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The Tax Publishers Hire income from vessels for oil production/prospecting whether royalty *Facts :* Assessee a Singapore non-resident had offered certain vessels on hire to corporates who were in the business of mineral and oil prospecting. No TDS was made on the same. Seeing AIR information revenue surveyed the receipts and alleged the same to be as royalty income taxable under Section 115A read with 9(1)(vi). Since no return was also filed by the assessee a best judgement order was made treating it as royalty income. On appeal assessee's stand was that they were covered under Section 44BB (specific Section meant for taxing cross border hire of vessels and equipments for oil/mineral exploration at 10%). DRP upheld views of the AO. On appeal by assessee - Held in favour of the assessee that they would get covered under Section 44BB read with 9(1)(vi) Explanation 2(iva) which specifically excludes incomes which taxed under Section 44BB from being read as royalty income. For taxing under Section 44BB no PE is required as per law. *Applied :* 1. Western Geco International Ltd. [TS-943-ITAT-2022 (Del)] 2. Larsen & Toubro Ltd. [TS-124-HC-2022(Bom)] 3. M/s. SBS Marine Ltd. v. ADIT [2015-TII-26-ITAT-DEL INTL] 4. Valentine Maritime (Gulf) LLC v. ADIT, 2017 TaxPub(DT) 0323 (Mum-Trib) 5. CIT v. M/s. SBS Marine Ltd. & Anr. [ITA No.36 of 2015 & Anr., dt. 6-8-2015] *Case:* Pacific Crest Pte. Ltd. v. DCIT 2023 TaxPub(DT) 2132 (Del-Trib)

The Tax Publishers

Hire income from vessels for oil production/prospecting whether royalty

Facts :

Assessee a Singapore non-resident had offered certain vessels on hire to corporates who were in the business of mineral and oil prospecting. No TDS was made on the same. Seeing AIR information revenue surveyed the receipts and alleged the same to be as royalty income taxable under Section 115A read with 9(1)(vi). Since no return was also filed by the assessee a best judgement order was made treating it as royalty income. On appeal assessee's stand was that they were covered under Section 44BB (specific Section meant for taxing cross border hire of vessels and equipments for oil/mineral exploration at 10%). DRP upheld views of the AO. On appeal by assessee -

Held in favour of the assessee that they would get covered under Section 44BB read with 9(1)(vi) Explanation 2(iva) which specifically excludes incomes which taxed under Section 44BB from being read as royalty income. For taxing under Section 44BB no PE is required as per law.

Applied :

1. Western Geco International Ltd. [TS-943-ITAT-2022 (Del)]

2. Larsen & Toubro Ltd. [TS-124-HC-2022(Bom)]

3. M/s. SBS Marine Ltd. v. ADIT [2015-TII-26-ITAT-DEL INTL]

4. Valentine Maritime (Gulf) LLC v. ADIT, 2017 TaxPub(DT) 0323 (Mum-Trib)

5. CIT v. M/s. SBS Marine Ltd. & Anr. [ITA No.36 of 2015 & Anr., dt. 6-8-2015]

Case: Pacific Crest Pte. Ltd. v. DCIT 2023 TaxPub(DT) 2132 (Del-Trib)