ADIT, Dehradun V. M/s. Landmark Graphics Malasiya SDN BHD, Dehradun

ITA 6392/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97980 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 26-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: SURAJ NANGIA CAS
• Keywords: Business income; Double taxation relief; Permanent establishment; Tax effect; Reason to believe
• Section: 143(3); 142(1); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D, NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 6392/DEL/2012 ASSESSMENT YEAR : 2004-05 ADIT, INTERNATIONAL TAXATION, VS. LANDMARK GRAPHIC S MALASIYA 13-A, SUBHASH ROAD, SDN BHD, AAYAKAR BHAWAN, DEHRADUN C/O NANGIA & CO. 75/7, RAJPUR ROAD, DEHRADUN GIR / PAN:AABCL1012F C.O.NO.37/DEL/2013 (ASSESSMENT YEAR 2004-05) LANDMARK GRAPHICAS MALASIYA VS. ADIT, INTERNATIONA L TAXATION, SDN, BHD, 13-A, SUBHASH ROAD, C/O NANGIA & CO., AAYAKAR BHAWAN, DEHRADUN 75/7, RAJPUR ROAD, DEHRADUN (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. S. NEGI, SR. DR RESPONDENT BY : SHRI AMIT ARORA AND SHRI SURAJ NANGIA, CAS DATE OF HEARING : 04.11.2015 DATE OF PRONOUNCEMENT : 08.12.2015 ORDER PER KULDIP SINGH, JM: SINCE, COMMON QUESTION IS RAISED TO BE DETERMINED IN THE AFORESAID APPEAL AND CROSS APPEAL, THEY ARE TAKEN UP TOGETHER FOR DISPOSAL BY WAY OF ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 2 SINGLE ORDER, WITH THE CONCURRENCE OF AUTHORIZED RE PRESENTATIVES OF THE PARTIES, TO AVOID REPETITION OF DISCUSSION. 2. THE APPELLANT, ADIT, INTERNATIONAL TAXATION, DEH RADUN (HEREINAFTER REFERRED AS THE REVENUE) BY FILING THE PRESENT AP PEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 09.10.2012 PASSED BY LD. CIT(A ) II, DEHRADUN QUA THE ASSESSMENT YEAR 2004-05 ON THE GROUND INTER ALI A THAT: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE REVENUE RECEIVED FOR PROVIDING SERVICES FOR GEOPHYSICAL AND GEOLOGICAL INTERPRETATION OF 3D AND 20 SEISMIC DATA ARE NOT FEES FOR TECHNICAL SERVICES. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN RELYING ON THE DECISION OF THE ITAT IN THE CASE OF M/S CGG VERITAS OVERLOOKING THE FACT THAT THE ITAT HAS CLEARLY HELD THAT INTERPRETATION OF SEISMIC DATA ARE IN THE NATURE OF FTS. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSE E WAS TAXABLE UNDER THE PRESUMPTIVE PROVISIONS OF SECTION 44BB EVEN THO UGH THE NATURE OF SERVICES RENDERED BY THE ASSESSEE WERE TECHNICAL IN NATURE AND NOT FOR A PROJECT UNDERTAKEN BY THE RECIPIENT WERE TAXABLE U/S 44BB. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN APPLYING THE DECISION OF ITAT IN THE C ASE OF M/S CGG VERITAS HOLDING THAT THE ASSESSEE COMPANY HAD A PE AND WAS THUS COVERED UNDER IT WHEN THE SAID DECISION IS BINDING ONLY IN CASE OF ASSESSEE NOT HAVING A PE AND THE SAID DECISION HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND AN MA HAS BEEN FILED, WHILE A PPEAL WAS NOT FILED PURELY ON ACCOUNT OF TAX EFFECT CONSIDERATION S. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT (A) HAS ERRED IN' IGNORING THE DISTINCT SCHEME OF TAXAT ION OF FTS/ROYALTY AND HOLDING THAT THE INCOME OF THE ASSESSEE WAS TAX ABLE UNDER THE PRESUMPTIVE PROVISIONS OF SEC. 44BB, DISREGARDING T HE INSERTION OF ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 3 PROVISO IN SECTION 44BB/44DA/115A AND THE RATIONALE BEHIND THE INTRODUCTION OF SAID CLARIFICATORY PROVISO'S IN THE FINANCE BILL 2010. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN HOLDING THAT RETROSPECTIVELY CANNOT BE READ INTO THE AMENDMENTS OF FINANCE ACT, 2010 INSERTING PROVISO T O SECTION 44BB/44DA/115A EVEN THOUGH THESE WERE CLARI FICATORY AND THEIR APPLICATION HAS TO BE READ INTO ACT AS PER HO N'BLE SUPREME COURT DECISION IN THE CASE OF SEDCO FOREX INTERNATI ONAL DRILLING VS. CIT AND OTHERS. 7. WHETHER THE CIT(A) HAS ERRED IN IGNORING DECISIO NS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ON GC AS AN AGENT OF M/S FORAMER FRANCE AND CIT VS. M/S ROLLS ROYCE PVT. LTD. (2007-TII- 03'-1 HIGH COURT UTTARAKHAND-INTL.) HOLDING THAT FT S IS NOT ELIGIBLE FOR 44BB. 3. THE APPELLANT OF CROSS OBJECTION, M/S. LANDMARK GRAPHICS MALASIYA SDN BHD, DEHRADUN (HEREINAFTER REFERRED AS THE ASS ESSEE) BY FILING THE CROSS APPEAL, CHALLENGED THE IMPUGNED ORDER DATED 0 9.10.2012 PASSED BY LD. CIT(A) II, DEHRADUN QUA THE ASSESSMENT YEAR 2004- 05 ON THE GROUND INTER ALIA THAT: 1. THAT THE LD. COMMISSIONER OF INCOME-TAX, APPEAL S-II, DEHRADUN [CIT(A)] ERRED IN NOT HOLDING THAT THE REA SSESSMENT PROCEEDINGS WERE BAD IN LAW BECAUSE IN THE ABSENCE OF ANY NEW MATERIAL, THE ASSESSING OFFICER COULD NOT HAVE FORM ED ANY REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. 2. WITHOUT PREJUDICE TO THE ABOVE, THAT THE LD. CIT (A) ERRED IN UPHOLDING THE ORDER OF THE AO THAT AS PER THE INDO- MALAYSIAN DTAA, THE APPELLANT HAD A PERMANENT ESTABLISHMENT (PE) IN INDIA AS OPPOSED TO THE FACT THAT THE APPELLANT DID NOT HAVE ANY PE IN INDIA FOR THE PURPOSE OF INDO-MALAYSIAN DTAA AS APPLICABLE FO R THE YEAR IN QUESTION. ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 4 3. WITHOUT PREJUDICE TO ANY OF THE ABOVE, THAT THE LD. CIT(A) ERRED IN NOT ACCEPTING THAT AS PER THE INDO-MALAYSIAN DTA A, IN THE ABSENCE OF A PE IN INDIA, THE ENTIRE INCOME OF THE APPELLAN T WAS TO BE TAXED AS 'BUSINESS INCOME' ONLY IN MALAYSIA AND NOT IN INDIA . 4. WITHOUT PREJUDICE TO ANY OF THE ABOVE, THAT THE LD. CIT(A) ERRED IN NOT UPHOLDING THE CLAIM OF THE APPELLANT THAT IT S NATURE OF OPERATIONS IN INDIA, I.E. THE WORK PERFORMED BY THE APPELLANT IN INDIA UNDER THE VARIOUS CONTRACTS WITH ITS CUSTOMERS, WAS NOT FEES FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION (2) TO SECTION 9(1)(VII) OF THE INCOME-TAX ACT, 1961. 