PROVISIONS OF SEC 44BB DOES NOT APPLY IN THE CASE OF THE ASSESSEE FOR THE REASON THAT IT IS NOT UNDERTAKING THE ACTIVITIES SPECIFIED IN S EC 44BB ITSELF. IT IS ONLY SUPPLYING 'PLANT AND MACHINERY ON HIRE TO A PERSON, WHO FURTHER SUPPLIES IT ON HIRE FOR PUTTING TO USE FOR THE PURPOSE AS SPECIFIED IN SEC 44BB. THE INTENTION OF THIS PROVISION WAS TO PROVIDE BENEFIT TO THE PERSONS SUPPLYING PLAN T AND MACHINERY ON HIRE TO THE ENTITIES INVOLVED IN BUSINESS OF PROSPECTING FOR OR EXTRACTING OR PRODUCTION OF MINERAL OIL EXPLORATION ITSELF. THE PROVISIONS OF SECTION 44BB WERE MEANT FOR THE ENTITIES WHICH INCUR HUGE EXPENSES AND WHICH ARE COMPLEX IN NAT URE WHICH IT DIFFICULT TO COMPUTE INCOME UNDER ARTICLE 7 OF DTAA. THEREFORE, TO SIMPLIFY THE COMPUTATION OF INCOME, SUCH PROVISIONS WERE BROUGHT ON THE STATUE. IN CASES LIKE THAT OF THE ASSESSEE, THERE ARE NO EXPENSES OF COMPLEX NATURE AND FURTHER THE INC OME IN SUCH CASES IS NOT REQUIRED TO BE COMPUTED UNDER ARTICLE 7. THU, THE PROVISIONS OF SECTION 44BB ARE NOT APPLICABLE TO A NON - RESIDENT, WHO SUPPLIES PLANT AND MACHINERY ON HIRE TO A PERSON, WHO DOES NOT ITSELF UNDERTAKE THE ACTIVITIES OF PROVIDING SE RVICES OR FACILITIES IN CONNECTION WITH PROSPECTING FOR OR EXTRACTING OR PRODUCTION OF MINERAL OIL EXPLORATION. THUS, THE PANEL IS OF THE CONSIDERED VIEW THAT THE RECEIPTS OF THE ASSESSEE BY WAY OF RENTALS OF LEASING OF VESSELS WOULD CONSTITUTE ITS INCOME BY WAY OF ROYALTY AS HAS BEEN PROPOSED BY THE ASSESSING OFFICER IN THE DRAFT ORDER. NOW COMES THE QUESTION OF TAXABILITY OF SUCH RECEIPTS AS THERE IS NO DOUBT THAT SUCH RECEIPTS CONSTITUTE ROYALTY U/S 9(1)(VI) OF INCOME TAX ACT AS WELL AS UNDER THE ART 1 3(3) OF THE DTAA. THE PAYMENT OF ROYALTY IS TAXED BASED ON SOURCE RULE. THUS, THE ROYALTY RECEIPT OF NON - RESIDENT SHALL BE LIABLE TO TAXATION IF THE SOURCE OF SUCH RECEIPTS, WHETHER MADE BY RESIDENT OR A NON - RESIDENT, IS HAVING TERRITORIAL NEXUS IN INDIA. IN OTHER WORDS, IF A NON - RESIDENT IS MAKING PAYMENT OF ROYALTY TO OTHER NON - RESIDENT THEN SUCH RECEIPTS OF THE OTHER NON - RESIDENT SHALL BE LIABLE TO TAX IF THE FIRST NON - RESIDENT HAS ITS SOURCE OF INCOME, FROM WHICH ROYALTY IS PAID, IN INDIA. THIS REQUIREM ENT IS SPECIFIED IN ARTICLE 13(7), WHICH STATES AS UNDER: - A. EITHER THE PAYER SHOULD BE RESIDENT OF INDIA IN ORDER TO BE TAXED UNDER ARTICLE 13(7) OR B. WHEN THE PAYMENT IS MADE BY ONE NON - RESIDENT TO ANOTHER NON - RESIDENT, ROYALTY WOULD ARISE ONLY IF: - THE NON - RESIDENT HAS A PE IN INDIA. THE LIABILITY TO PAY ROYALTY IS INCURRED IN CONNECTION WITH SUCH PE OR FIXED BASE; - ROYALTY IS BORNE BY SUCH PE OR FIXED BASE. PAGE 8 OF 46 IN THE PRESENT CASE, THE ROYALTY PAYMENTS ARE BEING MADE BY THE NON - RESIDENT FROM THE INCOME WHICH HAS BEEN OFFERED TO TAX U/S 44BB OF THE INCOME - TAX ACT, 1961 IN INDIA. THUS, THE PAYER IS DEEMED TO HAVE A PE IN INDIA, AND SUCH ROYALTY HAS BEEN CHARGED TO SUCH PE AS IT IS BEING TAXED AT A DEEMED PROFIT RATE OF 10% WHICH, BY DEEMING FICT ION, INCLUDES ALL EXPENSES OF THE PAYER IN RELATION TO THE PE. SINCE THE PLANT & MACHINERY IS TO BE UTL9IZED BY THE PE OF THE PAYER IN INDIA, THERE IS NO DOUBT THAT THE PAYMENTS WOULD BE CHARGED TO PE ONLY AND WOULD BE DEEMED TO HAVE BEEN INCLUDED U/S 44 BB. AS SUCH, THE ROYALTY RECEIPTS OF THE SUB - LESSOR ARE TAXABLE IN INDIA. GENERALLY, THE RATE OF TAXATION OF ROYALTY IS CONCESSIONAL AS COMPARED TO THE NORMAL RATE OF TAXATION APPLICABLE TO FOREIGN COMPANIES. WHEN THERE IS NO DTAA, DOMESTIC LAW PROVIDES F OR TAXATION U/S 9(1)(VI) OF THE ACT. IF SECTION 115A IS ATTRACTED THEN THE RATE OF TAXATION IS 10%. IF THE ROYALTIES ARE EFFECTIVELY CONNECTED WITH PE, THEN THEY ARE TAXED ON NET BASIS U/S 44DA. IN OTHER CASES, BY NECESSARY IMPLICATION, THE ROYALTY WOULD B E TAXABLE AT MAXIMUM MARGINAL RATE. BUT IN CASES, WHERE DTAA EXISTS, AS IN PRESENT CASE, ROYALTY SHALL BE TAXED AS PER THE RATE PROVIDED UNDER THE RESPECTIVE DTAA, IN THE CASE @ 10% OF GROSS RECEIPTS. THUS, THE PANEL IS OF CONSIDERED VIEW THAT REVENUES OF THE ASSESSEE BY WAY OF EQUIPMENT RENTALS ON LEASING OF SEISMIC SURVEY VESSELS WILL BE TAXABLE AS EQUIPMENT ROYALTY, BOTH UNDER THE DOMESTIC LAW AS WELL AS UNDER THE PROVISIONS OF DTAA. THIS GROUND OF OBJECTION IS, THEREFORE, REJECTED. 8 . BEFORE US THE LD COUNSEL FOR THE ASSESSEE SHRI DEEPAK CHOPRA SUMMARIZED THE FACTS AS UNDER: - A. CGG HAD HIRED TWO SEISMIC VESSEL SHIPS WITH CREWNAMELY - (I) FOHN AND (II) HARMATTAN FROM THE ASSESSEE FOR CONDUCTING SEISMIC SURVEY ACTIVITY FOR GEOPHYSICAL PROSPECTION. B. THE EQUIPMENT'S AND CREW ON THE VESSELS WERE TO BE PROVIDED BY ASSESSEE AS PER THE SPECIFICATIONS IN CONTRACT. THE VESSEL HAD TO BE IN FULL CAPACITY AND SUFFICIENT AND SUITABLE QUARTERS SHALL BE PROVIDED FOR THE CREW, INSTRUMENTS AND VESSEL SUPPLIES. C. ALL MAINTENANCE EXPENSES WERE TO BE BORNE BY THE ASSESSEE AND WAS ALSO AUTHORIZED TO HAULT THE SHIP IN THIS REGARD. D. THE CHARTERER WAS REQUIRED TO INFORM THE MAST ER OF THE AREA WITHIN WHICH THE VESSEL IS EXPECTED TO OPERATE AND THE MASTER SHALL BE FULLY AND SOLELY RESPONSIBLE FOR CHOOSING THE ROUTE TO REACH THIS AREA OF OPERATION OR PROGRESS FROM ONE AREA TO ANOTHER. E. THE ASSESSEE WAS RESPONSIBLE TOWARDS THE BE HAVIOUR OF MASTER, OFFICERS PAGE 9 OF 46 AND CREW . IF NECESSARY AND POSSIBLE, THE ASSESSEE SHALL REPLACE THE PERSON OR PERSONS OF WHOM THE CHARTERERS FOUND SUBJECT FOR COMPLAINT, THE RESULTING EXPENDITURE SHALL BE THE RESPONSIBILITY OF THE OWNERS. F. THE ASSESSEE HAS UNDERTAKEN TO PROVIDE INSURANCE COVER F OR THE HULL AND ENGINES OF THE VESSEL AND FOR ITS CREW, PLUS THIRD PARTY LIABILITY AND COVER AGAINST THE RISKS OF WAR AT THE NORMAL RATE AND SHALL GENERALLY PROVIDE ALL INSURANCE COVER AS NEEDED TO MEET THE REQUIREMENTS OF THE CHARTERER PARTY AND ITS APPEN DICES. G. THE ASSESSEE HAS ALSO UNDERTAKEN TO ENSURE THAT THE VESSEL COMPLIES WITH ALL INTERNATIONAL AND NATIONAL REGULATIONS APPLICABLE IN THE MATTERS OF HEALTH, SAFETY AND ENVIRONMENT. FURTHER, IT SHALL AS A MINIMUM APPLY THE INSTRUCTIONS OF THE OGP FORUM FOR MARINE SEISMIC OPERATIONS (OGP FORUM GUIDELINES RELATING TO MARINE SEISMIC OPERATIONS). H. THE OWNER IS LIABLE TO PROVIDE MINIMUM TRAINING REQUIRED FOR THE VESSEL'S CREW.THE TRAINING STANDARDS MUST, AS A MINIMUM, MEET OMI OR IAGC STANDARDS. 9 . FROM THE AFORESAID FACTS ACCORDING TO THE LD COUNSEL, IT IS EVIDENT THAT THE ASSESSEE HAD A PLACE OF BUSINESS IN INDIA AND HENCE A PE OF THE ASSESSEE CAME INTO EXISTENCE. HOWEVER, SINCE IN TERMS OF SECTION 90 OF THE ACT , THE PROVISIONS OF THE ACT WOULD APPLY TO TH E ASSESSEE ONLY SO FAR AS THEY ARE MORE BENEFICIAL TO THE ASSESSEE. IN THE PRESENT CASE SINCE THE ASSESSEE HAD PROVIDED THE VESSELS WHICH WERE USED FOR THE PURPOSES OF CONDUCTING SEISMIC SURVEYS BY CGG, THE REVENUES RECEIVED BY IT WERE OFFERED TO TAX AS PE R THE PROVISIONS OF SECTION 44BB OF THE ACT ON A DEEMED PROFIT OF 10%. 10 . LD COUNSEL FURTHER CONTENDED THAT THE FIRST ISSUE THAT HAS ARISEN FOR DETERMINATION IS WHETHER THE BENEFIT OF SECTION 44BB OF THE ACT IS AVAILABLE TO A SUB - CONTRACTOR SINCE BOTH THE AO AS WELL AS THE DRP HAVE HELD THAT IT WAS NOT THE INTENTION OF THE LEGISLATURE TO EXTEND THE BENEFIT INDEFINITELY AND THE BENEFIT PAGE 10 OF 46 OF SECTION 44BB DOES NOT EXTEND TO THE SUB - HIRER. AGAINST THE SAID OBSERVATIONS OF THE AO/DRP SHRI DEEPAK CHOPRA POI NTED OUT THAT THE DRP, IN THE ASSESSEE'S OWN CASE IN PREVIOUS ASSESSMENT YEAR, I.E. AY 2006 - 07, UNDER THE SAME FACTS AND CIRCUMSTANCES, HAS DIRECTED THAT THE ASSESSEE'S INCOME SHOULD BE BROUGHT TO TAX BY APPLYIN G THE DEEMED PROFIT RATIO OF 10 % U/S 44BB OF THE ACT. AND FOR THESE IT WAS POINTED OUT THAT IN ASSESSMENT YEAR 2004 - 05, ALSO THE AO HAD ALLOWED THE BENEFIT OF SECTION 44BB TO THE ASSESSEE COMPANY. AND SINCE THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES, ON THE PRINCIPLE OF CONSISTENCY ITSELF AS H ELD BY THE HONBLE SUPREME COURT IN RADHASOAMISATSANG 193 ITR 32 (SC) AND DELHI HIGH COURT IN 279 ITR 86 (SC), SO DEVIATION WAS NOT WARRANTED . 11 . ACCORDING TO THE LD COUNSEL A PERUSAL OF THE SAID PROVISION WOULD REVEAL THAT THE PROVISION CLEARLY ENVISAGES THE CASE OF THE ASSESSEE WHICH IS ENGAGED IN THE BUSINESS OF SUPPLYING PLANT AND MACHINERY TO HAS BE USED FOR EXTRACTION OR PRODUCTION OF MINERAL OILS. ACCORDING TO HIM THE LEGISLATURE HAS NOT IMPOSED ANY LIMITATION AS STATED BY THE AO/ DRP THAT SUB - CONTR ACTOR DOES NOT FALL UNDER SECTION 44BB AND CANNOT AVAIL THE BENEFIT UNDER IT . ACCORDING TO HIM THE SPECIAL PROVISION CATERS TO PERSON/ ASSESSEE, NON RESIDENT WHO IS LETTING EQUIPMENT FOR SUPPLYING OF PLANT AND MACHINERY WHICH SHOULD HAVE BEEN USED IN THE PROSPECTING, EXTRACTING OR PRODUCTION OF MINERAL OILS. THE LD COUNSEL ALSO ASSAILED THE FINDING OF THE LD AO/ DRP THAT THE ASSESSEE IS IN THE BUSINESS OF LEASING AND THEREFORE CANNOT ATTRACT / AVAIL THE BENEFIT UNDER SECTION 44 BB. ACCORDING TO HIM THE PROVISION DOES NOT DISTINGUISH BETWEEN THE MAIN CONTRACTOR OR SUB - CONTRACTOR . ACCORDING TO HIM THE PROVISION CLEARLY BRINGS IN ITS FOLD THE NON - RESIDENT ASSESSEE TO BE ENGAGED ONLY IN THE BUSINESS OF SUPPLYING OF PLANT AND PAGE 11 OF 46 MACHINER Y FOR THE PURPOSE OF PROSPECTING, EXTRACTING OR PRODUCTION OF MINERAL OILS. 12 . ACCORDING TO THE LD COUNSEL, IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT CGG WAS CONTRACTED BY ONGC TO CONDUCT SIESMIC SURVEYS WHICH IS AN INTEGRAL PART OF THE PROSPECT ION ACTIVITY. LD COUNSEL REFERRED TO THE MODAL PRODUCTION SHARING CONTRACT AND TOOK OUR ATTENTION TO PAGE 184 - NELP VIII AND PAGE 189 DEFINITION OF THE EXPLORATION OPERATIONS AT POINT 1.43. THE DEFINITION OF 'EXPLORATION OPERATIONS' HAS BEEN DEFINED TO MEAN OPERATIONS CONDUCTED IN THE CONTRACT AREA PURSUANT TO THIS CONTRACT IN SEARCHING FOR PETROLEUM AND SHALL INCLUDE BUT NOT LIMITED TO AERIAL, GEOLOGICAL, GEOPHYSICAL, GEOCHEMICAL, PALAEONTOLOGICAL,PALYNOLOGICAL, TOPOGRAHICAL AND SIESMIC SURVEYS, ANALYSIS AND STUDIES AND THEIR INTERPRETATION. AND T HE PETROLEUM TAX GUIDE (AT PAGE 191 OF THE PAPER BOOK) WH ILE DEFINING 'EXPLORATION OPERATIONS' (AT PAGE 195) ALSO INCLUDES SIESMIC SURVEYS. 