Ita/39/2012 Of Director Of Income Tax International Taxation v. M/S Western Geco International Ltd

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 39 of 2012Director of Income Tax (International Taxation) ..……AppellantVersus M/s Western Geco International Ltd. ……Respondent. Mr. Hari Mohan Bhatia, Advocate for the appellant. Coram : Hon’ble Barin Ghosh, C. J.Hon’ble V.K. Bist, J. Barin Ghosh, C.J. (Oral) Proviso to Sub-section (1) of Section 44BB of the Income Tax Act was inserted with effect from 1[st] April, 2011. This proviso, therefore, had no application prior to 1[st] April, 2011. The Section is as follows:- “44BB.(1) Notwithstanding anything to the contrary contained in sections 28 to 41 and sections 43 and 43A, in the case of an assessee [, being a non-resident,] engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils, a sum equal to ten per cent of the aggregate of the amounts specified in sub- section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”: Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D or section 115A or section 293A apply for the purposes of computing profits or gains or any other income referred to in those sections.” 2. Section 44BB of the Act deals with income arising out of, amongst others, business of providing services or facilities in the prospecting for, or extraction or production of mineral oils. However, Section 44BB applies only to such an assessee, who is a non-resident and not to an assessee, who has a permanent establishment in India or has a fixed place of profession situate in India. By the judgment under appeal, the claim of the Department that the assessee is not covered by Section 44BB and it falls either under Section 115A or 44DA was not accepted by the Tribunal in view of insertion of the proviso to Sub-section (1) of Section 44BB by the Finance Act, 2010 with effect from 1[st] April, 2011. Whereas Section 44BB deals with all kind of services in connection with prospecting for, or extraction or production of mineral oils; Section 44DA deals with, amongst others, fees for technical services from a non resident, not being a company, or a foreign company, after 31[st] March, 2003. At the same time, Section 115A deals with technical service fees in case of a foreign company. Therefore, we are of the view that the Tribunal was right in concluding that in respect of fees received by a non-resident assessee for providing service in connection with prospecting for, or extraction or production of mineral oil, such assessee would be covered by Section 44BB until before proviso to Sub-section (1) of Section 44BB was inserted. The other aspect of the matter is, whether factually Section 44BB will apply to the assessee and accordingly whether the assessee has not a permanent establishment in India and / or has not a fixed place of profession in India. The Assessing Officer did not make any inquiry, whether the assessee had a fixed place of business or profession in India or a permanent establishment in India. That being the situation, CIT DR submitted before the Tribunal that the issue relating to permanent establishment or fixed place of profession has not been examined by the Assessing Officer. The matter has, therefore, been remitted back to the Assessing Officer. There is, therefore, no scope of admitting the Appeal. The same is dismissed. 3. It is made clear that all the issues are res integra and, accordingly, the matter is required to be gone in de-novo. (V.K. Bist, J.) (Barin Ghosh, C.J.) 20.05.2013 20.05.2013 Rathour