5. WITHOUT PREJUDICE TO ANY OF THE ABOVE, THAT THE LD. CIT(A) HAS ERRED IN NOT UPHOLDING THAT THE ACTIVITIES PERFORME D BY THE APPELLANT ARE IN THE NATURE OF A BUILDING, CONSTRUCTION, INST ALLATION AND/OR A MINING OR LIKE PROJECT AND FOR THIS REASON, EXCLUDE D FROM THE AMBIT OF THE DEFINITION OF FEES FOR TECHNICAL SERVICES AS DE FINED IN EXPLANATION (2) TO SECTION 9(1 )(VII). 6. WITHOUT PREJUDICE TO ANY OF THE ABOVE, THAT THE LD. CIT(A) HAS ERRED IN NOT HOLDING THAT THE SCOPE OF OPERATIONS O F THE ASSESSEE ARE SQUARELY COVERED BY THE DECISION OF THE JURISDICTIO NAL HIGH COURT OF UTTARAKHAND IN THE CASE OF CIT VS. ONGC AS AGENT OF SCAN DRILLING COMPANY IN ITR NO.2 OF 2001. 4. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: THE ASSESSEE FILED THE RETURN OF INCOME U/S 139 OF THE ACT AT RS.2,47,26,130/- AND A FTER PROCESSING, A REFUND OF RS.1,71,43,039/- WAS ISSUED IN FAVOUR OF ASSESSE E. AFTER RECORDING THE REASONS, NOTICE U/S 148 OF THE ACT AND THEN NOTICE U/S 142(1) WERE SERVED UPON THE ASSESSEE AND IN RESPONSE THERETO, SHRI R.P . EASWARAN, CA/AR PUT APPEARANCE, ATTENDED THE HEARING AND FILED WRITTEN SUBMISSIONS AND IT WAS FOUND THAT THIS IS A CASE IN WHICH ASSESSMENT HAS B EEN COMPLETED U/S 143(3) AND U/S 147 ORIGINALLY. ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 5 5. THE REASONS OF REOPENING THE ASSESSMENT TRANSPIR ES THAT THERE HAS BEEN ESCAPEMENT OF INCOME AS THE ASSESSEE HAS EARNED REV ENUE OF RS.24,72,61,294/- FROM M/S. OIL & NATURAL GAS CORPO RATION LIMITED (HEREINAFTER REFERRED AS ONGC) TO CARRY ON GEOPHYSICAL AND GEOLOGICAL INTERPRETATION OF 3D SEISMIC DATA VOLUMES PERTAININ G TO ITS THREE INDIAN OFFSHORE BLOCKS FALLING IN DEEP AS WELL AS SHALLOW WATERS. THE CONTRACT NOT ITS CARRY OUT GEOLOGICAL & GEOPHYSICAL STUDIES. THE ASSESSEE CONTRACT WITH ONGC INVOLVED HIRING OF CONSULTANCY SERVICES F OR INTERPRETATION OF 3D SEISMIC VOLUME ALONG WITH ADJOINING 2D DATA WHICH IS A FAILURE ON THE PART OF THE ASSESSEE TO WRONGLY CLAIM BENEFIT U NDER SECTION 44BB. FROM THE CONTENTIONS OF THE ASSESSEE FILED VIDE REPLY DA TED 09.12.2011 THE TAXABILITY U/S 44BB WERE FOUND TO BE NOT TENABLE AS THE ASSESSEE RENDERED SERVICES PURELY OF TECHNICAL NATURE WHICH ARE COVER ED UNDER SEPARATE SECTIONS OF THE STATUTE VIZ.9(1)(VII), 44D, 44DA AND 115A. THE ASSESSING OFFICER ALSO RECORDED THAT THE PROVISO TO SECTION 44BB(1) C LEARLY STIPULATES THAT THIS SECTION DOES NOT APPLY IN THE CASES WHERE SECTION 1 15A OR SECTION 44D ARE APPLICABLE. SO, THERE WAS ALWAYS A SEPARATE AND SP ECIFIC PROVISION FOR COMPUTATION OF INCOME BY WAY OF ROYALTIES UNDER THE ACT AS INCOME BY WAY OF FEE FOR TECHNICAL SERVICES (FTS) AND ROYALTY IS NOT TO BE COVERED U/S 44BB. THE PROVISIONS OF