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The Tax Publishers Western Geco International Ltd. & Ors. v. ACIT & Ors. [ITA Nos. 5602, 5400 (Del) of 2013, dt. 13-5-2016] : 2016 TaxPub(DT) 2448 (Del-Trib) Scope of section 44BB v. 44DA v. 115A *Facts:* Assessee a non-resident of British Virgin Islands was in the business of providing 2D/3D seismic data for oil exploration business with a project office/PE in India during assessment year 2010-11. They had offered their income to tax under section 44BB. It was the assessing officers case that the income will fall in the scope of section 44DA as fee for technical services with an applicable PE. There were mobilization /de-mobilization which were held taxable in India contrary to assessees plea that these arose outside India. Disallowance of service tax reimbursed by customers was also made that these also arose in connection with oil exploration seismic study activities. On appeal FA held that service tax and mobilization and de-mobilization are taxable in India under section 44BB while the head of taxability was held to be as 44BB and not 44DA as the amendment in section 44BB read with section 44DA was not retrospective. Aggrieved both parties went in higher appeal: Held by the ITAT in assessees favour: Service tax is not a consideration in connection with mineral/oil exploration thus not taxable under section 44BB. Section 44BB and 44DA its amendments are only prospective AY 2011-12 and cannot be applied retrospectively. Against the assessee: Mobilization and de-mobilization charges is taxable in India as there is nexus to Indian income. W.e.f. assessing year 2011-12 (i) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil having business PE or fixed place of profession-(section 44DA); (ii) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil without having business PE or fixed place of profession- (section l15A); (iii) Other fee for technical services having business PE or fixed place of profession-(section 44DA); (iv) Other fee for technical services without business PE or fixed place of profession-(section l15A); Thus it is abundantly clear that with effect from assessment year 2011-12 fee for technical services whether rendered in connection with prospecting for or extraction or production of mineral oil or otherwise will be assessable either under section 44DA or section l15A of the Act depending on fact whether such receipts are effectively connected with PE or fixed place of profession, or not. However, for assessment year 2004-05 to 2010-11 the consideration received for fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil though effectively connected with PE or fixed place of profession will fall outside the scope of section 44DA and will be assessable under section 44BB (1) of the Act for the simple reason that proviso to section 44BB(1) does not contain section 44DA for these years."

The Tax Publishers

Western Geco International Ltd. & Ors. v. ACIT & Ors. [ITA Nos. 5602, 5400 (Del) of 2013, dt. 13-5-2016] : 2016 TaxPub(DT) 2448 (Del-Trib)

Scope of section 44BB v. 44DA v. 115A

Facts:

Assessee a non-resident of British Virgin Islands was in the business of providing 2D/3D seismic data for oil exploration business with a project office/PE in India during assessment year 2010-11. They had offered their income to tax under section 44BB. It was the assessing officers case that the income will fall in the scope of section 44DA as fee for technical services with an applicable PE. There were mobilization /de-mobilization which were held taxable in India contrary to assessees plea that these arose outside India. Disallowance of service tax reimbursed by customers was also made that these also arose in connection with oil exploration seismic study activities. On appeal FA held that service tax and mobilization and de-mobilization are taxable in India under section 44BB while the head of taxability was held to be as 44BB and not 44DA as the amendment in section 44BB read with section 44DA was not retrospective. Aggrieved both parties went in higher appeal:

Held by the ITAT in assessees favour:

Service tax is not a consideration in connection with mineral/oil exploration thus not taxable under section 44BB.

Section 44BB and 44DA its amendments are only prospective AY 2011-12 and cannot be applied retrospectively.

Against the assessee:

Mobilization and de-mobilization charges is taxable in India as there is nexus to Indian income.

W.e.f. assessing year 2011-12

(i) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil having business PE or fixed place of profession-(section 44DA);

(ii) Fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil without having business PE or fixed place of profession- (section l15A);

(iii) Other fee for technical services having business PE or fixed place of profession-(section 44DA);

(iv) Other fee for technical services without business PE or fixed place of profession-(section l15A);

Thus it is abundantly clear that with effect from assessment year 2011-12 fee for technical services whether rendered in connection with prospecting for or extraction or production of mineral oil or otherwise will be assessable either under section 44DA or section l15A of the Act depending on fact whether such receipts are effectively connected with PE or fixed place of profession, or not. However, for assessment year 2004-05 to 2010-11 the consideration received for fee for technical services rendered in connection with prospecting for or extraction or production of mineral oil though effectively connected with PE or fixed place of profession will fall outside the scope of section 44DA and will be assessable under section 44BB (1) of the Act for the simple reason that proviso to section 44BB(1) does not contain section 44DA for these years."