13 . THE ABOVE INTERPRETATION OF THE PROVISIONS OF SECTION 44BB I.E. THAT THE BENEFIT DOES EXTEND TO ASSESSEE SUPPLYING PLANT AND MACHINERY WHICH IS USED OR TO BE USED FOR T HE PURPOSES OF EXPLORATION, EXTRACTION OR PRODUCTION OF MINERAL OILS IS DULY SUPPORTED BY THE FOLLOWI NG JUDGMENTS. 1. MCDERMOT INTERNATIONAL VS. DCIT (49ITD590) 2. MICROPERI SPA MILANIVS. DCIT (82 ITD 369) (BOMBAY) 3. WAVEFIELDINSEIS ASA (320 ITR 290)(A AR) 4. BOURBON OFFSHORE ASIA (P) LTD. (337 ITR 122) (AAR) 5. SIEM OFFSHORE INC (337 ITR 207) (AAR) 6. LLOYD HELICOPTERS PTY LTD. (249 ITR 162)(AAR) 14 . THUS, ACCORDING TO SHRI DEEPAK CHOP R A FROM A PERUSAL OF THE ABOVE JUDICIAL PRECEDENCE, IT IS EVIDENT THAT NO DISTINCTION HAS BEEN CARVED OUT IN THE PAGE 12 OF 46 PROVISIONS OF SECTION 44BB OF THE ACT BETWEEN THE MAIN CONTRACTOR AND THE SUB - CONTRACTOR ; AND SO LONG AS BOTH ACTIVITIES I.E. OF THE CONTRACTOR AS WELL AS THE SUB - CONTRACTOR/HIRER ARE LINKED TO THE ACTIVITY OF EXPLORATION, EXTRACTION OR PRODUCTION OF MINERAL OILS AND ANY OTHER INTERPRETATION LIKE WHAT THE AO/DRP HAS MADE IS NOT WHAT THE STATUTE SAYS OR IS THAT INTENTION OF THE LEGISLATURE. THEREFORE, ACCORDING TO TH E LD COUNSEL IN THE PRESENT CASE IT IS ALSO EVIDENT THAT CGG WAS ENGAGED IN CONDUCTING THE SIESMIC SURVEYS WHICH ARE AN INTEGRAL PART OF THE PROSPECTING/EXPLORATION ACTIVITY. HENCE, THE EQUIPMENT PROVIDED BY THE ASSESSEE (I.E. VESSELS) WERE USED BY CGG FOR THE PURPOSES OF EXPLORATION ACTIVITY AND AS SUCH THE REVENUES RECEIVED BY THE ASSESSEE WERE ELIGIBLE TO BE TAXED UNDER THE PROVISIONS OF SECTION 44BB OF THE ACT. AND LD COUNSEL CITED JUDGEMENT IN WHICH IT HAS BEEN HELD THAT SEISMIC SURVEY IS COVERED UNDER THE ACT I VITY OF EXPLORATIO N/ PROSPECTIN G : (I). GEOFIZYKA TORUN (320 ITR 268) (AAR); ( II). SEABRID EXPLORATION FZ LLC (320 ITR 286) (AAR); (III). SPECTRUM GECO LTD. (346 ITR 422) (AAR); AND (IV). WESTERMGECO INTERNATIONAL LTD. (338 ITR 161) (AAR). 15 . FURTHER , THE LD COUNSEL SUBMITTED THAT THE NEXT ISSUE WHICH IS REQUIRED TO BE DETERMINED IS WHETHER ON THE FACTS OF THE PRESENT CASE COULD IT BE SAID THAT THE REVENUES ARISING FROM TIME CHARTER OF THE VESSELS WAS IN THE NATURE OF 'ROYALTY' AS DEFINED U NDER SECTION 9(1)(VI) AND ARTICLE 13 OF THE ACT AS HELD BY THE AO/DRP ? 16 . THE LD COUNSEL SUBMITTED THAT BOTH THE AO AS WELL AS THE DRP HAVE COME TO THE CONCLUSION (BASED O N THEIR INTERPRETATION THAT THE ASSESSEE BEING A HIRER PAGE 13 OF 46 WAS NOT ENTITLED TO THE BENEFIT OF SECTION 44BB OF THE ACT) THAT THE REC E IPTS OF THE ASSESSEE WERE LIABLE TO BE TAXED UNDER SECTION 9(1)(VI) OF THE ACT. 17 . AGAINST THIS FINDING, THE LD COUNSEL CONTENDED THAT THE RECEIPTS OF THE ASSESSEE ARE LIABLE TO BE TAXED UNDER THE PROVISIO NS OF SECTION 44BB OF THE ACT AND TOOK OUR ATTENTION TO THE PROVISIONS OF CLAUSE (VIA) OF SECTION 9(1)(VI) OF THE ACT WHICH EXCLUDES THE USE OF EQUIPMENT WHICH IS COVERED BY THE PROVISIONS OF SECTION 44BB OF THE ACT.THAT APART IT WOULD ALSO BE SEEN THAT TH E PROVISIONS OF SECTION 44D AND SECTION 44DA OF THE ACT HAVE NO APPLICABILITY ON THE FACTS OF THE PRESENT CASE SINCE THESE PROVISI ON CANNOT BE APPLIED IN A CASE WHERE THE TRANSACTION IS BETWEEN TWO NON - RESIDENTS . 18 . LD COUNSEL CITED THE DECISION OF THE DE LHI HIGH COURT IN THE CASE OF DIT VS. OHM L TD (212 TAXMAN 440/352 ITR 406) TO HIGHLIGHT THE LEGAL MAXIM GEN ERALLIA SPECIALIBUS NON DEROGANT AND CONTENDED THAT IN ANY CASE THE PROVISIONS OF SECTION 44BB OF THE ACT ASSUME PRECEDENCE OVER THE GENERAL PROVISIONS OF SECTION 44D AND 44DA OF THE ACT AND HENCE WOULD NOT BE APPLICABLE. 19 . ACCORDING TO THE LD COUNSEL, EVEN OTHERWISE, THE PROVISO TO SECTION 44BB OF THE ACT IN ANY CASE DOES NOT APPLY TO THE ASSESSEE SINCE THE REVENUES RECEIVED BY IT WERE FROM ANOTHER NON - RESIDENT COMPANY AND HENCE THE PROVISIONS OF SECTION 44D AND 44DA OF THE ACT HAVE NO APPLICABILITY ON SUCH REVENUES. SIMILARLY THE PROVISIONS OF SECTION 115A ALSO DO NOT APPLY ON THE FACTS OF THE PRESENT CASE. THEREFORE THE LD COUNSEL PRAYS THAT THE IMPUGNED ORDER BE SET - ASIDE AND EARLIER ORDER ACCEPTING THE STAND OF THE ASSESSEE MAY BE UPHELD FOR CONSISTENCY. IN NEXT PART OF A PPLICABILITY OF INTEREST UNDE R SECTION 234B THE LD. PAGE 14 OF 46 COUNSEL SUBMITTED THAT T HIS ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISION OF THE DELHI AND UTTARAKHAN HIGH COURT - DIT VS. MAERSK COMPANY LTD. (334 ITR 79 )UTT) DIT VS. JACABS CIVIL INCOPORATED (330 ITR 578) CIT VS. TIDE WATER MARINE INTERNATIONAL (309 ITR 85) 20 . ON THE OTHER HAND THE LD CIT DR SHRI SANJEEV SHARMA SUBMITTED THAT THE ASSESSEE HAS EARNED ITS INCOME FROM TIME CHARTERING OF VESSELS TO M/S. CGG SERVICES AS ROYALTY AS AGAINST ITS COMPUTATION OF INCOME UNDER SECTION 44BB OF THE ACT. AND ACCORDING TO HIM, THE DRP RIGHTLY HELD THAT THE RECEIPTS OF THE APPELLANT ARE TAXABLE AS ROYALTY UNDER ARTICLE 13 OF INDIA FRANCE DTAA AT THE RATE OF 10% ON GRO SS BASIS. 21 . ACCORDING TO THE LD CIT DR DURING THE YEAR ASSESSEE (OWNER) HAS TIME CHARTERED TWO VESSELS (CGG FOHN AND CGG MARAMATON) TO M/S. CGG MARINE SAS, FRANCE THE CHARTERER. 22 . THE LD CIT DR TOOK OUR ATTENTION TO THE COPY OF AGREEMENT IN REGARD TO 'FOHN' WHICH APPEARS AT PAGES 12 TO 57 OF THE PAPER BOOK FILED BY THEASSESSEE. IN THE SAID AGREEMENT, THE CHARTERER IS COMPAIGNEGENERALE DE GEOPHYSIQUE (CGG). RELEVANTPORTION OF THE AGREEMENT WAS BROUGHT TO OUR NOTICE. THE CLAUSES POINTED OUT BY THE LD CIT DR IS REPRODUCED BELOW: - THE OWNERS OFFER TO HIRE AND THE CHARTERERS ACCEPT TO RENT THE VESSEL AND ITS CREW FOR AN ACTIVITY OF GEOPHYSICAL PROSPECTION (PARAGRAPH 1.1; PAGE 12) IF A GEOPHYSICAL STUDY IS IN PROGRESS AT THE END OF THE NOTIFICATION PERIOD, THE CHARTERS WILL BE ALLOWED TO COMPLETE THE STUDY BEFORE RETURNING THE VESSEL TO THE OWNERS (PARAGRAPH 1.2; PAGE 12). THIS INDICATES THAT PAGE 15 OF 46 GEOPHYSICAL ACTIVITY IS CARRIED ON BY CGG. THE VESSEL S HALL BE EMPLOYED FOR GEOPHYSICAL PROSPECTION TASKS WORLDWIDE (PARAGRAPH 5.1;PAGE 13) THE CHARTERERS ARE RESPONSIBLE FOR OPERATING AND MAINTAINING ALL GEOPHYSICAL PROSPECTION - RELATED EQUIPMENT AS DESCRIBED IN APPENDIX 3 (PARAGRAPH 7.2; PAGE 14). ALL FUEL ON BOARD THE VESSEL AT THE TIME OF HANDOVER SHALL BE PAID FOR BY THE CHARTERERS (PARAGRAPH 8; PAGE 15) THE MASTER IS UNDER THE CHARTERS ORDERS AS REGARDS THE UTILIZATION OF THE VESSEL, SHIPPING AGENCIES AND ALL OTHER ARRANGEMENTS RELATING TO THE PERFORMAN CE OF THE GEOPHYSICAL PROSPECTION WORK (PARAGRAPH 12.1;PAGE 17). THE CHARTERS SHALL WITH THE PRIOR AGREEMENT OF THE OWNERS HAVE POSSIBILITY OF SUB - LETTING THE VESSEL SUBJECT TO GIVING THE OWNERS 60 DAYS ADVANCE NOTICE (PARAGRAPH 19; PAGE 19) RENTAL FEES BA SED ON USD/PER DAY (PARAGRAPH 23; PAGE 20) AGREEMENT WAS DRAFTED IN PARIS ON MARCH 1, 1996 (PAGE 23) THE CLIENTS OF CGG ARE THE SOLE, EXCLUSIVE OWNERS OF THESE RESULTS (PAGE 24). INDICATING THAT THOUGH THE PROSPECTION SERVICES ARE PERFORMED BY CGG THE RES ULTS BELONG TO CLIENTS. THE AGREEMENT WAS ENDORSED TO CGG MARINE, AS ON JULY 1, 1996 (PAGES 31 AND 32) BY ENDORSEMENT NO.6 THE TIME CHARTER CONTRACT DATED MARCH 1, 1996 WAS EXTENDED FOR A PERIOD OF TWO YEARS FROM MAY 20, 2004. THE CHARTERER WAS CGG MARIN E SAS, FRANCE. 23 . THE LD CIT DR SUBMITTED THAT TIME CHARTER PARTY AGREEMENT IN REGARD TO VESSEL'HARMATTAN' IS AVAILABLE ON PAGES 58 TO 78. THE VESSEL WAS HANDED OVER TO CGG ON 7 TH MAY 1996 IN ABIDJAN, IVORY COAST. THE VESSEL WAS ENDORSED TO C GG. MARINE S AS ON JULY 1, 1996. VIDE ENDORSEMENT NO. 6; THE AGREEMENT WAS EXTENDED FOR A PERIOD OF ONE YEAR FROM JANUARY 25, 2004 (PAGE 94). THE CHARTERER IS C.G.G. MARINE SAS, FRANCE. PAGE 16 OF 46 24 . THE LD CIT DR SHRI SANJEEV SHARMA TOOK OUR ATTENTION TO PARAGRAPH 1 OFTHE WRITTEN SUBMISSION OF THE ASSESSEE, W HICH STAT ES THAT VESSELS HAVE BEEN PROVIDED TO M/SCORNPANIGNEGENERALE DE GEOPHYSIQUE (CGG). PAGE 1 OF PB WHICH SHOWS THAT CGG SERVICES HAS ENTERED INTO CONTRACT WITH ONGC FOR CARRYING OUT SEISMIC OPERATIONS. PARAGRAPH 2 OF THE WRITTEN SUBMISSION OF THE ASSESSEE ALSO STATES CGG SERVICES HAD ENTERED INTO THREE CONTRACTS WITH ONGC FOR PROVIDING PERSONNEL AND EQUIPMENT, PLAN AND EXECUTES ACQUISITION OF 3D SEISMIC DATA AND BASIC 3D SEISMIC DATA PROCESSING. THE FLOW OF TRANSAC TIONS BETWEEN CGG MARINE SAS FRANCE AND CGG SERVICES IS NOT EXPLAINED BY THE ASSESSEE. THEREFORE ACCORDING TO THE LD CIT DR, THE ASSESSEE HAS CHARTERED / HIRED THE VESSELS TO CGG MARINE SAS FRANCE AND THE SAME ARE FINALLY HIRED TO (POSSIBLY IN A CHAIN) CGG SERVICES WHO HAS CARR IED OUT SEISMIC SURVEY FOR ONGC WHICH IS ENGAGED IN THE BUSINESS OF PROSPECTING, EXTRACTION AND PRODUCTION OF MINERAL OIL. 25 . ACCORDING TO THE LD CIT DR, AGREEMENT BETWEEN ASSESSEE AND CGG WAS ENTERED INTO IN 1996 AND HAS CONTINUED AL L THE YEARS SINCE THEN. THEREFORE, THE ASSESSEE IS ENGAGED IN LEASIN G BUSI NESS. THE A G REEMENT IS TO ALLOW THE USE OF VESSELS WORLDWIDE. THE CHARTERERS HAVE A RIGHT TO SU BL ET VESSEL. THE CHARTERER IS OBLIGED TO MAKE HIRE PAYMENTS IRRESPECTIVE OF THE USE OF VESSEL. FURTHER, THE VESSELS ARE GIVEN ON HIRE TO CGG MARINE SAS FRANCE WHO HAS IN TURN HIRED TO (POSSIBLY IN A CHAIN) TO CGG SERVICE S WHO ITSELF IS NOT ENGAGED ANY BUSINESS OF PROSPECTING, EXTRACTION AND PRODUCTION OF MINERAL OIL. CGG SERVICES PROVIDE SER VICES TO ONGC WHO IS ENGAGED IN THE BUSINESS OF PROSPECTI NG, EXTRACTION AND PRODUCTION OF MINERAL OIL. 26 . THE LD CIT DR SUBMITTED THAT AS FAR AS TAXATION OF REVENUE RECEIVED BY THE PAGE 17 OF 46 ASSESSEE UNDER THE PROVISIONS OF TAX TREATY BETWEEN INDIA AND FRANCE IS C ONCERNED, THE SAME IS TAXABLE AS ROYALTY UNDER THE PROVISIONS OF ARTICLE 13. PARAGRAPH 3 OF ARTICLE 13 OF TAX TREATY DEFINING ROYALTIES READS AS BELOW: FOR THE PURPOSES OF THIS ARTICLE, THE TERM 'ROYALTIES' MEANS: (A) ............ ( B ) PAYMENTS OF ANY KIND RECEIVED AS CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE, ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT, OTHER THAN INCOME DERIVED BY AN ENTERPRISE OF A CONTRACTING STATE FROM THE OPERATION OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC. 27 . AND THEREFORE IT IS LD CIT DR, CONTENDED THAT FROM A PERUSAL OF THE ABOVE, IT IS EXPLICITLY CLEAR THAT REVENUE RECEIVED FROM HIRING OF SHIPS IS COVERED BY THE DEFINITION OF ROYALTY IN THE TAX TREATY. IN THIS CASE ACCORDING TO THE LD CIT DR, THE ASSESSEE IS NOT COVERED BY THE EXCLUSION PROVISION AS IT IS NOT DERIVING INCOME FROM OPERATION OF SHIPS IN INTERNATIONAL TRAFFIC, AS THE VESSELS FOR WHICH PAYMENTS ARE BEING RECEIVED REMAIN IN THE INDIAN TERRITORY. 28 . ACCORDING TO THE LD CIT DR, THE PAYMENTS MADE BY A NON - RESIDENT TO ANOTHER NON - RESIDENT A RE ALSO COVERED UNDER THE SOURCE RULE PRESCRIBED IN PARAGRAPH 7 OF ARTICLE 13 OF THE TREATY. THE LD DR CONTENDED THAT ASSESSEE IN ITS WRITTEN SUBMISSION (PAGE 7) HAS REITERATED THAT IT HAD A PLACE O F BUSINESS IN INDIA AND HENCE A PE OF THE ASSESSEE CAME INTO EXISTENCE. OTHERWISE ALSO, THE PAYMENTS TO THE ASSESSEE AROSE IN INDIA AS PER PROVISIONS OF PARAGRAPH 7 OF ARTICLE 13 WHICH READS AS BELOW: 'ROYALTIES AND FEES FOR TECHNICAL SERVICES SHALL BE DE EMED TO ARISE IN A CONTRACTING STATE WHERE THE PAYER IS THAT STATE ITSELF, A POLITICAL SUB - DIVISION, A LOCAL AUTHORITY OR A RESIDENT OF THAT STATE. WHERE, HOWEVER, THE PERSON PAYING THE ROYALTIES OR FEES FOR TECHNICAL SERVICES, WHETHER HE IS A PAGE 18 OF 46 RESIDENT OF A CONTRACTING STATE OR NOT HAS IN A CONTRACTING STATE A PERMANENT ESTABLISHMENT OR A FIXED BASE IN CONNECTION WITH WHICH THE OBLIGATION TO MAKE PAYMENTS WAS INCURRED AND THE PAYMENTS ARE BORNE BY THAT PERMANENT ESTABLISHMENT OR FIXED BASE THEN THE ROYALTIE S OR FEES FOR TECHNICAL SERVICES SHALL BE DEEMED TO ARISE IN THE CONTRACTING STATE IN WHICH THE PERMANENT ESTABLISHMENT OR FIXED BASE IS SITUATED.' 29 . ACCORDING TO THE LD CIT DR, THE VESSELS HAVE BEEN USED BY CGG SERVICES IN INDIA AND PAYMENTS HAVE BEEN MADE FOR USING THE VESSELS FOR ITS BUSINESS IN INDIA AND PAYMENTS WERE INCURRED AND ARE BORNE BY THE PERMANENT ESTABLISHMENT OF THE CGG SITUATED IN INDIA THEREFORE THE ROYALTY IS DEEMED TO ARISE IN INDIA. 30 . ACCORDING TO THE LD CIT DR, THE PAYMENTS ARE BAS ED ON PER DAY RATE AND NOT BASED ON ACTUAL USE. ADDITIONALLY, PROVIDING FUEL IS AL SO RESPONSIBILITY OF THE CHARTERERS. THE USE OF THE VESSEL IS DEPENDENT ON THE USER AND THE ASSESSEE HAS NO ROLE IN ITS USE WHETHER USED IN INDIA OR OUT OF INDIA OR WHETHER U SED OR NOT USED, IT WILL RECEIVE PAYMENTS. THE ASSESSEE IS IN THE BUSINESS OF 'TIME CHARTERING' THE VESSELS. 31 . THE LD CIT DR SUBMITTED THAT THE REVENUE BELIEVES THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE IS NOT AMOUNTS REFERRED TO IN SECTION 44BB O F THE ACT FOR VARIOUS REASONS STATED ABOVE AND ACCORDINGLY EXCLUSION IN CLAUSE (IVA) OF EXPLANATION TO SECTION 9(1) (VI) OF THE ACT DO NOT APPLY IN THIS CASE. 32 . THE LD CIT DR SANJEEV SHARMA VEHEMENTLY ARGUED THAT IN THE PRESENT CASE TIM E CHARTERING OF VESSELS IS INVOLVED AND RELIED UPON THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF CIT VS. GOSALIA SHIPPING PVT. LTD. (113 ITR 307 ( SC ) ) TO CANVASS THE POINT THAT SINCE THE ASSESSEE HAS TIME CHARTERED ITS VESSELS, THEN SEC. 44BB IS NOT APPLICABLE. ACCORDING TO HIM, THE CHARTER ER COULD HAVE USED THE VESSEL FOR ANY OTHER ACTIVITY AND NOT CONFINED TO ACTIVITIES SPECIFIED UNDER SEC. PAGE 19 OF 46 44BB AND URGED THAT BECAUSE THE ASSESSEE HAS TIME CHARTERED ITS SHIPS TO CGG, THE INCOME DERIVED FROM SU CH ACTIVITY IN NO WAY ATTRACT SEC. 44BB. 32.1 THE LD DR EMPHASISED THAT THE USE OF WORDS 'IN THE' IS VERY IMPORTANT IN SECTION 44B AND MUST BE GIVEN ITS DUE MEANING. THE SCOPE OF THE WORDS 'IN THE' IS LIMITED THAN THE WORDS 'IN CONNECTION WITH' THAT ARE USED IN REGARD TO SERVICES OR FACILITIES. THIS WOULD THEREFORE, SUGGEST THAT THE PLANT AND MACHINERY MUST BE DIRECTLY USED BY THE PERSON HIRING THE SAME (CHARTERERS) IN THE PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS. IN THE PRESENT CASE, TH E CHARTERERS ARE NOT ENGAGED IN THE BUSINESS OF PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS. THESE VESSELS ARE USED BY THEM DURING THE COURSE OF EXECUTING THEIR AGREEMENTS WITH ONGC , WHO IS ENGAGED IN THE BUSINESS OF EXPLORATION AND EXTRACTION OF MINERAL OILS. ACCORDING TO HIM, THE REVENUE IS OF THE VIEW THAT THE SCOPE OF PROVISIONS CANNOT BE EXTENDED TO CASES WHEREIN SIMPLE HIRING OF VESSELS IS INVOLVED AND NOT DIRECTLY USED IN THE BUSINESS AS PRESCRIBED IN THE SECTION. SO, THE LD DR CONTENDED THAT THE BENEFIT CANNOT BE EXTENDED TO THE PERSONS HIRING THE VESSELS TO OTHER PERSONS WHO ARE NOT ENGAGED IN THE BUSINESS OF EXPLORATION, EXTRACTION OR PRODUCTION OF MINERAL OILS. THE LD DR BROUGHT OUT ATTENTION TO PARAGRAPH 5.1.1 (PAGES 2 T O 7 OF THE DRP ORDER) AND STATED THAT REASONING OF DECISION IS GIVEN ON PAGES 5 AND 6 OF THE DRP ORDER. DRP HAS STATED THAT, IN REGARD TO ACTIVITY OF SUPPLYING PLANT AND MACHINERY ON HIRE THE TERMS 'IN CONNECTION WITH' ARE NOT USED INDICATING THAT THE TERMS 'USED OR TO BE USED' ARE MEANT FOR HIRER ONLY WHEN THE CHARTERERS ARE USING THE SAME IN THEIR BUSINESS OF BUSINESS OF PROSPECTING, EXTRACTION AND PRODUCTION OF MINERAL OIL. 33 . ACCORDING TO HIM, THE SECTION 44BB USES THE EXPRESSION 'IN CONNECTION WITH' PAGE 20 OF 4 6 I N REGARD TO NON - RESIDENT ENGAGED IN THE BUSINESS OF PROVIDING SERVICES OR FACILITIES, WHEREAS, THE EXPRESSION' IN THE' PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OIL HAS BEEN USED IN CASE OF NON - RESIDENT SUPPLYING PLANT AND MACHINERY. THE SCOP E OF EXPRESSION 'IN CONNECTION WITH' CAME UP FOR CONSIDERATION BEFORE THE HON'BLE AAR IN THE C ASE OF GEOFIZYKA TORUN SP. ZO.O. (2009 - TII - 24 - ARA - INTL/320 ITR268)). PARAGRAPHS RELEVANT TO THE ISSUE WERE POINTED OUT AND ARE REPRODUCED BELOW. ' 6.1. THE EXPRESSION IN CONNECTION WITH' IS IMPORTANT AND HAS TO BE CONSTRUED TO HAVE EXPANSIVE MEANING. WHILE EXPLAINING THE MEANING OF SIMILAR AND INTER - CHANGEABLE EXPRESSIONS VIZ. 'PERTAINING T O' AND 'IN RELATION TO', THE SUPREME COURT OBSERVED IN THE C A SE OF DOYPACK SYSTEMS PVT.LTD. 1988 (36) ELT 201 (SC)=(2002 - TLOL - 389 - SC - MISC): '48. THE EXPRESSION 'IN RELATION TO' (SO ALSO 'PERTAINING TO'), IS A VERY BROAD EXPRESSION WHICH PRESUPPOSES ANOTHER SUBJECT MATTER. THESE ARE WORDS OF COMPREHENSIVENESS WHICH MIGHT BOTH HAVE A DIRECT SIGNIFICANCE AS WELL AS AN INDIRECT SIGNIFICANCE DEPENDING ON THE CONTEXT, SEE STATE WAKF BOARD VS. ABDUL AZIZ {AIR 1968 MADRAS 79, 81 PARAGRAPHS 8 AND 10, FOLLOWING ANDAPPROVING NITAICHARANBAGCHI VS. SURESH CHANDRA PAUL (66 C. WN . 767), SHYAMLAL VS. M.SHAYAMLAL (A.I.R. 1933 ALL. 649) AND 76 CORPUS JURIS SECUNDUM 621. ASSUMING THAT THE INVESTMENTS IN SHARES AND IN LANDS DO NOT FORM PART OF THE UNDERTAKINGS BUT ARE DIFFERENT SUBJECT MATTERS, EVEN THEN THESE WOULD BE BROUGHT WITHIN T HE PURVIEW OF THE VESTING BY REASON OF THE ABOVE EXPRESSIONS. IN THIS CONNECTION REFERENCE MAY BE MADE TO 76 CORPUS JURIS SECUNDUM AT PAGES 620 AND 621 WHERE IT IS STATED THAT THE TERM 'RELATE' IS ALSO DEFINED AS MEANING TO BRING INTO ASSOCIATION OR CONNEC TION WITH. IT HAS BEEN CLEARLY MENTIONED THAT 'RELATING TO' HAS BEEN PAGE 21 OF 46 HELD TO BE EQUIVALENT TO OR SYNONYMOUS WITH AS TO 'CONCERNING WITH' AND 'PERTAINING TO'. THE EXPRESSION 'PERTAINING TO' IS AN EXPRESSION OF EXPA NSION AND NOT OF CONTRACTION. 34 . IN THE D ECISION OF BRITISH COLUMBIA APPELLATE COURT, VANCOUER IN NANAIMO COMMUNITY HOTEL LTD. VS. CANADA, 1944 (4) DLR, 638 WHICH AROSE UNDER THE EXCISE PROFITS TAX ACT, 1940, THE FOLLOWING PASSAGE IS INSTRUCTIVE OF THE REAL IMPORT OF THE PHRASE 'IN CONNECTION WIT H': 'MR. CUNLIFEE ARGUES THAT THAT SECTION PRESUPPOSES THAT AN ASSESSMENT HAS BEEN MADE, AND THAT AS I UNDERSTAND HIM, THE WORDS 'IN CONNECTION WITH' MEAN 'CONSEQUENT UPON.' I DO NOT THINK THAT IS THE CORRECT CONSTRUCTION TO BE PUT UPON THESE WORDS. ONE O F THE VERY GENERALLY ACCEPTED MEANINGS OF 'CONNECTION' IS'RELATION' BETWEEN THINGS ONE OF WHICH IS BOUND UP WITH OR INVOLVED IN ANOTHER'; OR AGAIN 'HAVING TO DO WITH'. THE WORDS INCLUDE MATTERS OCCURRING PRIOR TO AS WELL AS SUBSEQUENT TO OR CONSEQUENT UPON SO LONG AS THEY ARE RELATED TO THE PRINCIPAL THING. THE PHRASE 'HAVING TO DO WITH' PERHAPS GIVES AS GOOD A SUGGESTION OF THE MEANING AS COULD BE HAD? I THINK SECTION 66 IS SUFFICIENT TO OUST THE JURISDICTION OF THIS COURT TO DEAL WITH A DECISION ON WHICH AN ASSESSMENT IS SUBSEQUENTLY MADE.' 35 . IN THAT CASE, THE COURT WAS WITH INTERPRETING SECTION 66 OF THE INCOME WAR TAX ACT WHICH READS AS UNDER: '66. SUBJECT TO THE PROVISIONS OF THIS ACT, THE EXCHEQUER COURT SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ALL QUESTIONS THAT MAY ARISE IN CONNECTION WITH ANY ASSESSMENT MADE UNDER THIS ACT. 6.3. IN V.A. VASUMATHI V. C IT 123 ITR 94 THE KERALA HIGH COURT OBSERVED WHILE INTERPRETING SECTION 48(1) OF THE INCOME - TAX ACT THAT THE WORDS 'IN CONNECTION WITH SUCH TRANSFER' MEAN INTRINSICALLY RELATED TO THE TRANSFER AND THE EXPENDITURE HAS TO BE CONNECTED WITH THE TRANSFER. PAGE 22 OF 46 7. KEEPING THE ABOVE EXPOSITION OF THE PHRASE 'IN CONNECTION WITH', IT IS CRYSTAL CLEAR THAT THE SERVICES OFFERED BY THE APPLICANT IS IN CONNECTION WITH THE PROSPECTING FOR OR EXTRACTION OF MINERAL OILS, WHICH BUSINESS IS CARRIED ON BY THE APPLICANTS EMPLO Y E RS VIZ. THOSE IN THE BUSINESS OF ALL AND AAS PRODUCTION. THE REAL; INTIMATE AND PROXIMATE NEXUS BETWEEN THE SERVICES PERFORMED BY THE APPLICANT IN INDIA AND THE PROSPECTING FOR OR EXTRACTION OF MINERAL OILS (WHICH EXPRESSION INCLUDES PETROLEUM AND NATURAL GAS) IS VERY MUCH PRESENT IN THE INSTANT CASE. 36 . GEOFIZYKA'S CUSTOMER WAS ONGC. THE TEST APPLIED BY THE HON'BLE AAR WAS THE