SECTION 44BB AND 44BA HAVE BEEN AMENDED W.E.F. 01.04.2011. THE ASSESSEE OFFERED ITS RECEIP T /INCOME U/S 44BB OF THE ACT TREATING THEM TO BE TAXABLE UNDER THE SAID PROV ISIONS WHEREAS ASSESSEE HAS ITSELF ACCEPTED IT AS PERMANENT ESTABLISHMENT ( PE) WHILE FILING ITS RETURN. ON THE BASIS OF TERMS AND CONDITIONS OF THE CONTRAC T, ASSESSING OFFICER NOTED THAT SERVICES ARE PROVIDED BY THE ASSESSEE FO R EXPLORATION ACTIVITIES WHICH ARE IN THE NATURE OF TECHNICAL SERVICES. THE ASSESSEE HAS ALSO FAILED TO ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 6 PROVE AS TO HOW IT HAS CLAIMED THAT THERE IS NO PE IN INDIA ESPECIALLY IN VIEW OF THE AFORESAID OBSERVATIONS. THE ASSESSING OFFICE R CONSIDERED THE INCOME OF THE ASSESSEE BEING IN THE NATURE OF FEE FOR TECH NICAL SERVICES (FTS) AND IN VIEW OF APPLICABILITY OF DTAA, THE INCOME IS HELD T AXABLE SINCE PES OF THE ASSESSEE HAVE BEEN HELD TO HAVE BEEN EXISTED INCOM E FROM FTS IS TREATED AS BUSINESS INCOME OF THE ASSESSEE. IN THE ABSENCE OF BOOKS OF ACCOUNT, INCOME IS COMPUTED BY ESTIMATING THE SAME AFTER APPLYING T HE DEEMED PROFIT RATE OF 25% I.E. RS.6,18,15,320/- ON GROSS RECEIPT I.E. RS. 24,74,69,294/- 6. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ) WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, THE REVENUE AS WELL AS THE ASSESSEE HAVE FILED APPEAL / CROSS OBJECTION BEFORE THE TRIB UNAL. 7. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, GONE THROUGH MATERIAL PLACED ON RECORD IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF TAX AUTHORI TIES BELOW. 8. LD. D.R. CONTENDED THAT LD. CIT(A) HAS ERRED IN HOLDING THAT THE INCOME OF THE ASSESSEE WAS TAXABLE UNDER PRESUMPTIV E PROVISIONS OF SECTION 44BB AND HOLDING THAT THE PROVISO INSERTED BY FINAN CE ACT 2010 TO SECTION 44BB/44AD/115A, CANNOT BE APPLIED RETROSPECTIVELY A ND RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. 9. ON THE OTHER HAND, LD. A.R. REPELLED THE ARGUMEN TS ADDRESSED BY LD. D.R. BY CONTENDING THAT THE ISSUE IN CONTROVERSY HA S ALREADY BEEN SET AT REST BY HON'BLE SUPREME COURT AND THE CASE LAW RELIED UP ON BY THE ASSESSING OFFICER HAVE ALREADY BEEN SET ASIDE BY THE BY THE HON'BLE SUPREME COURT IN THE CASE CITED AS ONGC LIMITED IN I.T.A. NO. 731 IF 2007 DATED 01 ST JULY 2015. ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 7 10. GROUNDS NO.1, 2, 3 & 4: NOW, THE QUESTIONS ARISE FOR DETERMINATION ARE, WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE REVENUE RECEIVED FOR PROVIDING SERVICES FOR GEOPHYS ICAL AND GEOLOGICAL INTERPRETATION OF 3D AND 20 SEISMIC DATA ARE NOT FE ES FOR TECHNICAL SERVICES; WHETHER THE CASE OF THE ASSESSEE IS DULY COVERED BY THE AFORESAID JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE CITE D AS ONGC LTD. VS. CIT AND ANOTHER IN CIVIL APPEAL NO.731 OF 2007 JUDGEMENT DATED 01 ST JULY 2015. 