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The Tax Publishers PGS Exploration (Norway) v. ADIT [ITA No. 612 of 2012, dt. 8-4-2016] : 2016 TaxPub(DT) 2158 (Del-HC) Income whether taxable under section 44BB or 115A *Facts:* Assessee in the business of 2D/3D seismic survey for oil exploration had offered his income from seismic survey done for BG and RIL under section 44BB for assessment year 2007-08. This was countered by the department that the said income streams were taxable under section 115A as Fee for technical services (FTS). DRP upheld views of the assessing officer which was concurred by the ITAT but remanded for finding facts. On further appeal: Held in favour of the assessee that since the assessment year is 2007-08 and the exclusion clause first proviso in section 44BB(1) was inserted only vide finance act, 2010 w.e.f. 1-4-2011 thus the income fell in the scope of section 44BB. However the fact that section 44DA excludes income in the scope of section 44BB if there is a PE was not verified, thus to check whether PE existed or not the case was remanded back to the assessing officer for finding of facts to this extent the decision went against the assessee. Section 44BB is a special provision, thus it overrides section 115A on principle of generalia specialibus non derogant. After 1-4-2011 the taxability of mineral exploration is as under: If PE exists then it will be subject to section 44DA. If no PE exists then it will fall into section 115A. Income which falls in section 115A will also not fall into section 44DA or section 44BB due to the exclusion clause was a finding made by the high court. Similar view has also been established in Flash mailer 284 Scorpion Courageous (as enclosed). Section 44BB deems 10% of the receipts as taxable income/profits while section 115A applies 10% as the tax so the impact is substantial.

The Tax Publishers

PGS Exploration (Norway) v. ADIT [ITA No. 612 of 2012, dt. 8-4-2016] : 2016 TaxPub(DT) 2158 (Del-HC)

Income whether taxable under section 44BB or 115A

Facts:

Assessee in the business of 2D/3D seismic survey for oil exploration had offered his income from seismic survey done for BG and RIL under section 44BB for assessment year 2007-08. This was countered by the department that the said income streams were taxable under section 115A as Fee for technical services (FTS). DRP upheld views of the assessing officer which was concurred by the ITAT but remanded for finding facts. On further appeal:

Held in favour of the assessee that since the assessment year is 2007-08 and the exclusion clause first proviso in section 44BB(1) was inserted only vide finance act, 2010 w.e.f. 1-4-2011 thus the income fell in the scope of section 44BB. However the fact that section 44DA excludes income in the scope of section 44BB if there is a PE was not verified, thus to check whether PE existed or not the case was remanded back to the assessing officer for finding of facts to this extent the decision went against the assessee. Section 44BB is a special provision, thus it overrides section 115A on principle of generalia specialibus non derogant. After 1-4-2011 the taxability of mineral exploration is as under:

If PE exists then it will be subject to section 44DA.

If no PE exists then it will fall into section 115A.

Income which falls in section 115A will also not fall into section 44DA or section 44BB due to the exclusion clause was a finding made by the high court.

Similar view has also been established in Flash mailer 284 Scorpion Courageous (as enclosed). Section 44BB deems 10% of the receipts as taxable income/profits while section 115A applies 10% as the tax so the impact is substantial.