BUSINESS OF ONGC (APPLICANT'S EMPLOYERS) TO WHOM SERVICES WERE PROVIDED. IT WAS HELD THAT THE SERVICES PROVIDED BY GEOFYZKA WER E IN CONNECTION WITH THE EXPLORATION FOR OR EXTRACTION OF MINERAL OIL AS ONGC WAS ENGAGED IN THIS BUSINESS. THE REVENUE HUMBLY SUBMITS THAT EVEN IF THE WIDER SCOPE OF THE MEANING OF EXPRESSION 'IN CONNECTION WITH' IS APPLIED IN THE CASE BEFORE THE HON'BLE TRIBUNAL, THEN ALSO THE PAYMENTS WOULD NOT BE COVERED UNDER THE PROVISIONS OF SECTION 44BB AS, APPLICANT'S EMPLOYER/CHARTERER, CGG MARINE SAS FRANCE IS NOT ENGAGED IN THE BUSINESS OF PROSPECTING, EXPLORATION OF OR EXTRACTION OF MINERAL OIL. 37 . THEREFORE , REAL TEST TO DECIDE THE APPLICABILITY OF SECTION 44BB IS THE BUSINESS OF THE CUSTOMER OF THE ASSESSEE WHETHER THEY ARE IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS. IT APPEARS THAT CGG MARINE SAS, THE CUSTOMER OF THE ASSESSEE HAS NOT PROVIDED ANY SERVICES TO ONGC. THIS IS A CASE OF MULTI - LEVEL OF HIRING AND NEITHER THE ASSESSEE NOR THE CHARTERER (CGG SAS FRANCE) IS IN THE BUSINESS OF PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS. CGG SERVICES, A PERSON OTHER THAN TH E ASSESSEE AND ITS CUSTOMER, HAS PROVIDED THE SERVICES TO ONGC. 38 . THEREFORE THE LD DR CONTENDED THAT BASED ON THE AVAILABLE FACTS, IT WAS PAGE 23 OF 46 ONGC AND NOT THE CUSTOMER OF THE ASSESSEE THAT WAS ENGAGED IN THE BUSINESS OF PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS. 39 . ACCORDING TO THE LD CIT DR, SECTION 44B B IS A SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS IN CONNECTION WITH THE BUSIN E SS OF EXPLORATION, ETC., OF MINERAL OILS. IT PROVIDES FOR PRESUMPTIVE TAXATION OF INCOME. SCOPE OF SECTION 44 B B WAS EXPLAINED IN CBDT CIRCULAR NO. 495 DATED 22.02.1987. THIS CIRCULAR MENTIONED THAT, A NUMBER OF COMPLICATIONS ARE INVOLVED IN THE COMPUTATION OF TAXABLE INCOME IN THE BUSINESS OF PROVIDING SERVICES AND FACILITIES IN CONNECTION WITH OR SUPPLY OF PLANT OR MACHINERY ON HIRE, USED OR TO BE USED IN THE EXPLORATION OR EXPLOITATION OF MINERAL OILS. WITH A VIEW OF SIMPLIFYING THE PROVISIONS, FINANCE ACT, 1987, HAS INSERTED A NEW SECTION.' IN THE CASE OF ASSESSEE, NO COMPLICATIONS ARE INVOLVED IN THE COMPUTATI ON OF INCOME BECAUSE THE PAYMENTS ARE OF THE NATURE OF ROYALTY AND TAXABLE ON GROSS BASIS BOTH UNDER THE PROVI SIONS OF TAX TREATY AND THE ACT AND THEREFORE THE LD DR DOES NOT WANT US TO INTERFERE IN THE REASONED ORDER OF THE AUTHORITIES BELOW. 40 . THE LD COUNSEL SHRI DEEPAK CHOPRA IN HIS REJOINDER TO THE SUBMISSION OF THE LD CIT DR SUBMITTED THAT THERE IS NO DISPUTE THAT SEISMIC SURVEY ACTIVITIES FORM PART OF EXPLORATION ACTIVITY AND AS SUCH ARE ELIGIBLE FOR THE BENEFIT UNDER SECTION 44BB THE ACT AND THE REVENUE IS IN AGREEMENT WITH THE ASSESSEE IN REGARD TO THE SAME. THE MAIN ISSUE, WHICH ARISES FOR DETERMINATION IN THE PRESENT CASE, IS WHETHER THE ASSESSEE BEING A SUBCONTRACTOR IS ELIGIBLE FOR CLAIMING BENEF IT OF SECTION 44 BB OF THE ACT AND POINT ED OUT THAT THE ASSESSEE'S CASE IS THAT IT HAS PROVIDED VESSELS TO CGG WHO HAS USED THE SAME FOR CARRYING SEISMIC DATA ACQUISITION FOR ONGC WHICH IS ADMITTEDLY IN EXPLORATION ACTIVITY. PAGE 24 OF 46 41 . IN RESPECT TO THE CONTENTION OF THE LD CIT DR THAT THE FLOW OF TRANSACTION S BETWEEN CGG MARINE SAS FRANCE AND CGG SERVICES I S NOT EXPLAINED BY THE ASSESSEE ; AND THAT THE ASSESSEE HAS CHARTER HIR ED TO CGG MARINE WHICH ARE FINALLY HIRED IN CHAIN TO CGG SERVICES ; AND BASED ON THESE ALLEGED FACTS THE LD CIT DR HAS CONCLUDED THAT THE ASSESSEE IS INTO LEASING BUSINESS. TO THIS CONTENTION AND CO NCLUSION OF THE LD DR, THE LD COUNSEL SUBMITTED THAT C GG SERVICES SAS ( C GG SERVICES') WAS FORMERLY KNOWN AS C GG MARINE SAS. IN THIS REGARD, HE TOOK OUR ATTENTION TO THE TDS CERTIFICATES ISSUED BY C GG SERVICES ON PAGE 108 & 109 OF THE ASSESSEE'S PAPER BOOK ('PB') WHICH SHOWS THAT C GG MARINE AND C GG SERVICES ARE ONE AND THE SAME ENTITY. THEREFORE ACCORDING TO THE LD COUNSEL, THE CONCLUSION DRAWN BY THE LD. CIT DR THAT ASSESSEE HAS CHARTERED HIRED VESSELS TO C GG MARINE WHICH ARE FINALLY HIRED IN CHAIN TO C GG SERVICES AND THAT THE ASSESSEE IS IN LEASING BUSINESS IS INCORRECT AND IS BASED PURELY ON SURMISES AND CONJECTURES. IT WAS FURTHER SUBMITTED THAT THE LD. CIT DR HAS WRONGLY ASSUMED WITHOUT ANY SUPPORTING MATERIAL THAT THE SEISMIC SURVEY VESSELS HAVE BEEN HIRED IN CHAIN TO C GG SERVICES. THUS ACCORDING TO THE LD COUNSEL, THE LD. DR'S SUBMISSION IS LIABLE TO BE REJECTED/DISREGARDED, SINCE IT IS FACTUALLY INCORRECT. 42 . IN RESPECT TO THE CONTENTION OF THE LD CIT DR THAT FOR AVAILING THE BENEFIT OF SECTION 44BB OF THE ACT, THE PLANT AND MACHINERY TO BE USED, MUST BE DIRECTLY USED BY THE PERSON HIRING THE SAME (CHARTERERS) IN THE PROSPECTING, EXTRACTION ORPRODUCTION OF M INERAL OILS. AND TO THE CONTENTION OF THE LD CIT DR THAT IN THE PRESENT CASE, THE CHARTERS ARE NOT ENGAGED IN THE BUSINESS OF PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS AND THEREFORE NOT ELIGIBLE FOR BENEFIT OF SECTION 44BB OF TH E ACT. THE LD COU NSEL SUBMITTED THAT SECTION 44BB ENVISAGES PAGE 25 OF 46 THE CASE OF AN ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF SUPPLYING PLANT AND MACHINERY ON HIRE 'USED', OR 'TO BE USED', IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AND AS MUCH MANDATES TH AT SUCH PERSON WOULD BE TAXED ON A DEEMED INCOME BASIS. A PLAIN READING OF THE PROVISION ALSO SUGGESTS THAT THE LEGISLATURE HAD NOT IMPOSED THE CONDITION OF 'USED' OR 'TO BE USED' ON SUCH PERSON. THE TERM 'USE' OR 'USED' HAS BEEN QUALIFIED IN RESPECT OF PR OSPECTION, EXTRACTION AND PRODUCTION OF MINERAL OILS. THE P ROVISION ITSELF ENVISAGES THE POSSIBILITY THAT THE PERSON WHO IS LETTING THE EQUIPMENT IS ENGAGED IN THAT BUSINESS ONLY VIZ. SUPPLYING PLANT AND MACHINERY. HOWEVER, THE ONLY CONDITION THAT IS MANIF EST IN THE SAID PROVISION IS THAT SUCH PLANT AND MACHINERY SHOULD HAVE BEEN USED IN THE PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS. AND THE ADMITTED FACTS IN THE PRESENT CASE ARE THAT C GG (THE HIRER) HAS USED THE EQUIPMENT IN EXPLORATION , PROSPECTION AND PRODUCTION OF MINERAL OILS . 43 . IT WAS ALSO STATED BY THE LD COUNSEL THAT THE PROVISION NO WHERE LAYS DOWN THAT CHARTERERS SHOULD BE ENGAGED DIRECTLY IN THE BUSINESS OF PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS . ACCORDING TO TH E LD AR THE CONCLUSIONS OF THE LD. CIT DR ARE ALSO FALLACIOUS ON ACCOUNT OF THE REASON THAT THE PROVISION CLEARLY ENVISAGES THE NON - RESIDENT ASSESSEE TO BE ENGAGED ONLY IN THE BUSINESS OF SUPPLYING PLANT AND MACHINERY. THE ONLY CONDITION IMPOSED, SO TO SPEA K, IS THAT SUCH PLANT AND MACHINERY HAS TO BE USED OR SHOULD BE USED FOR THE PURPOSES OF PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS. THE USER IS NOT DEFINED AND AS SUCH THE USER COULD BE A THIRD PERSON AS WELL. HENCE, WHERE THE PROVISION DOES NO T CREATE ANY DISCRIMINATION BETWEEN THE PERSON WHO ACTUALLY DOES THE ACTIVITY OF PROSPECTING, EXTRACTION OR PRODUCTION AND THE PERSON WHO SUPPLIES THE PAGE 26 OF 46 PLANT AND MACHINERY FOR SUCH PROSPECTION TO BE CARRIED OUT, A NARROW INTERPRETATION OF THE PROVISION SHOU LD NOT BE DRAWN. THE BASIC CONDITION TO BE SATISFIED IN THE SAID PROVISION IS THAT THE MAIN CONTRACTOR SHOULD BE ENGAGED IN THE PROVISION OF SERVICES OR FACILITIES IN CONNECTION WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERALS OILS OR WHERE EQUIPMENT HAS BEEN SUPPLIED, SUCH EQUIPMENT SHOULD HAVE BEEN USED FOR THE PURPOSES OF PROSPECTION, EXTRACTION OR PRODUCTION OF MINERAL OILS. THAT WHERE THE LEGISLATURE INTENDED TO IMPOSE SUCH A CONDITION IT WAS SPECIFICALLY SO PROVIDED FOR, ACCORDINGLY ASSESSEE IS ELIGIBLE FOR BENEFIT OF SECTION 44BB OF THE ACT. AND THE LD COUNSEL IN ORDER TO SUBSTANTIATE THIS ARGUMENT REFERRED TO THE EXPLANATION 2 CONTAINED TO SECTION 9 (I) (VII) WHICH IS REPRODUCED AS UNDER: - FOR THE PURPOSES OF THIS CLAUSE,' FEES FOR TECHNICAL SE RVICES' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY C ONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD' SALARIES'. 44 . FROM THE AFORESAID EXPLANATION IT WAS CONTENDED BY THE LD COUNSEL THAT THAT FEE FOR TECHNICAL SERVICE DOES NOT INCLUDE CONSIDERATION IN RELATION TO MINING, IN CASE THE PROJECT IS UNDERTAKEN BY THE RECIPIENT. THUS ACCORDING TO THE LD COUNSEL WHERE THE LEGISLATURE WANTED THAT, THEN THE CONDITION IS IMPOSED SPECIFICALLY AND THE SAME HAS BEE N PROVIDED IN THE STATUE ITSELF. HOWEVER IT WAS STRESSED BY THE LD COUNSEL THAT THERE IS NO SUCH CONDITION IMPOSED IN SECTION 44BB, THAT THE PERSON WHO HAS SUPPLIED THE PLANT MACHINERY SHOULD BE DOING THE EXPLORATION ACTIVITY HIMSELF . PAGE 27 OF 46 45 . IN RESPECT TO THE CONTENTION OF THE LD CIT DR THAT CGG SERVICES IS ITSELF NOT ENGAGED IN THE BUSINESS OF PROSPECTING, EXPLORATION OF OR EXTRACTION OF MINERAL OILS. AND TO THE CONTENTION OF THE LD CIT DR THAT IT WAS ONGC AND NOT CUSTOMER OF THE ASSESSEE THAT WAS ENGAGED IN THE BUSINESS OF PROSPECTING, EXPLORATION OF OR EXTRACTION OF MINERAL OILS. THE LD COUNSEL SUBMITS THAT THE CGG SERVICES HAD ENTERED INTO CONTRACTS WITH ONGC FOR PROVIDING PERSONNEL AND E QUIPMENT, PLANNING AND EXECUTING ACQUISITION OF 3D SEISMIC DATA AND BASIC 3 D SEISMIC DATA PROCESSING. THE LD. COUNSEL SUBMITTED THAT TO REDUCE THE RISKS INVOLVED IN EXPLORATORY DRILLING, SEISMIC SURVEYS ARE CONDUCTED TO GATHER DATA TO UNDERSTAND THE SIZE A ND LOCATION OF OIL FIELDS (OR SQUEEZE MORE OIL OUT OF EXISTING RESERVOIRS). SEISMIC SURVEYS CAN PAINT A PICTURE OF THE SUBSURFACE IN ORDER TO BETTER TARGET THE OIL AND GAS RESERVES. THIS RESULTS IN FEWER DRY HOLES AND EVEN AVOIDS DRILLING IF SEISMIC DATA S UGGESTS A LOW POTENTIAL FOR OIL OR GAS. ACCORDINGLY, FOR ANY OIL AND GAS EXPLORATION ACTIVITY, SEISMIC SURVEY IS THE FIRST STEP AND PERHAPS THE MOST CRITICAL PART OF THE ACTIVITY. HENCE, SUCH SERVICES ARE DIRECTLY RELATED AND IN FACT ARE A PART OF THE EXPL ORATION / PROSPECTING ACTIVITIES FOR MINERAL OIL (PETROLEUM AND NATURAL GAS). 46 . IN THIS REGARD, REFERENCE WAS ALSO DRAWN TO MODEL PRODUCTION SHARING CONTRACT ('MODEL PSC') (PLEASE REFER PAGE 184 - NELP VIII AND PAGE 189 DEFINITION OF THE EXPLORATION OPERAT IONS AT POINT 1.43) WHICH FORMS THE BASIS OF ANY OIL AND GAS FIELD DEVELOPMENT ACTIVITY IN INDIA. THE 'EXPLORATION OPERATIONS' AS DEFINED UNDER MODEL PSC ALSO INCLUDES SEISMIC ACTIVITIES. THE DEFINITION 'EXPLORATION OPERATIONS' IS REPRODUCED AS UNDER: 'OP ERATIONS CONDUCTED IN THE CONTRACT AREA PURSUANT TO THIS CONTRACT IN SEARCHING FOR PETROLEUM AND IN THE COURSE OF AN APPRAISAL PROGRAMME AND PAGE 28 OF 46 SHALL INCLUDE BUT NOT BE LIMITED TO AERIAL, GEOLOGICAL, GEOPHYSICAL, GEOCHEMICAL, PALAEONTOLOGICAL, PALYNOLOGICAL T OPOGRAPHICAL AND SEISMIC SURVEYS, ANALYSIS, STUDIES AND THEIR INTERPRETATION, INVESTIGATIONS RELATING TO THE SUBSURFACE GEOLOGY INCLUDING STRUCTURAL TEST DRILLING, STRATIGRAPHIC TEST DRILLING, DRILLING OF EXPLORATION WELLS AND APPRAISAL WELLS AND OTHER REL ATED ACTIVITIES SUCH AS SURVEYING, DRILL SITE PREPARATION AND ALL WORK NECESSARILY CONNECTED THEREWITH THAT IS CONDUCTED IN CONNECTION WITH PETROLEUM EXPLORATION. 47 . FURTHER, THE PETROLEUM TAX GUIDE (AT PAGE 191 OF THE PAPER BOOK) WHILE DEFINING 'EXPLORA TION OPERATIONS' (AT PAGE 195) ALSO INCLUDES SEISMIC SURVEYS. 48 . THE VIEW THAT SEISMIC SURVEY IS A PART OF EXPLORATION AND PROSPECTION OF MINERAL OILS HAS ALSO BEEN SUPPORTED BY HON'BLE DELHI HIGH COURT IN CASE OF OHM LIMITED.(352 ITR 406) . THEREFORE, A CCORDING TO THE LD COUNSEL, THE ANALOGY DRAWN BY THE LD. CIT DR THAT THE CGG SERVICES IS NOT ENGAGED IN THE BUSINESS OF PROSPECTING, EXPLORATION OF OR EXTRACTION OF MINERAL OILS IS INCORRECT AND SANS ANY MERIT . 49 . WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. BEFORE WE LOOK INTO THE MERITS OF THE CASE, WE WOULD LIKE TO MAKE A MENTION OF SECTION 44B AND SECTION 172 WHICH DEALS WITH SPECIAL PROVISIONS FOR COMPUTING PROFITS AND GAINS OF SHIPPING BUSINESS IN THE CASE OF NON - RESIDENTS. THE PROVISIONS OF SECTION 44B OF THE ACT WERE BROUGHT ON THE STATUTE BOOK TO SIMPLIFY THE TAXATION OF NON - RESIDENTS E NGAGED IN THE SHIPPING BUSINESS. C LAUSE ( 1 ) OF SECTION 44B EXTENDS TO THE AMOUNT PAID OR PAYABLE (WHETHER IN OR OUT OF INDIA) TO THE ASSESSEE OR TO ANY PERSON ON HIS BEHALF ON ACCOUNT OF CARRIAGE OF PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT ANY PORT IN INDIA; AND CLAUSE (II) EXTENDS TO THE AMOUNT RECEIV ED OR DEEMED TO BE RECEIVED IN INDIA BY OR ON PAGE 29 OF 46 BEHALF OF THE ASSESSEE ON ACCOUNT OF THE CARRIAGE OF PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT ANY PORT IN INDIA. HOWEVER, SECTION 172 DEALS WITH PROFITS OF NON - RESIDENTS FROM OCCASIONAL SHIPPING BUSINE SS. AND WAS ALSO A SPECIAL PROVISION FOR THE LEVY AND RECOVERY OF TAX IN THE CASE OF ANY SHIP, BELONGING TO OR CHARTERED BY A NON - RESIDENT, WHICH CARRIES PASSENGERS, LIVESTOCK, MAIL OR GOODS SHIPPED AT A PORT IN INDIA. UNDER THIS PROVISION AN AD - HOC ASSES SMENT IS MADE BEFORE THE SHIP IS ALLOWED TO LEAVE THE INDIAN PORT UNLESS THE NON - RESIDENT SHIPPING CONCERN HAS AN AGENT IN INDIA FROM WHOM THE TAX WOULD BE RECOVERABLE. T HUS, BOTH THESE PROVISIONS I.E. SEC. 44B AND SEC. 172 OF THE ACT APPLIES TO NON - RESIDE NTS ENGAGED IN THE BUS INESS OF SHIPPING WHERE THERE I S CARRIAGE OF PASSENGER S, LIVESTOCK ETC. SECTION 172 I S AN ALTERNATIVE MECHANISM, WHICH PERMITTED THAT INSTEAD OF MAKING AN AD - HOC ASSESSMENT ON THE NON - RESIDENT BEFORE THE SHIP WERE TO LEAVE THE PORT IN INDIA; THE AGENT IN INDIA WOULD MAKE THE PROVISIONS FOR PAYMENT OF TAXES AT IN THE MANNER SPECIFIED IN THE SAID PROVISION. THESE SEC TIONS ARE NOT APPLICABLE PER - SE TO THE INSTANT CASE, HOWEVER, IT IS MENTIONED BECAUSE SEC. 172 OF THE ACT, WAS AN ISSUE IN GOSALIA SHIPPING PVT. LTD. (113 ITR 307) SC WHICH WAS HEAVILY RELIED BY THE LD. CIT DR TO SUPPORT THE CONTENTION THAT THE AGREE MENT OF THE ASSESSEE WAS A TIME - CHARTER AND SO THE SPECIAL PROVISION OF SEC. 44BB IS OF NO AVAIL TO THE ASSESSEE. WE WILL DEAL WITH THE SAID CONTENTION LATER. AND I N ORDER TO ADJUDICATE THE ISSUE IN HAND, IT WOULD BE APPOSITE TO REPRODUCE THE PROVISION OF LAW INVOLVED IN THE MATTER. SO SECTION 44BB IS REPRODUCED BELOW: - SECTION 44BB [S PECIAL PROVISION FOR COMPUTING PROFITS AND GAINS IN CONNECTION WITH THE BUSINESS OF EXPLORATION, ETC., OF MINERAL OILS. PAGE 30 OF 46 (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 41 AND SECTIONS 43 AND 43A, [IN THE CASE OF AN ASSESSEE, BEING A NON - RESIDENT] ENGAGED IN THE BUSINESS OF PROVIDING SERVICES, OR FACILITIES IN CONNECTION WITH, OR SUPPLYING PLANT AND MACH INERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS, A SUM EQUAL TO TEN PER CENT OF THE AGGREGATE OF THE AMOUNTS SPECIFIED IN SUB - SECTION (2) SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS C HARGEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION': PROVIDED THAT THIS SUB - SECTION SHALL NOT APPLY IN A CASE WHERE THE PROVISIONS OF SECTION 42 OR SECTION 440 OR [SECTION 440A OR ( SECTION 115A OR SECTION 293AAPPLY FOR THE PURPOS ES OF COMPUTING PROFITS OR GAINS OR ANY OTHER INCOME REFERRED TO IN THOSE SECTIONS. (2) THE AMOUNTS REFERRED TO IN SUB - SECTION (1) SHALL BE THE FOLLOWING, NAMELY: (A) THE AMOUNT PAID OR PAYABLE (WHETHER IN OR OUT OF INDIA) TO THE ASSESSEE OR TO ANY PERS ON ON HIS BEHALF ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS IN INDIA; AND (B) THE AMOUNT REC EIVED OR DEEMED TO BE RECEIVED IN INDIA BY OR ON BEHALF OF THE ASSESSEE ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH, OR SUPPLY OF PLANT AND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUC TION OF MINERAL OILS OUTSIDE INDIA. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1), AN ASSESS MAY CLAIM LOWER PROFITS AND GAINS THAN THE PROFITS AND GAINS SPECIFIED IN THAT SUB - SECTION, IF HE KEEPS AND MAINTAINS SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED UNDER SUB - SECTION (2) OF SECTION 44AA AND GETS HIS ACCOUNTS AUDITED AND FURNISHES A REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB, AND THEREUPON THE AO SHALL PROCEED TO MAKE AN ASSESSMENT OF THE TOTAL INCOME OR LOSS OF THE ASSES SEE UNDER SUB - SECTION (3) OF SEC. 143 AND DETERMINE THE SUM PAYABLE BY, OR REFUNDABLE TO, THE ASSESSEE . EXPLANATION: FOR THE PURPOSES OF THIS SECTION, - (I) PLANT INCLUDES SHIPS, AIRCRAFTS, VEHICLES, DRILLING UN ITS, SCIENTIFIC PAGE 31 OF 46 APPARATUS AND EQUIPMENT, USED FOR THE PURPOSES OF THE SAID BUSINESS; (II) MINERAL OIL INCLUDES PETROLEUM AND NATURAL GAS. 50 . AN ANALYSIS OF THE SAID SECTION REVEALS THAT IT (SEC. 44BB) IS A SPE CIAL PROVISION IN RESPECT TO AN ASSESSEE WHO IS A NON - RESIDENT FOR COMPUTING PROFITS AND GAIN IN CONNECTION WITH THE BUSINESS OF EXPLORATION, ETC OF MINERAL OILS. THE CHARGING PROVISIONS IS CONTAINED IN SUB - SECTION (1) OF SECTION 44BB, THE RELEVANT PART OF WHICH PROVIDES THAT WHERE AN ASSESSEE, NON - RESIDENT IS ENGAGED IN THE BUSINESS OF PROVIDING S ERVICES, OR FACILITIES IN CONNECTION WITH OR SUPPLYING PLANT AND MACHINERY ON HIRE USED, OR TO BE USED, IN TH E PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS, A SUM EQUAL TO TEN PERCENT OF THE AGGREGATE OF THE AMOUNT SPECIFIED IN SUB - SECTION (2). WHAT ATTRACTS SEC. 44BB IS THE GENERATION OF INCOME (OPERATIONAL INCOME). IT SHOULD BE REMEMBERED THAT OWNERSHIP OF A SHIP PER SE WILL NOT ATTRACT SEC. 44BB. IT IS THE INCOME ARISING ON ACCOUNT OF SUPPLYING OF PLANT/SHIP ON HIRE USED IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF MINERAL OILS IN INDIA. ON A PLAIN READING OF THE SAID PROVISION IT WOULD BE APPARENT THAT THE SECTIO N ENVISAGES THE CASE OF AN ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF SUPPLYING PLANT AND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS AND AS MUCH MANDATES THAT SUCH PERSON WOULD BE TAXED ON A DEEMED INCOME BASIS. THE TERM USED OR TO BE USED HAS BEEN QUALIFIED IN RESPECT OF SERVICES OR FACILITIES IN CONNECTION WITH OR SUPPLY OF PLANT AND MACHINERY FOR PROSPECTI NG FOR OR EXTRACTION AND PRODUCTION OF MINERAL OILS. THE PROVISION ITSELF ENVISAG ES CLEARLY THE NON - RESIDENT TO BE IN THE BUSINESS OF LETTING PLANT AND MACHINERY. HOWEVER, THE ONLY CONDITION THAT IS MANIFEST IN THE SAID PROVISION IS THAT SUCH PLANT AND MACHINERY SHOULD HAVE BEEN USED OR TO BE USED IN THE PROSPECTING FOR , PAGE 32 OF 46 EXTRACTION OR PRODUCTION OF MINERAL OILS WHICH INCLUDES PETROLEUM AND NATURAL GAS . 51 . BEFORE WE PROCEED FURTHER TO ASCERTAIN THE CLAIM OF THE ASSESSEE WHETHER BUSINESS OF LENDING THE SHIPS FALLS U/S 44BB WE HAVE TO EXAMINE THE CONTENTION OF THE LD. DR WHO HA S RELIED ON THE DECISION OF THE H ONBLE SUPREME COURT IN CIT V. GOSALIA SHIPPING PVT. LTD. (113 ITR 307) SC TO CANVASS THE POINT THAT IN THE CASE OF A TIME - CHARTER THE PROVISIONS OF SECTION 44BB OF THE ACT WOULD CEASE TO HAVE ANY EFFECT. THE QUESTION WHICH AROSE BE FORE THE APEX COURT IN THAT CASE WAS WHETHER IN TERMS OF SUB - SECTION (2) OF SECTION 172 OF THE ACT WHICH PROVIDES THAT WHERE A SHIP BELONGING TO OR CHARTERED BY A NON - RESIDENT CARRIES GOODS SHIPPED AT A PORT IN INDIA, ONE SIXTH OF THE AMOUNT PAID OR PAYABL E 'ON ACCOUNT OF SUCH CARRIAGE' TO THE OWNERS OR THE CHARTERER OR TO ANY OTHER PERSON SHALL BE DEEMED TO BE INCOME ACCRUING OR ARISING IN INDIA OR WHETHER THE PAYMENT MADE BY THE CHARTERERS TO THE OWNER OF THE SHIP WAS FOR THE USE AND HIRE OF SUCH SHIP. THE APEX COURT MADE THE FOLLOWING OBSERVATION IN RESPECT TO ASCERTAIN THE INTENTION OF PARTIES TO AN AGREEMENT AND THEN WENT ON TO ANALYSIS THE AGREEMENT IN QUESTION IN THAT CASE AND OBSERVED THAT 'IT IS TRUE THAT ONE CANNOT PLACE OVER - RELIANCE ON THE FORM WHICH THE PARTIES GIVE TO THEIR AGREEMENT OR ON THE LABEL WHICH THEY ATTACH TO THE PAYMENT DUE FROM ONE TO THE OTHER. ONE MUST HAVE REGARD TO THE SUBSTANCE OF THE MATTER AND, IF NECESSARY, TEAR THE VEIL IN ORDER TO SEE WHETHER THE TRUE CHARACTER OF A PAYM ENT IS SOMETHING OTHER THAN WHAT, BY A CLEVER DEVICE OF DRAFTING, IT IS MADE TO APPEAR. BUT WE SEE NO REASON TO HOLD THAT THE REAL INTENTION OF THE PARTIES WAS SOMETHING DIFFERENT FROM WHAT THE WORDS USED BY THEM CONVEY IN THEIR ACCEPTED SENSE. THE CHARTER - PARTY WAS DRAWN IN A PAGE 33 OF 46 STANDARD FORM APPROVED BY THE 'NEW YORK PRODUCE EXCHANGE' AND THERE IS NO WARRANT FOR SUPPOSING THAT THOUGH THE PAYMENT WHICH THE CHARTERERS BOUND THEMSELVES TO MAKE TO THE OWNERS OF THE SHIP WAS ON ACCOUNT OF THE CARRIAGE OF GOODS, T HE PARTIES DESCRIBED IT AS BEING PAYABLE FOR THE USE AND HIRE OF THE VESSEL, IN ORDER TO AVOID THE PAYMENT OF INDIAN INCOME - TAX'. WHILE ADJUDICATING ON THE CONTROVERSY INVOLVED THE HONBLE SUPREME COURT HELD THAT THE CRUX OF THE TRANSACTION WAS THAT THE C HARTERERS WERE NOT LIABLE FOR TO PAY TO THE OWNERS ANY AMOUNT ON ACCOUNT OF CARRIAGE OF GOODS AND HEN CE THE PROVISIONS OF SECTION 172 OF THE ACT WERE NOT APPLICABLE. IN THE SAID CASE THE PRINCIPLE LAID DOWN WAS THAT A TIME CHARTER SIMPLICITOR WOULD NOT 'FA LL WITHIN THE CHARGING PROVISIONS CONTAINED IN SUB - SECTION (2) OF SECTION 172 OF THE ACT, SINCE TO FALL WITHIN THE PURVIEW OF SECTION 172 OF THE ACT THE PAYMENT HAS TO BE FOR THE CARRIAGE OF PASSENGERS, GOODS ETC. LET US NOW EXAMINE WHETHER THIS JUDGMENT H ELP S THE CONTENTION OF THE REVENUE. FOR THAT IT WOULD BE RELEVANT TO EXAMINE THE VARIOUS CLAUSES OF THE CHARTER AGREEMENT BETWEEN THE APPELLANT AND CGG (CHARTERER). HOWEVER, BEFORE WE PROCEED TO EXAMINE THE SAME, IT WOULD BE RELEVANT TO REFER TO THE GENER AL PRINCIPLES OF LAW WHILE INTERPRETING THE TERMS OF ANY AGREEMENT. 52 . THE APEX COURT IN THE CASE OF BANK OF INDIA VS. K. MOHANDAS (2009) (5 SCC 313) HAS HELD AS UNDER - THE TRUE CONSTRUCTION OF A CONTRACT MUST DEPEND UPON THE IMPORT OF THE WORDS USED AND NOT UPON WHAT THE PARTIES CHOOSE TO SAY AFTERWARDS. N OR DOES SUBSEQUENT CONDUCT OF THE PARTIES IN THE PERFORMANCE OF THE CONTRACT AFFECT THE TRUE EFFECT OF THE CLEAR AND UNAMBIGUOUS WORDS USED IN THE CONTRACT. THE INTENTION OF THE PARTIES MUST BE ASCER TAINED FROM THE LANGUAGE THEY HAVE USED, CONSIDERED IN THE LIGHT OF THE SURROUNDING CIRCUMSTANCES AND THE OBJECT OF THE CONTRACT. THE NATURE AND PURPOSE OF THE CONTRACT IS AN IMPORTANT GUIDE IN ASCERTAIN THE INTENTION OF THE PARTIES. PAGE 34 OF 46 53 . IN GANGA SARAN VS. FIRM RAM CHARAN RAM GOPAL, AIR 1952 SC 9, A FOUR JUDGE BENCH OF THE HONBLE SUPREME COURT STATED: 'SINCE THE TRUE CONSTRUCTION OF AN AGREEMENT MUST DEPEND UPON THE IMPORT OF THE WORDS USED AND NOT UPON WHAT THE PARTIES CHOOSE TO SAY AFTERWARDS. IT IS U NNECESSARY TO REFER TO WHAT THE PARTIES HAVE SAID ABOUT IT.' 54 . IT IS ALSO A WELL - RECOGNIZED PRINCIPLE OF CONSTRUCTION OF A CONTRACT THAT IT MUST BE READ AS A WHOLE IN ORDER TO ASCERTAIN THE TRUE MEANING OF ITS SEVERAL CLAUSES AND THE WORDS OF EACH CLAUSE SHOULD BE INTERPRETED SO AS TO BRING THEM INTO HARMONY WITH THE OTHER PROVISIONS IF THAT INTERPRETATION DOES NO VIOLENCE TO THE MEANING OF WHICH THEY ARE NATURALLY SUSCEPTIBLE. [(THE NORTH EASTERN RAILWAY COMPANY VS. L. HASTINGS) (1900 AC 260)]. 55 . THIS POSITION IS ALSO SUPPORTED BY THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. - HOOGLY MILLS (287 ITR 333). THE SAME VIEW WAS EXPRESSED BY THE SUPREME COURT IN THE CASE OF ISHIKAWA - HARIMA HEAVY INDUSTRIES LTD. VS. DIT (288 ITR 408) WHERE THE COURT O BSERVED AS UNDER - IN CONSTRUING A CONTRACT, THE TERMS AND CONDITIONS THEREOF ARE TO BE READ AS A WHOLE. A CONTRACT MUST BE CONSTRUED KEEPING IN VIEW THE INTENTION OF THE PARTIES. NO DOUBT, THE APPLICABILITY OF THE TAX LAWS WOULD DEPEND UPON THE NATURE OF THE CONTRACT, BUT THE SAME SHOULD NOT BE CONSTRUED KEEPING IN VIEW THE TAXING PROVISIONS, 56 . IN OTTOMAN BANK OF NICOSIA V OHANES CHAKARIAN. AIR 1938 PC 26, LORD WRIGHT MADE THESE WEIGHTY OBSERVATION: THAT IF THE CONTRACT IS CLEAR AND UNAMBIGUOUS, ITS T RUE EFFECT CANNOT BE CHANGED MERELY BY THE COURSE OF CONDUCT ADOPTED BY THE PARTIES IN ACTING UNDER IT. 57 . GUIDED BY THE SAID PRINCIPLES, WE NOW PROPOSE TO EXAMINE THE VARIOUS CLAUSES OF THE CHARTER AGREEMENT BETWEEN THE APPELLANT AND THE CHARTERER. THE PAGE 35 OF 46 APPELLANT HAD PROVIDED TWO SEISMIC SURVEY VESSELS NAMELY CGG FOHN AND CGG HARMATTAN TO M/S CGG (ALSO A NON - RESIDENT COMPANY INCORPORATED IN FRANCE) FOR CARRYING OUT GEOPHYSICAL PROSPECTION. COPY OF THE TIME CHARTER AGREEMENT BETWEEN THE ASSESSEE AND CGG FOR '1:01IN' IS AT PAGE 12 TO 57 OF THE PAPER BOOK. THE AGREEMENT BETWEEN THE APPELLANT AND CGG FOR VESSEL H ARMATTAN' IS AT PAGES 58 TO 105 OF PAPER BOOK. THE TIME CHARTER AGREEMENT (FOR THE RESEARCH VESSEL FOHN) BETWEEN THE APPELLANT AND CGG IS AT P AGE 12 OF THE PAPER HOOK. CLAUSE 1.1 OF THE SAID AGREEMENT (ON PAGE 12 OF THE PAPER BOOK) PROVIDES THAT THE OWNERS (I.E. THE APPELLANT) OFFERS TO HIRE AND THE CHARTERERS (I.E. CGG) ACCEPT TO RENT THE VESSEL AND ITS CREW FOR AN ACTIVITY OF GEOPHYSICAL PROSP ECTION. IT IS ALSO PROVIDED THAT THE SAID VESSEL IS FITTED OUT AND EQUIPPED TO CARRY OUT THE SAID ACTIVITY ANYWHERE IN THE WORLD. CLAUSE 1.2 PROVIDES THAT THE VESSELS ARE FOR A PERIOD 01'40 MONTHS FOR THE PURPOSES OF GEOPHYSICAL PROSPECTION ANY WHERE IN TH E WORLD. IT IS ALSO PROVIDED THAT AT THE END OF THE CHARTER PERIOD IF ANY GEOPHYSICAL STUDY IS IN PROGRESS THE CHARTERERS WILL BE ALLOWED TO COMPLETE THE STUDY. CLAUSE 2.4. PROVIDES THAT THE CHARTERERS ARE AUTHORISED TO PERFORM WORK ON THE GEOPHYSICAL INST ALLATION EVEN ON STANDBY. CLAUSE 4.2 PROVIDES THAT THE DURING THE ENTIRE CHARTER PERIOD THE EQUIPMENT ON THE VESSEL SHALL COMPLY WITH THE LIST GIVEN IN APPENDIX 2 PARTICULARLY AS REGARDS: THE COMPRESSORS NEEDED FOR GEOPHYSICAL ACTIVITY. CLAUSE 5.1. FURTHER PROVIDES THAT THE VESSEL SHALL BE EMPLOYED FOR GEOPHYSICAL PROSPECTION TASKS WORLD - WIDE WITHIN THE BOUNDARIES OF THE NAVIGABLE AREAS NORMALLY COVERED BY INSURANCE POLICIES AND BY ITS OFFICIAL CLASSIFICATION AND SAFETY PAGE 36 OF 46 DOCUMENTS. HOWEVER, THE CHART ERERS SHALL HAVE THE OPTION OF EXCEEDING THESE BOUNDARIES SUBJECT TO APPROVAL OF THE VESSELS MASTER. CLAUSE 7.2 PROVIDES THAT THE CHARTERERS (I.E. CGG) ARE RESPONSIBLE FOR OPERATING AND MAINTAINING ALL GEOPHYSICAL PROSPECTION RELATED EQUIPMENT. CLAUSE 20. 1 PROVIDES THAT EXCEPT WITH THE OWNERS PRIOR CONSENT THE VESSEL SHALL NOT BE SENT OR CONTINUE ON COURSE FOR ANY PLACE OR FOR ANY VOYAGE NOR SHALL IT BE USED TO PERFORM A SERVICE THAT WOULD BRING IT INTO ANY AREA OF DANGER.... NEITHER SHALL IT TRANSPORT GOO DS THAT MIGHT IN ANY WAY EXPOSE THE VESSEL TO RISKS OF SEIZURE APPENDIX I TO THE AGREEMENT (AT PAGE 24 OF THE PAPER BOOK) CONTAINS THE SECRECY CLAUSE. THIS CLAUSE PROVIDES AS UNDER - UNDER THE SECRECY CLAUSE HEREUNDER THE OWNERS (I.E. THE APPELLANT), THE IR AGENTS AND EMPLOYEES ACCEPT: TO TREAT AS CONFIDENTIAL AND NOT TO DIVULGE ANY INFORMATION THAT MIGHT BE TRANSMITTED TO US AND GENERALLY ANYTHING THAT THEY MIGHT LEARN ON THE METHODS, TECHNIQUES AND EQUIPMENT USED BY CGG WHETHER THESE METHODS, TECHNIQUES, AND EQUIPMENT BE THEIR OWN OR USED WITH THE AGREEMENT OF THIRD PARTIES; TO TREAT AS CONFIDENTIAL AND NOT DIVULGE ANYTHING THEY MIGHT LEARN ABOUT THE RESULTS OF GEOPHYSICAL PROSPECTION WORK, WHATEVER THE DATE ON WHICH WORK WAS PERFORMED AND WHATEVER THE ME THODS AND RESOURCES USED. THEY RECOGNISE THAT THE CLIENTS OF CGG (I.E. ONGC) ARE THE SOLE, EXCLUSIVE OWNERS OF THESE RESULTS... ON PAGE 27 OF THE PAPER BOOK (APPENDIX 2) IN THE TECHNICAL SPECIFICATIONS OF THE VESSEL IN CLAUSE 10 SEPARATE SPACES HAVE BEEN PROVIDED ON THE VESSEL FOR PAGE 37 OF 46 SEISMIC SURVEY PART OF THE VESSEL. SIMILARLY IN AP PENDIX 3 (ON PAGE 29 OF PAPER BO OK). SURVEY LAB DETAILS ON THE VESSEL HAVE BEEN PROVIDED. SIMILAR TERMS ARE CONTAINED IN THE TIME CHARTER AGREEMENT IN RESPECT OF THE VESSEL HARMA TTAN. 58 . ALL THE ABOVE TERMS GO TO EVIDENCE THAT THE ABOVE AGREEMENTS WERE NOT TIME CHARTERS SIMPLICITOR. THE CHARTER AGREEMENT FILED IN THE PRESENT CASE CONTEMPLATES THE VESSELS BEING TAKEN ON HIRE BY THE APPLICANT AND THE NOMENCLATURE OF HIRE, AND FOR CARRYING OUT GEOPHYSICAL PROSPECTION. THE TERM . OFFERS TO HIRE, AND ACCEPT TO RENT THE VESSEL AND I TS CREW FOR AN ACTIVITY OF GEOPHYSICAL PROSPECTION . THE CLAUSE 1.2 STATES THAT AT THE END OF THE CHARTER PERIOD IF ANY GEOPHYSICAL STUDY IS IN PROGRESS THE CHARTERERS WILL BE ALLOWED TO COMPLETE THE STUDY ; AND IN THE CLAUSE 4.2 IT IS AGREED THAT THAT DURING THE ENTIRE CHARTER PERIOD THE EQUIPMENT ON THE VESSEL SHALL COMPLY WITH THE LIST GIVEN IN APPENDIX 2 THE COMPRESSORS NEEDED FOR GEOPHYSICAL ACTIVITY . FURTHER, CLAUSE 5.1 PROVIDES THAT THE VESSEL SHALL BE EMPLOYED FOR GEOPHYSICAL PROSPECTION TASKS AND THAT THE CHARTERERS (I.E. CGG) ARE RESPONSIBLE FOR OPERATING AND MAINTAINING ALL GEOPHYSICAL PROSPECTION RELATED EQUIPMENT . FURTHER, SECRECY CLAUSE STATES NOT TO DIVULGE ANYTHING THEY MIGHT LEARN ABOUT THE RESULTS OF GEOPHYSICAL PROSPECTION WORK . IN THE TECHNICAL SPECIFICATIONS OF THE VESSEL IN CLAUSE 10 SEPARATE SPACES HAVE BEEN PROVIDED ON THE VESSEL FOR SEISMIC SURVEY PART OF THE VESSEL. SURVEY LAB DETAILS ON THE VESSEL HAVE BEEN PROVIDED. A CONSPECTUS OF VARIOUS TERMS AND STIPULATIONS COUPLE D WITH THE PURPOSE FOR WHICH THE VESSEL IS CHARTERED WOULD GIVE AN UNMISTAKABLE INDICATION OF HIRING THE VESSEL FOR GEOPHYSICAL ACTIVITY . T HE AFORESAID CLAUSES OF THE AGREEMENT WERE FOR PROVIDING PAGE 38 OF 46 THE VESSEL TO CGG (HIRER) FOR THE SPECIFIC PURPOSE OF CARRY ING OUT GEOPHYSICAL PROSPECTION. HENCE, THE VESSELS WERE NOT ENGAGED IN THE PURPOSES OF CARRYING OUT ANY OTHER PURPOSE LIKE CARRIAGE OF PASSENGERS, GOODS OR LIVESTOCK ETC.; AN D WERE FOR THE SPECIFIC PURPOSE OF CARRYING OUT GEOPHYSICAL PROSPECTION. THUS, TH ESE AGREEMENTS CANNOT BE CLASSIFIED AS A TIME CHARTER SIMPLICITOR AND THE REAL INTENTION OF THE PARTIES AS PER THE CONTRACT WAS TO PROVIDE THE VESSEL FOR CARRYING OUT GEOPHYSICAL PROSPECTION AND NOT FOR ANY OTHER PURPOSE. THE CLAUSES OF THE AGREEMENT BROUGHT TO OUR NOTICE BY THE REVENUE CANNOT BE READ IN ISOLATION AND THE CONTRACT HAS TO BE READ AS A WHOLE AND THE NATURE AND PURPOSE OF THE CONTRACT IS AN IMPORTANT GUIDE IN ASCERTAINING THE INTENTION OF THE PARTIES AS LAID DOWN BY THE HONBLE SUPREME CO URT IN BANK OF INDIA VS. K. MOHANDAS & OTHERS (SUPRA) AND SO WE H O LD THAT THE AGREEMENT BETWEEN THE PARTIES WAS NOT A TIME CHARTER SIMPLICITOR AND SO THE APEX COURT DECISION IN GOSALIA SHIPPING P. LTD. (113 ITR 307) (SC) IS OF NO HELP TO THE REVENUE, THOUG H THE TERM TIME - CHARTER HAS BEEN USED IN THE SAID AGREEMENT. 59 . COMING BACK TO THE MAIN ISSUE I.E., WHETHER THE ASSESSEE WHO LENDS ITS PLANT TO A HIRER WHO IS HAVING A CONTRACT WITH ONGC FOR PROSPECTING, EXPLORATION OR PRODUCTION OF MINERAL OIL, WE MAY RE FER TO CERTAIN CASE LAWS, AND REPRODUCE ITS RELEVANT PART. (I). WAVEFILEDINSEIS ASA ( 320 ITR 290) (AAR) THE SECOND LIMB OF S. 44BB IS CLEARLY ATTRACTED IN THE INSTANT CASE. THERE IS NO DOUBT THAT PF IS ENGAGED, INTER ALIA, IN THE BUSINESS OF LETTING OUT THE SHIPS/VESSELS ON HIRE. THERE IS ALSO NO DOUBT THAT THE VESSEL HAS BEEN TAKEN ON HIRE BY THE APPLICANT FOR THE PURPOSE OF ENABLING THE APPLICANT TO CARRY ON THE SEISMIC SURVEY AND DATA ACQUISITION OPERATIONS WHICH ARE ESSENTIAL FOR PROSPECTING OF MINERAL OIL.THE REQUIREMENT OF SUB - S ECT (1) OF S. 44BB IS THAT THE VESSEL/SHIP MUST BE USED IN THE PROSPECTING FO R OR EXTRACTION OF MINERAL OILS. A CHASE VESSEL PROVIDED BY PF IS INEXTRICABLY LINKED TO THE PROSPECTING OPERATIONS. ONCE THE DEPLOYMENT OF THE VESSEL IN THE PROSPECTING OPERATIONS PAGE 39 OF 46 IS CONSIDERED TO BE INTEGRAL PART OF SUCH OPERATIONS, THE SECOND PART OF S. 44BB(1) IS TRIGGERED. IT IS IMMATERIAL WHETHER THE VESSEL IS DEPLOYED IN THE PROSPECTING ACTIVITIES PURSUANT TO A DIRECT CONTRACT WITH THE OIL PRODUCING COMPANY OR PURSUANT TO A CONTRACT WITH THE SEISMIC SURVEY SERVICES PROVIDER. THE PERSON AT WHOSE INSTA NCE THE CHASE VESSEL PARTICIPATES IN THE SEISMIC SURVEY IS NOT RELEVANT TO DECIDE WHETHER THE REQUIREMENTS OF THE SECTION ARE SATISFIED. THE TIME CHARTER PARTY AGREEMENT FILED IN THE PRESENT CASE CONTEMPLATES THE VESSEL BEING TAKEN ON HIRE BY THE APPLICANT AND THE NOMENCLATURE 'HIRE' AND 'PAY HIRE FOR THE VESSEL' IN FACT CONVEYS THE PREDOMINANT NATURE OF THE TRANSACTION AND THE INTENTION OF PARTIES. THE MASTER AND CREW OF THE HIRED VESSEL MAY IN ONE SENSE, CARRY ON THE SERVICES BY TAKING CARE OF THE VESSEL, BUT, ON THAT ACCOUNT, THE SECOND LIMB OF S. 44BB(1) DOES NOT CEASE TO APPLY UNLESS IT CAN BE SAID WITH CERTAINTY THAT THERE IS NO HIRE AT ALL. THE TERM 'HIRE' I N RELATION TO A THING LIKE MACHINE, VEHICLE, SHIP ETC. IS GENERALLY UNDERSTOOD TO BE: 'TO PROCU RE THE TEMPORARY USE OF PROPERTY AT A SET PRICE' OR 'GIVING ANOTHER TEMPORARY POSSESSION AND USE OF PROPERTY OTHER THAN MONEY FOR REWARD'. A CONSPECTUS OF VARIOUS TERMS AND STIPULATIONS COUPLED WITH THE PURPOSE FOR WHICH THE VESSEL IS CHARTERED WOULD GIVE AN UNMISTAKABLE INDICATION OF HIRING THE VESSEL. THE VESSEL, THROUGHOUT THECHARTER PERIOD, IS KEPT AT THE CHARTERER'S DISPOSAL AND WOULD BE AVAILABLE FOR OPERATIONS WHENEVER THE CHARTERER WANTS. THE FACT THAT THE OPERATION AND MANAGEMENT OF THE VESSEL ARE STATED TO BE UNDER THE CONTROL AND COMMAND OF THE OWNERS, THEIR MASTER AND CREW DOES NOT GO AGAINST THE CONCEPT OF HIRING. SUCH A STIPULATION IN CL. 6( D) OF THE AGREEMENT SHALL BE READ ALONG WITH THE SENTENCE IMMEDIATELY FOLLOWING IT WHICH SAYS THAT 'THE VESSEL WILL BE OPERATED AND THE SERVICES WILL BE RENDERED AS REQUESTED BY THE CHARTERERS, SUBJECT ALWAYS TO THE EXCLUSIVE RIGHT OF THE OWNERS OR THE MASTER OF THE VESSEL TO DETERMINE WHETHER OPERATION OF THE VESSEL MAY BE SAFELY UNDERTAKEN'. THIS IS ONLY M EANT TO ENSURE THE SAFETY OF THE VESSEL AND DOES NOT RULE OUT HIRING. COLUMN NO. 18 OF THE AGREEMENT SAYS THAT THE EMPLOYMENT OF VESSEL IS RESTRICTED TO 'SUPPORT, RESUPPLY AND CHASE SERVICES FOR SEISMIC OPERATIONS AS INSTRUCTED BY CHARTER, ALWAYS WITHIN VE SSEL'S SAFE CAPACITIES AND CAPABILITIES'. THIS STIPULATION AGAIN DOES NOT RUN COUNTER TO A HIRING CONTRACT. THE PURPOSES FOR WHICH THE HIRING VESSEL CAN BE UTILIZED ARE ONLY SPECIFIED THERE. THOUGH THE APPLICANT HAS STATED THAT THE CHASE VESSEL 'CONSTANTLY MONITORS THE ACTIVITIES OF ALL THE EQUIPMENTS USED FOR SEISMIC DATA ACQUISITION ', IT IS NOT STATED BY WHOM SUCH MONITORING IS DONE. IS IT BY THE CREW OF THE VESSEL OR BY THE TECHNICAL PERSONNEL OF THE APPLICANT ON BOARD OF THE VESSEL? THE LATTER SITUATIO N SEEMS TO BE MORE PROBABLE. THE CREW MAY BE ENGAGED IN THE NORMAL OPERATIONS CONNECTED WITH NAVIGATION AND SOME SUPPORT SERVICES. ON THE WHOLE, IT APPEARS THAT THE TRANSACTION FALLS MORE APPROPRIATELY UNDER THE SECOND LIMB OF SUB - SO (1) OF S. 4488 RATHER THAN THE FIRST LIMB. THEREFORE THE INCOME DERIVED BY PF OUGHT TO BE COMPUTED IN ACCORDANCE WITH PROVISIONS OF S. 44BB. AS PER S. 44BB R/W PART II OF THE FIRST SCHEDULE TO THE IT ACT, THE EFFECTIVE RATE AT WHICH THE TAX HAS TO BE WITHHELD FROM THE PAYMENTS MADE BY THE APPLICANT TO PF WOULD BE 4.223 PER CENT. THE CONSIDERATION FOR SERVICES PROVIDED BY PF COULD NOT BE CONSTRUED TO BE IN THE NATURE OF 'ROYALTY' UNDER S. 9(1) (VI). ONCE S. 44BB IS ATTRACTED, IT IS COMMON GROUND THAT THE COMPUTATION PAGE 40 OF 46 HAS TO BE MAD E IN ACCORDANCE WITH THAT PROVISION AND NO OTHER SPECIAL PROVISION, VIZ., S. 44DA OR S. 115A WOULD COME INTO PLAY IN VIEW OF THE FACT THAT THE PAYMENT IS BEING MADE BY A NON - RESIDENT TO ANOTHER NON - RESIDENT. (II) BOURBON OFFSHORE ASIA (P). LTD. (337 ITR 122 ) (AAR) THE APPLICANT IS ENGAGED IN THE BUSINESS OF PROVIDING OFFSHORE OIL AND GAS MARINE SUBSEA SERVICES. IT ALSO OFFERS RANGE OF OFFSHORE OIL SERVICE VESSELS TO GLOBAL OIL AND GAS INDUSTRY. UNDER THE CONTRACT WITH TOIVL, WHO IN TURN IS PROVIDING VARIOU S OFFSHORE DRILLING AND SUPPORT SERVICES TO ONGC, THE APPLICANT HAS PROVIDED 4VESSELS TO TOIVL TO BE USED ON EAST AND WEST COASTS OF INDIA. FOR THE PURPOSES OF S.44 BB , THE VESSELS PROVIDED ARE COVERED UNDER THE DEFINITION OF 'PLANT'. THE CONSIDERATION RECE IVED FOR SUPPLY OF 'PLANT' I. E. THE VESSELS ON HIRE WHEN USED IN THE PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF OIL AND GAS IS COVERED UNDER THE SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS UNDER S. 44 BB . THE INTENTION TO EXCLUDE CONSTRUCTION, AS SEMBLY AND MINING OR LIKE PROJECT FROM THE PURVIEW OF FEES FOR TECHNICAL SERVICES IS TO DRAW A LINE OF DISTINCTION BETWEEN BUSINESS ACTIVITIES AND MERE RENDERING OF SERVICES. THE NATURE OF RECEIPTS ON ACCOUNT OF PROVISION OF SUPPLY OF VESSELS ON HIRE BASIS CANNOT HAVE THE CHARACTER OF FEES FOR TECHNICAL SERVICES WITHIN THE MEANING OF EXPLN. 2 TO S. 9(1)(VII). THE SERVICES REQUIRED BY TOIVL ARE RENDERED BY THE APPLICANT BY USING THE VESSELS UNDER ITS CONTROL AND COMMAND WHICH CANNOT BEAR THE CHARACTER OF FEE S FOR TECHNICAL SERVICES. THE RATE AT WHICH TAX IS TO BE WITHHELD FROM PAYMENTS MADE BY TOIVL TO THE APPLICANT TOWARDS TIME CHARTER OF SERVICE VESSELS WILL BE 4.22 PER CENT. (III) SIEM OFFSHORE INC. (337 ITR 207) (AAR) FROM THE ROLE ASSIGNED TO THE APPLICA NT AND THE RESPONSIBILITIES UNDERTAKEN BY IT IN TERMS OF THE CONTRACT AMONG THE CONSORTIUM MEMBERS AND ACCEPTED AND RECOGNIZED BY ONGC, IT IS CLEAR THAT THE APPLICANT WAS MAINLY ENGAGED IN TRANSPORTATION OF CARGO, MATERIAL AND PERSONNEL REQUIRED AT THE RIG IN ADDITION TO ENSURING MARINE LOGISTICS SUPPORT IN THE EVENT OF ANY OPERATIONAL EXIGENCY. IT IS NOT POSSIBLE TO UNDERSTAND THE RESPONSIBILITIES RESTING ON THE APPLICANT IN TERMS OF THE CONTRACT AS INVOLVING THE PROVIDING OF ANY TECHNICAL SERVICE. OBVIOUS LY, THE APPLICANT IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES OR FACILITIES IN CONNECTION WITH EXTRACTION OR PRODUCTION OF OIL, A MINING ACTIVITY. IT COULD ALSO BE SAID TO BE SUPPLYING PLANT AND MACHINERY FOR HIRE TO BE USED IN THE PROSPECTING OF OIL. THUS, THE INCOME DERIVED BY THE APPLICANT FROM THE ACTIVITIES UNDERTAKEN BY IT UNDER THE CONSORTIUM AGREEMENT AS RECOGNIZED BY ONGC THE EXPLORER, TAKES IT OUT OF S. 9(1)(VII) AND BRINGS THAT INCOME WITHIN S. 4488. ON THE TERMS OF THE TRANSACTION IN QUESTI ON, IT IS CLEAR THAT WHAT IS PAID TO THE APPLICANT IS NOT FEE FOR TECHNICAL SERVICES AND CONSEQUENTLY PAGE 41 OF 46 THE PROVISO TO S. 4488 IS NOT ATTRACTED. THE SERVICES BEING PROVIDED BY THE APPLICANT ARE NOT TECHNICAL SERVICES. HENCE, THE APPLICANT CAN CLAIM TO BE ASS ESSED IN TERMS OF S. 4488 ESPECIALLY SINCE THERE IS NO CASE THE':ONGC IS NOT INVOLVED IN PROSPECTING, EXPLORATION AND EXTRACTION OF OIL AND THE SERVICES BEING PROVIDED BY THE APPLICANT ARE SERVICES IN CONNECTION WITH THAT ACTIVITY. (IV ) LLOYD HELICOPTERS PTY LTD. (249 ITR 162 ) (AAR) IT IS S. 44BB AND NOT S. 44BBA WHICH IS MORE APPROPRIATE TO THE PRESENT CASE. IN THE FIRST PLACE, THE QUESTION OF TAXATION HERE PERTAINS TO A NON - RESIDENT SSESSEE WHICH IS PROVIDING FACILITIES AND SERVICES AND LEASING OUT PLANT AND MACHINERY IN RELATION TO A BUSINESS IN EXPLORATION FOR, AND EXTRACTION AND PRODUCTION OF, MINERAL OIL. IT MAY BE THAT THE COMPANY - OR RATHER THE GROUP TO WHICH IT BELONGS - MAY HAVE A WIDER AREA OF OPERATIONS BUT THE ISSUE HERE IS ONLY REGARDING ACTIVITIES IN RELATION TO BUSINESS OF MINERAL OILS. SECONDLY, THOUGH THE BUSINESS OPERATIONS IN THE PRESENT CASE ATTRACT THE PROVISIONS OF SUB - SO (1) OF S. 44BBA, THAT SECTION CAN BE INVOKED ONLY IN CASES WHERE THE OPERATOR IS DERIVING INCOME OF THE CATEGORIES SPECIFIED IN SUB - SO (2) OF THAT SECTION. WHERE THE INCOME DERIVED CANNOT BE BROUGHT WITHIN THE CATEGORIES OF RECEIPTS OUTLINED IN SUB - SO (2), THE STATUTORY FORMULA FOR DETERMINING THE PRESUMPTIVE INCOME BECOMES UNW ORKABLE. THE SECTION PROVID ES A M ACHINERY FOR APPLYING THE RATE OF PRESUMPTIVE TAXATION NOT TO ALL ENTERPRISESENGAGED IN THE BUSINESS OF OPERATION OF AIRCRAFT BUT ONLY TO SUCH OF THOSE AS LEVY CHARGES FROM THEIR CUSTOMERS SPECIFICALLY ON ACCOUNT OF THE CARRIAGE OF MEN AND MATERIAL F ROM ONE PLACE TO ANOTHER AND SHOULD BE HELD INAPPLICABLE TO A CASE OF THE PRESENT TYPE. IT IS TRUE THAT THE APPLICANT - COMPANY IS CARRYING PASSENGERS AND GOODS FROM THE ONSHORE BASES TO OFFSHORE UNITS OF C BUT THE REAL NATURE OF THE AGREEMENT BETWEEN THE AP PLICANT AND C IS BASICALLY DIFFERENT. UNDER CL. 2 OF THE AGREEMENT, WHAT THE APPLICANT HAS TO DO IS TO PLACE ITS HELICOPTER SERVICES AT THE DISPOSAL OF C FOR ITS OIL OPERATIONS. THE AGREEMENT NOWHERE MENTIONS ANY CONSIDERATION FOR THE CARRIAGE OF PASSENGER S OR EQUIPMENT. TRIPS WILL BE CHARGED FOR IRRESPECTIVE OF THE NUMBER OF MEN OR QUANTITY OF MATERIAL TRANSPORTED. THE CHARGES WILL HAVE TO BE PAID EVEN IF, FOR SOME REASON, THERE SHOULD BE NO PASSENGER AND/OR EQUIPMENT AT ALL CARRIED ON ANY FLIGHT. THE CONT RACT MAKES NO REFERENCE TO CHARGES FOR TRANSPORT OF MEN AND MATERIALS AND MAKES NO DISTINCTION BETWEEN CHARGES FOR PASSENGERS AND CHARGES FOR GOODS OR MATERIALS AND OTHER EQUIPMENT. THE CONSIDERATION PROVIDED FOR IS A CONSOLIDATED CONSIDERATION FOR A PACKA GE OF SERVICES AND IT IS NOT PROPER OR POSSIBLE TO SEGREGATE OR DETERMINE ANY PART OF IT AS REFERABLE TO, OR BEING ON ACCOUNT OF, CARRIAGE OF MEN AND MATERIALS. THE BARGAIN BETWEEN THE PARTIES IS OF A TOTALLY DIFFERENT NATURE PAGE 42 OF 46 AND THERE IS NO JUSTIFICATION TO READ INTO THE TRANSACTION AN ARRANGEMENT WHICH CAN FIT INTO THE LANGUAGE OF S. 44BBA. FOR THE ABOVE REASONS, IT IS DIFFICULT TO SAY THAT THE CONSIDERATION OR ANY PART THEREOF PAID TO THE APPLICANT BY C IS ON ACCOUNT OF THE TYPES OF CARRIAGE IN THE SECTI ON. READING THE TWO SUB - SECTIONS OF S. 44BBA TOGETHER, IT CAN BE SAID THAT THE SECTION IS APPLICABLE - AND CAN INDEED BE APPLIED - ONLY IF IT IS POSSIBLE TO SAY THAT THEY REPRESENT THE CATEGORIES OF RECEIPTS MENTIONED IN THE SECTION AND WITH REFERENCE TO WHICH THE 'PRESUMPTIVE' RATE OF PROFIT SPECIFIED IN THE SECTION SHOULD BE APPLIED. ON THE OTHER HAND, THE CONSIDERATION IN THE PRESENT CASE CAN DEFINITELY BE SAID TO RELATE TO ONLY THE PROVISION OF SERVICES AND FACILITIES AND HIRE OF PLANT AND MACHINERY IN RELA TION TO AN OIL BUSINESS CARRIED ON BY C. THEREFORE, THE PRESENT CASE IS ONE GOVERNED BY S. 44BB RATHER THAN BY S. 44BBA. THE PARTIES CONSIDERED IT EXPEDIENT TO AGREE THAT C SHOULD BE ABLE TO COMMAND THE HELICOPTER AND ALLIED SERVICES OF THE APPLICANT AS AN D WHEN REQUIRED; IT WAS NOT SUFFICIENT FOR THEM MERELY TO ENTER INTO A CONTRACT AGREEING TO PAY FOR FARE AND FREIGHT AS AND WHEN PASSENGERS OR MATERIAL WERE TRANSPORTED. THERE IS A MATERIAL DISTINCTION, IN THECOMMERCIAL SENSE, BETWEEN THE TWO TYPES OF CONT RACT AND ONE CANNOT IGNORE IT . 60 . A READING OF THE AFORESAID JUDICIAL PRECEDENCE CLARIFY THAT SEC. 44BB DOES NOT DISTINGUISH BETWEEN THE MAIN CONTRACTOR OR A SUB - CONTRACTOR AS HAS BEEN INTERPRETED BY THE AO AND THE DRP. THE CONCLUSIONS OF THE AO AND THE DRP ARE ERRONEOUS ON ACCOUNT OF THE REASON THAT THE PROVISION CLEARLY ENVISAGES THE NON - RESIDENT ASSESSEE TO BE ENGAGED IN THE BUSINESS OF SUPPLYING PLANT AND MACHINERY ON HIRE . THE ONLY CONDITION IMPOSED, SO TO SAY , IS THAT SUCH PLANT AND MACHINERY HAS TO BE USED OR SHOULD BE USED FOR THE PURPOSES OF PROSPECTING FOR , OR EXTRACTION OR PRODUCTION OF MINERAL OILS. THE LANGUAGE IN SECTION 44BB IN OUR VIEW IS CLEAR SO ALSO THE LEGISLATIVE INTENTION. IT IS A TRITE LAW TH AT HAS ALREADY HELD BY THE HONBLE SUPREME COURT IN B. PARMANNAND VS. MOHAN KOIKAL 2011 (4) SCC 266 THAT THE LANGUAGE EMPLOYED IN A STATUTE IS THE DETERMINATIVE FACTOR OF THE LEGISLATIVE INTEND. IT IS WELL SETTLED PRINCIPLE OF LAW THAT THE COURT CANNOT R EAD ANYTHING INTO A STATUTORY PROVISION WHICH IS PLAN AND UNAMBIGUOUS. IF THE PAGE 43 OF 46 LEGISLATURES INTENTION AS CONTENDED BY THE REVENUE WAS TO RESTRICT THE BENEFIT OF SEC. 44BB ONLY TO THE MAIN CONTRACTOR OR ONGC, THEN THE WORDS AFTER THE ASSESSEE ENGAGED IN T HE BUSINESS OF SUPPLYING PLANT AND MACHINERY ON HIRE OR PROVIDING SERVICES OR FACILITIES OUGHT TO HAVE BEEN OMITTED. HENCE, WHERE THE PROVISION DOES NOT CREATE ANY DISCRIMINATION BETWEEN THE PERSON WHO ACTUALLY DOES THE ACTIVITY OF PROSPECTING FOR OR EXTRACTION OR PRODUCTION , AND THE PERSON WHO SUPPLIES THE PLANT S AND MACHINERY , T HE NARROW INTERPRETATION OF THE PROVISION IS THUS NOT PERMITTED. THE BASIC CONDITION TO BE SATISFIED IN THE SAID PROVISION IS THAT THE PLANT OR MACHINERY SUPPLIED OR LENTED O N HIRE BY THE ASSESSEE, NON - RESIDENT SHOULD BE USED IN THE PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERALS OILS OR WHERE EQUIPMENT HAS BEEN SUPPLIED, SUCH EQUIPMENT SHOULD HAVE BEEN USE D FOR THE PURPOSES OF PROSPECTI N G FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS. HAVING REGARD TO THE ABOVE WE ARE OF THE CONSIDERED OPINION THAT THE FETTER ASSUMED BY AUTHORITIES BELOW WHILE INTERPRETING THE PROVISIONS OF SECTION 44BB OF THE ACT ARE MANIFESTLY ABSENT AND THERE IS NOTHING IN TH E SAID PROVISION SO AS TO DISENTITLE A SUB - CONTRACTOR FROM INVOKING THE SAI D PROVISION . ACCORDINGLY WE DO NOT FIND ANY FAULT IN THE CLAIM OF THE ASSESSEE THAT REVENUES RECEIVED UNDER THE CHARTER AGREEMENTS WITH C GG FOR PROVIDING TWO SEISMIC SURVEY VESSELS ARE IN CONSIDERATION WITH PROSPECTING FOR, EXTRACTIONS OR PRODUCTION OF MINERAL OILS AND THEREFORE TAXABLE U/S 44BB OF THE ACT. 61 . IT IS ALSO A SETTLED LAW THAT THE COURT CANNOT ADD WORDS TO STATUTE OR READ WORDS INTO IT WHICH ARE NOT THERE VIDE UO I VS. DELHI NANDAN AGGARWAL (1962) (1)SCC 323. THE SIMILAR VIEW HAS BEEN REITERATED RECENTLY IN CIT VS. TARA AGENENCE (2007) 292 ITR 444 (SC). THIS BEING SO WE ARE OF THE VIEW THERE IS NO PAGE 44 OF 46 RESTRICTION AS SUGGESTED BY THE LD DR CANNOT BE READ INTO SECTION 44BB, T O EXCLUDE THE ASSESSEE FROM IT. 62 . NOW WHEN WE LOOK INTO THE FACTS OF THE CASE IN THE LIGHT OF THE DISCUSSION ABOVE WE FIND THAT ASSESSEE IS IN THE BUSINESS OF SUPPLYING PLANT/ SHIP ON HIRE WHICH IS BEING USED FOR PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OILS. THEREFORE, ON THE WHOLE, IT APPEARS THAT THE TRANSACTION FALLS UNDER THE SECOND LIMB OF SUB - SECTION (1) OF SEC. 44BB. THE INTENTION OF THE PARLIAMENT TO EXCLUDE CONSTRUCTION, ASSEMBLY AND MINING OR LIKE PROJECT FROM THE PURVIEW OF FEES FOR TECHNICAL SERVICES IS TO DRAW A LINE OF DISTINCTION BETWEEN BUSINESS ACTIVITIES AND MERE RENDERING OF SERVICES. ON NO STRETCH OF IMA GINATION CAN WE HOLD THAT T HE NATURE OF RECEIPTS ON ACCOUNT OF PROVISION OF SUPPLY OF VESSELS ON HIRE BASIS CAN HAVE CHARACTER OF FEES FOR TECHNICAL SERVICES WITHIN THE MEANING OF EXPLN. 2 TO S. 9(1)(VII). THE SERVICES REQUIRED BY CGG (HIRER) ARE RENDERED BY THE ASSESSEE BY LENDING THE VESSELS ON HIRE CANNOT BEAR THE CHARACTER OF FEES FOR TECHNICAL SERVICES. THE ASSESSEES INCOME NO DOUBT IS DERIVED FROM LETTING OUT THE PLANT/SHIP WHICH IS USED FOR PROSPECTING FOR OR EXTRACTION OR PRODUCTION OF MINERAL OIL , T HEREFORE, THE SECOND LIMB OF SEC. 44BB IS CLEARLY ATTRACTED IN THE INSTANT CASE. THE NON - RESIDENT ASSESSEE IN OUR OPINION SATISFIES THE REQUI REMENT STIPULATED BY SEC. 44BB AND THUS, QUALIFIES ITS INCOME EARNED THUS TO BE TREATED AND TAXED AS PER THE SP ECIAL PROVISION AND NOT OTHERWISE AS CONTENDED BY THE REVENUE. WE COULD NOT FIND ANY RESTRICTION OR FETTER IN SECTION 44B B AS CONTENDED BY THE REVENUE TO DISQUALIFY THE ASSESSEE IN APPLYING THE SAID SECTION TO COMPUTE ITS TAX. WE CANNOT READ WHAT IS NOT SAID IN SEC. 44BB AND ADD WORDS IN SEC. 44BB TO BRING IN A RESTRICTED INTERPRETATION AS CONTENDED BY THE REVENUE TO THE EFFECT PAGE 45 OF 46 THAT ONLY DIRECT CONTRACT WITH THE OIL PRODUCING COMPANY WOULD ONLY QUALIFY. IT IS NOBODYS CASE THAT ASSESSEE IS NOT A NON - RESI DENT NOR IT HAS NOT GIVEN ON HIRE ITS SHIP FOR THE PURPOSE OF PROSPECTING FOR OR EXTRACTING OR PRODUCTION OF MINERAL OILS. SO THE ASSESSEE FALLS IN THE SPECIAL PROVISION MEANT FOR COMPUTING PROFITS AND GAIN IN CONNECTION WITH TH E BUSINESS OF EXPLORATION E TC. O F MINERAL OILS; AND ITS INCOME HAS TO BE COMPUTED AS PER THE SAID PROVISION UNLESS AND OTHERWISE THE ASSESSEE CLAIMS LOWER PROFITS AND GAINS AS STIPULATED UNDER SUB - SECTION (3) OF SECTION 44BB. THE AMOUNTS WHICH THE ASSESSEE OFFERED AND COMPUTED U/S 4 4BB ADMITTEDLY IS ON ACCOUNT OF THE S UPPLY OF PLANT AND MACHINERY ON HIRE USED, OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS IN INDIA; AND SO, IT SATISFIES THE REQUIREMENT OF SEC. 44BB, THEREFORE, T HE ASSESSEE S CONTENTION NEEDS TO BE UPHELD. ANY OTHER INTERPRETATION AS SUGGESTED BY THE REVENUE WILL DEFEAT THE SPECIAL LAW ENACTED FOR THE PURPOSE OF COMPUTING PROFITS AND GAINS IN CONNECTION WITH THE BUSINESS OF EXPLORATION, ETC., OF MINERAL OILS. THEREFORE, WE HO LD THAT THE REVENUE EARNED BY THE ASSESSEE FROM M/S CGG FOR LETTING OUT ITS TWO SEISMIC SURVEY VESSELS ARE IN CONSIDERATION FOR BEING DEPLOYED FOR PROSPECTING FOR, EXTRACTION OR PRODUCTION OF MINERAL OILS AND, THEREFORE, TAXABLE U/S 44BB OF THE ACT. AND W E TAKE NOTE OF THE FACT THAT IN A.Y. 2004 - 05, THE AO ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE INCOME NEED TO BE TAXED U/S 44BB AND IN A.Y. 2006 - 07 THE DRP ALSO DIRECTED THAT THE INCOME OF THE ASSESSEE TO BE TAXED AS PER SEC. 44BB OF THE ACT . NO CHANGES IN FACTS OR CIRCUMSTANCES WERE POINTED OUT BY THE LD. DRP IN THE INSTANT ASSESSMENT YEAR. SO AS PER THE HONBLE SUPREME COURTS ORDER IN RADHA SWAMI SATSANG 193 ITR 32 (SC) AND OF THE HONBLE DELHI HIGH COURT REPORTED IN 279 ITR 86 (DEL.) ON THE PRINCIPL E OF PAGE 46 OF 46 CONSISTENCY TOO NO DEVIATION WAS WARRANTED. THEREFORE, THE ORDER IMPUGNED IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 63 . IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17. 02 .2015 - SD/ - - SD/ - (T.S.KAPOOR) (A.T.VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 /02 /2015 *A.K. KEOT *KAVITA COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI