Director Of Income Tax & Another v. M/S Paradigm Geophysical Pvt. Ltd

IN THE HIGH COURT OF UTTARAKHAND AT NAINITALIncome Tax Appeal No. 47 of 2008 Director of Income Tax & another. ………. Appellants Versus M/s Paradigm Geophysical Pvt. Ltd. .………. Respondent Mr. Hari Mohan Bhatia, Advocate for the appellants. Mr. Pulak Raj Mullick, Advocate for the respondent. JUDGMENT Coram: Hon’ble Barin Ghosh, C.J. Hon’ble Servesh Kumar Gupta, J. BARIN GHOSH, C. J. (Oral) The assessee provided technical service to an Indian Company. While providing such service, it carried out processing work outside India. The factual position, to that effect, was not questioned by the Assessing Officer. Processed data was utilised by the Indian Company for the work of the Indian Company in India. Because the processed data was so utilised, the Assessing Officer held that the assessee is liable to pay tax in India. This contention of the Assessing Officer was assailed by the assessee before the appellate authority. The appellate authority held that the service provided by the assessee comes within Section 9(1)(vii)(b) of the Income Tax Act. The appellate authority held that, since such technical service was provided by the assessee while being engaged in the business of providing services or facilities in connection with or to be used in the prospecting for or extraction or production of mineral oils, the tax payable by the assessee is liable to be assessed under Section 44BB of the Income Tax Act. The revenue went before the Tribunal and failed. Hence, the present appeal. 2. Before the Tribunal, the principal contention of the revenue was that the matter of tax liability of the assessee was required to be sorted out in accordance with the Treaty inter se the country, to which the assessee belongs, and the Government of India. We think that, for the reasons rightly recorded in the judgment and order under appeal, the Tribunal has rejected the said contention and upheld the judgment of the appellate authority. We think that the Tribunal has correctly held that the Treaty will come into play only when the tax liability of the assessee under the domestic law is established. In the instant case, the appellate authority correctly found that the domestic law fastened tax liability upon the assessee in view of Section 9(1)(vii)(b) of the Act. It, then, proceeded to consider Section 44BB of the Act and found that, since technical service was provided by the assessee, without having a permanent address in India, to an Indian Company for the purpose of exploration of oil, the tax liability of the assessee under the domestic law is leviable in terms of the provisions contained in Section 44BB of the Act and the law, as provided in Section 44BB, being such that there is no question of applying the provisions of the Treaty in order to give any further relief to the appellants, and, as such, the provisions of the Treaty do not apply in the matter of assessment of tax liability of the assessee. We have not been able to take a contrary view. 3. Before the Tribunal, a contention was raised, but for the first time, that the liability is to be determined under Section 44D of the Act. As is recorded in the order of the Tribunal, no argument in that regard was advanced before the Tribunal. Further, the said contention was not taken at the assessment stage. The necessary parameters for applying Section 44D of the Act were not brought on record. Therefore, the argument that Section 44D applies cannot be heard in appeal, inasmuch as, on records, there are no facts to backup the said argument. 4. We, accordingly, dismiss the appeal. G (Servesh Kumar Gupta, J.) 11.07.2013 (Barin Ghosh, C. J.) 11.07.2013