11. LD. A.R. WHILE RELYING UPON THE JUDGEMENT CITED ONGC LTD. (SUPRA) CONTENDED THAT THIS ISSUE HAS ALREADY BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE SUPREME COURT. FOR FACILITY OF REFEREN CE, PARA 13 OF THE JUDGEMENT (SUPRA) IS REPRODUCED AS UNDER: 13. THE INCOME TAX ACT DOES NOT DEFINE THE EXPRESS IONS 'MINES' OR 'MINERALS'. THE SAID EXPRESSIONS ARE FOUND DEFINED AND EXPLAINED IN THE MINES ACT, 1952 AND THE OIL FIELDS (DEVELOPMENT AND REGULATION) ACT 1948. WHILE CONSTRUING THE SOMEWHAT PARI MATERI A EXPRESSIONS APPEARING IN THE MINES AND MINERALS (DEVELOPMENT AN D REGULATION) ACT 1957 REGARD MUST BE HAD TO THE PROVISIONS OF EN TRIES 53 AND 54 OF LIST AND ENTRY 22 OF LIST OF THE 7TH SCHEDULE TO TH E CONSTITUTION TO UNDERSTAND THE EXCLUSION OF MINERAL OILS FROM THE D EFINITION OF MINERALS IN SECTION 3(A) OF THE 1957 ACT. REGARD MU ST ALSO BE HAD TO THE FACT THAT MINERAL OILS IS SEPARATELY DEFINED IN SECTION 3(B) OF THE 1957 ACT TO INCLUDE NATURAL GAS AND PETROLEUM IN RE SPECT OF WHICH PARLIAMENT HAS EXCLUSIVE JURISDICTION UNDER ENTRY 5 3 OF LIST OF THE 7TH SCHEDULE AND HAD ENACTED AN EARLIER LEGISLATION I.E . OIL FIELDS (REGULATION AND DEVELOPMENT) ACT, 1948. READING SEC TION 2(J) AND 2(JJ) OF THE MINES ACT, 1952 WHICH DEFINE MINES AND MINERALS AND THE PROVISIONS OF THE OIL FIELDS (REGULATION AND DEVELO PMENT) ACT, 1948 SPECIFICALLY RELATING TO PROSPECTING AND EXPLORATIO N OF MINERAL OILS, EXHAUSTIVELY REFERRED TO EARLIER, IT IS ABUNDANTLY CLEAR THAT DRILLING OPERATIONS FOR THE PURPOSE OF PRODUCTION OF PETROLE UM WOULD CLEARLY AMOUNT TO A MINING ACTIVITY OR A MINING OPERATION V IEWED THUS, IT IS THE PROXIMITY OF THE WORKS CONTEMPLATED UNDER AN AG REEMENT, ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 8 EXECUTED WITH A NON-RESIDENT ASSESSEE OR A FOREIGN COMPANY, WITH MINING ACTIVITY OR MINING OPERATIONS THAT WOULD BE CRUCIAL FOR THE DETERMINATION OF THE QUESTION WHETHER THE PAYMENTS MADE UNDER SUCH AN AGREEMENT TO THE NON-RESIDENT ASSESSEE OR THE FO REIGN COMPANY IS TO BE ASSESSED UNDER SECTION 4488 OR SECTION 440 OF THE ACT. THE TEST OF PITH AND SUBSTANCE OF THE AGREEMENT COMMENDS TO US AS REASONABLE FOR ACCEPTANCE. EQUALLY IMPORTANT IS THE FACT THAT THE CBDT HAD ACCEPTED THE SAID TEST AND HAD IN FACT ISSUED A CIR CULAR AS FAR BACK AS 22.10.1990 TO THE EFFECT THAT MINING OPERATIONS AND THE EXPRESSIONS 'MINING PROJECTS' OR 'LIKE PROJECTS' OCCURRING IN E XPLANATION 2 TO SECTION 9(1} OF THE ACT WOULD COVER RENDERING OF SE RVICE LIKE IMPARTING OF TRAINING AND CARRYING OUT DRILLING OPE RATIONS FOR EXPLORATION OF AND EXTRACTION OF OIL AND NATURAL GA S AND HENCE PAYMENTS MADE UNDER SUCH AGREEMENT TO A NON-RESIDEN T FOREIGN COMPANY WOULD BE CHARGEABLE TO TAX UNDER THE PROVIS IONS OF SECTION 44BB AND NOT SECTION 44D OF THE ACT. WE DO NOT SEE HOW ANY OTHER VIEW CAN BE TAKEN IF THE WORKS OR SERVICES MENTIONE D UNDER A PARTICULAR AGREEMENT IS DIRECTLY ASSOCIATED OR INEX TRICABLY CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINER AL OIL. KEEPING IN MIND THE ABOVE PROVISION, WE HAVE LOOKED INTO EACH OF THE CONTRACTS INVOLVED IN THE PRESENT GROUP OF CASES AND FIND THA T THE BRIEF DESCRIPTION OF THE WORKS COVERED UNDER EACH OF THE SAID CONTRACT AS CULLED OUT BY THE APPELLANTS AND PLACED BEFORE THE COURT IS CORRECT. THE SAID DETAILS ARE SET OUT BELOW. 1. CIVIL APPEAL NO. 4321 - DRILLING OF EXPLORATION WELLS AND CARRYING OUT SEISMIC SURVEYS FOR EXPLORATORY DRILLING. 2 . 3 . 44 . THE ABOVE FACTS WOULD INDICATE THAT THE PITH AND SU BSTANCE OF EACH OF THE CONTRACTS/AGREEMENTS IS INEXTRICABLY CONNECTED WITH PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OIL. THE DOMINA NT PURPOSE OF EACH OF SUCH AGREEMENT IS FOR PROSPECTING, EXTRACTION OR PRODUCTION OF MINERAL OILS THOUGH THERE MAY BE CERTAIN ANCILLARY WORKS CONTEMPLATED THEREUNDER. IF THAT BE SO, WE WILL HAV E NO HESITATION IN HOLDING THAT THE PAYMENTS MADE BY ONGC AND RECEIVED BY THE NON- RESIDENT ASSESSEES OR FOREIGN COMPANIES UNDER THE S AID CONTRACTS IS MORE APPROPRIATELY ASSESSABLE UNDER THE PROVISIONS OF SECTION 44BB ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 9 AND NOT SECTION 44D OF THE ACT. ON THE BASIS OF THE SAID CONCLUSION REACHED BY US, WE ALLOW THE APPEALS UNDER CONSIDERA TION BY SETTING ASIDE THE ORDERS OF THE HIGH COURT PASSED IN EACH O F THE CASES BEFORE IT AND RESTORING THE VIEW TAKEN BY THE LEARNED APPE LLATE COMMISSIONER AS AFFIRMED BY THE LEARNED TRIBUNAL. 12. IN THE LIGHT OF SETTLED PRINCIPLE OF LAW IN THE CASE CITED AS ONGC (SUPRA), THE ISSUE IN CONTROVERSY HAS BECOME APPARE NTLY CLEAR THAT MINING PROJECT OR LIKE PROJECTS OCCURRING IN EXPLANATIO N 2 TO SECTION 9(1) OF THE ACT WOULD COVER RENDERING OF SERVICE LIKE IMPARTING OF TRAINING AND CARRYING OUT DRILLING OPERATIONS FOR EXPLORATION OF AND EXTR ACTION OF OIL AND NATURAL GAS AND HENCE, PAYMENTS MADE UNDER SUCH AGREEMENT T O A NON- RESIDENT/FOREIGN COMPANY WOULD BE CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 44BB AND NOT U/S 44D OF THE ACT . 13. IN THE INSTANT CASE, THE ASSESSEE COMPANY HAS R ECEIVED REVENUE FOR PROVIDING SERVICES OF GEOPHYSICAL AND GEOLOGICAL IN TERPRETATION OF 3D AND 2D SEISMIC DATA, WHICH CANNOT BE CONSIDERED AS FTS AND AS SUCH, CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 44BB OF THE ACT AND LD. CIT(A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. S O, AFFIRMING THE FINDINGS RETURNED BY LD. CIT(A), WE HEREBY DECIDE GROUNDS NO .1, 2, 3 AND 4 AGAINST THE REVENUE. 14. GROUNDS NO.5 & 6: LD. A.R. FOR THE ASSESSEE BY RELYING ON THE JUDGEM ENT CITED AS B J SERVICES COMPANY MIDDLE EAST LIMITED VS DCIT 339 IT R 169 ORDER DATED 20.08.2011 AND BAKER HUGHES ASIA PACIFIC LIMI TED VS ADIT 167 TTJ 304 CONTENDED THAT THE ASSESSING OFFICER HAS GRAVELY E RRED IN APPLYING THE AMENDMENT PROPOSED BY FINANCE BILL (2010) IN SE CTION 44BB AND 44DA RETROSPECTIVELY WHICH ARE ONLY PROSPECTIVE IN NATUR E. FOR FACILITY OF ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 10 REFERENCE, OPERATIVE PART OF THE JUDGEMENT IN CASE OF B J SERVICES COMPANY MIDDLE EAST LIMITED (SUPRA) IS REPRODUCED AS UNDER: .THE COMBINED EFFECT OF THE PROVISIONS OF S.44BB, 44DA AND 115A OF THE ACT WILL NOT HAVE A BEARING TO THE CASE IN HAND IN AS MUCH AS THE EXPLANATORY NOTE TO THE FINANCE BILL, 2010 C LEARLY INDICATES THAT THE AMENDMENTS PROPOSED IN S.44BB AND 44DA OF THE A CT WOULD TAKE EFFECT FROM 1 ST APRIL, 2011 AND WOULD APPLY IN RELATION TO THE ASSESSMENT YEAR 2011-12 AND SUBSEQUENT YEARS. THE AMENDMENT IS PROSPECTIVE IN NATURE AND WOULD NOT APPLY TO THE CA SES IN HAND WHICH IS OF THE EARLIER ASSESSMENT YEARS. 15. THE RATIO OF JUDGEMENT IN CASES CITED AS B J SE RVICES COMPANY MIDDLE EAST LIMITED AND BAKER HUGHES ASIA PACIFIC L IMITED VS ADIT (SUPRA) IS, SECTION 44DA INSERTED IN FINANCE ACT 2010 W.E.F. 0 1.04.2011 IN SECTION 44BB ARE PROSPECTIVE IN NATURE , WOULD ONLY APPLY TO THE ASSESSMENT YEAR 2011-12 AND ONWARDS AND NOT IN THE CASE OF THE ASSESSEE QUA THE ASSESSMENT YEAR 2004-05. SO, AFFIRMING THE FINDINGS RETURNED BY LD. CIT(A), WE HEREBY DECIDE GROUNDS NO.5 & 6 AGAIN ST THE REVENUE. 16. GROUND NO.7: THE AFORESAID ISSUE I.E. AS TO WHETHER FTS IS NOT ELIGIBLE FOR 44BB CAME UP FOR ADJUDICATION BEFORE HON'BLE SUPREME COU RT IN THE CASE OF ONGC IN CIVIL APPEAL NO.731 (2007) 1240/2008 AND TH E SAME HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AS PER FINDINGS R ETURNED BY HON'BLE SUPREME COURT IN PARA 13 OF THE JUDGEMENT REPRODUCE D IN THE PRECEDING PARAGRAPH NO.11. SO, BY FOLLOWING THE JUDGMENT IN CASE OF ONGC (SUPRA) DELIVERED BY THE HON'BLE SUPREME COURT, WE HEREBY AFFIRM THE FINDINGS OF LD. CIT(A) THAT FTS IS NOT ELIGIBLE FOR SECTION 44B B. ITA NO.6392/DEL/2012 C.O.NO.37/DEL/2013 11 17. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE HE REBY DISMISS BOTH THE AFORESAID APPEALS, I.T.A. NO. 6392/DEL/2012 FILED B Y THE ASSESSEE AND THE CROSS APPEAL NO.37/DEL/2013 FILED BY THE REVENUE. 18. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH DEC., 2015. SD./- SD./- ( J. S. REDDY) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 08.12.2015 2015/SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 30/11,4,7,8/12 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 8/12/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 8/12 SR. PS/PS 7 FILE SENT TO BENCH CLERK 8/12 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER