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Fugro Geoteam AS C/o Nangia & Company Chartered Accountants Suite -4A, Plaza M-6, Jasola, New Delhi-110025 Vs. Addl. Director of Income tax International Taxation, Subhash Road, Dehradun-248001
November, 24th 2014
                 IN THE INCOME TAX APPELLATE TRIBUNAL
                      DELHI BENCH : `B : NEW DELHI

             BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER
                                  AND
              SHRI GEORGE GEORGE K., JUDICIAL MEMBER

                                ITA No.5823/Del /2011
                               Assessment Year : 2008-09


Fugro Geoteam AS                   Vs.            Addl. Director of Income tax
C/o Nangia & Company                              International Taxation,
Chartered Accountants                             Subhash Road,
Suite -4A, Plaza M-6,                             Dehradun-248001
Jasola, New Delhi-110025                          (Uttrakhand)

(PAN AABCF 1411 A)



   (Appellant)                              (Respondent)

                 Appellant by :      Shri Amit Arora, Suraj Nangia, CAs.
                 Respondent by:      Shri Sanjeev Sharma, CIT, D.R.

                                         ORDER

   PER SHRI GEORGE GEORGE K, JM:


   1.     This appeal at the instance of the assessee is directed against the

   Assessing Officer's order dated 02.11.2011 passed u/s 143(3) r.w.s 144C(13) of

   the Act. The relevant Assessment Year is 2008-09.

   2.   Brief facts of the case are as follows.

          The assessee is foreign company incorporated under the laws of Norway.

   It is engaged in the activities relating to acquisition of 3D sesismic data under
                                                             ITA No.5823/Del /2011        2
                                                            Assessment Year : 2008-2009




contracts with Reliance Industries Ltd. and ONGC. For the year under dispute,

the return of income was filed on 28.11.2008 declaring income of

Rs.18,27,42,870/- from contract receipt u/s 44BB of the Act. The return was

selected for scrutiny and AO passed draft assessment order, wherein, the

assessee's claim for the being taxed u/s 44BB was rejected and its income has

been taxed as fees from technical services. Aggrieved by the proposed variation

in its income, the assessee has filed objections before the Dispute Resolution

Panel. The Dispute Resolution Panel affirmed the view taken by the assessee.

The assessee being aggrieved is in appeal before us raising the following

grounds:

"Addition qua seismic survey operations                in   connection           with
exploration/prospecting/extraction of mineral oil




      1.    That the assessing officer erred on facts and in law in completing
            assessment under section 144C/143(3) of the Income-tax Act, 1961
            (`the Act') at an income of Rs.527,387,970/- as against the income
            of Rs.182,742,870/- returned by the appellant.
      2.    That the assessing officer erred on facts and in law in assessing
            revenue of Rs.1,827,428,731/- arising from seismic survey services
            rendered      by     the    appellant     in    connection     with
            exploration/prospecting/extraction not chargeable to tax under
            section 44BB of the Act.
      3.    That the assessing officer erred on facts and in law in holding that
            income from the aforesaid revenues of Rs.1,827,428,731/- was to be
            computed by adopting a presumptive profit rate of 25 per cent.

Addition qua mobilization/demobilization of vessels outside India

      1.    That the assessing officer erred on facts and in law in holding that
            revenue        of        Rs.282,123,166/-        arising       from
            mobilization/demobilisation of vessels outside India were `fees for
                                                             ITA No.5823/Del /2011        3
                                                            Assessment Year : 2008-2009




             technical services' under section 9(1)(vii) of the Act as opposed to
             revenues claimed to be exempt from tax under the Act."

3.     Both AR and DR agreed that the above grounds are covered by the

various judicial pronouncements. It was submitted that the first ground is

covered in favour of the assessee by the judgment of the Hon'ble Delhi High

Court in the case of PGS Geophysical AS Vs. Addl. Director of Income Tax

reported in 2014-TII-35-HC-DEL-INTL.

3.1.   It was submitted that the issue raised in the second ground is covered in

favour of the Revenue by the various judgments of the Hon'ble Uttrakhand High

Court, namely:


1.     CIT & Another Vs. Atwood Oceanics Pacific Ltd. [Uttrakhand High
       Court] [2010-TII-12-HC-UKHAND-INTL] dated May 19, 2010.

2.     CIT Vs. R&B Falcon Drilling Co. [Uttrakhand High Court] [2009-
       TII-20-HC-UKHAND-INTL] dated: April 24,2009

3.     CIT Vs M/s Sundowner Offshore International Burmuda Ltd
       [Uttrakhand High Court] [2009-TII-07-UKHAND-INTL] dated
       February 16, 2009.

4.     CIT Vs. M/s BJ Service Co [Uttrakhand High Court] [2007-TII-05-
       HC-UKHAND-INTL] dated October 8, 2007.

5.     CIT Vs. Trans Ocean Offshore Incorporation [High Court of
       Uttrakhand] [2007-TII-13-HC-Ukhand-INTL] dated October 08,
       2007.

6.     M/s Sedco Forex International Inc Vs CIT, Meerut [Uttrakhand High
       Court] [2007 TII-02-HC-UKHAND-INTL] dated September 28, 2007.

7.     CIT Vs. M/s Halliburton Offshore Service Inc [Uttrakhand High
       Court] [2007-TII-04-HC-UKHAND-INTL] dated September 20, 2007.
                                                            ITA No.5823/Del /2011        4
                                                           Assessment Year : 2008-2009




3.2.   The third ground, it was submitted that it is covered in favour of the

assessee in the case of DIT Vs. NGC Network Asia in ITA No. 1037 of 2008

and DIT Vs Clifford Chance LLP in ITA No.2883 of 2008.


4.     We have heard rival submission and perused the material on record. In so

far as first ground is concerned, the DRP rejected the assessee contention by

making the following observation:


"4.3. The Panel has considered the facts of the case and the arguments of
      the Assessing Officer as well as the contentions of the assessee. The
      Panel has also noted that the Ruling of AAR in the case of Geophzika
      Torun Sp. Zo.0 applies to the facts of the present case and in that
      Ruling the AAR has considered most of the arguments made by the
      assessee as well as by the AO in the present case. Although the AO
      has dismissed this ruling on the ground that it is applicable only to
      the case in which it was given, the Panel is of the view that such a
      Ruling given on similar set of cases would have considerable
      persuasive value. However, the Panel has noted that the Department
      has filed a writ before the Hon'ble Delhi High Court against the
      Ruling of AAR in the case of Geophyzika Torun Sp. Zo.o. Therefore,
      as the matter is sub-judice before the Delhi High Court no
      interference is being made by the Panel in the draft order proposed by
      the Assessing Officer. The Assessing Officer is directed to proceed
      and complete the assessment as per the draft order dated 29.12.2010
      passed by him."


5.     The Ruling of AAR in the case of Geophzika Torun Sp. Zo.o has been

confirmed by the Hon'ble Delhi High Court in the case of Director of Income

Tax-II Vs. OHM Ltd. [2012] 28 taxmann 120 (Del). The said judgment of the

jurisdictional High Court in the case of Director of Income Tax-II Vs. OHM

Ltd. (Supra) was followed by the Hon'ble jurisdictional High Court in the
                                                                   ITA No.5823/Del /2011        5
                                                                  Assessment Year : 2008-2009




case of PGS Geophysical AS (Supra). In the light of the above judgments of

Hon'ble jurisdictional High Court, we hold that for the relevant assessment

year, assessee is entitled to declare its income under the provision of Section

44BB of the Act. It is ordered accordingly.

6.        In     so   far   as   the   second   ground   namely       addition       qua

mobilization/demobilization of Vessel outside India is concerned, the DRP

dismissed the plea of the assessee by following the various judgments of the

Hon'ble Uttrakhand High Court. The relevant finding of the DRP reads as

follows:

     "5. Ground no.2: This objection to the proposal to tax the receipts on
     account of mobilization & demobilization at 25 per cent deemed profit
     rate. In the return of income the assessee had claimed that mobilization
     & demobilization revenue aggregating to Rs.282,123,166/- pertained to
     transportation of the vessel outside Indian territorial waters, and that
     accordingly, the same was not chargeable to tax in India in terms of
     section 5 read with section 9 of the Income-tax Act, 1961. The Panel has
     noted that the AO has relied on a number of decisions of the
     jurisdictional High Court in which this issue has been decided in favour
     of the department:


     1.        CIT & Another Vs. Atwood Oceanics Pacific Ltd. [Uttrakhand High
               Court] [2010-TII-12-HC-UKHAND-INTL] dated May 19, 2010.

     2.        CIT Vs. R&B Falcon Drilling Co. [Uttrakhand High Court] [2009-
               TII-20-HC-UKHAND-INTL] dated: April 24,2009

     3.        CIT Vs M/s Sundowner Offshore International Burmuda Ltd
               [Uttrakhand High Court] [2009-TII-07-UKHAND-INTL] dated
               February 16, 2009.

     4.        CIT Vs. M/s BJ Service Co [Uttrakhand High Court] [2007-TII-05-
               HC-UKHAND-INTL] dated October 8, 2007.
                                                               ITA No.5823/Del /2011        6
                                                              Assessment Year : 2008-2009




     5.     CIT Vs. Trans Ocean Offshore Incorporation [High Court of
            Uttrakhand] [2007-TII-13-HC-Ukhand-INTL] dated October 08,
            2007.

     6.     M/s Sedco Forex International Inc Vs CIT, Meerut [Uttrakhand High
            Court] [2007 TII-02-HC-UKHAND-INTL] dated September 28,
            2007.
     7.     CIT Vs. M/s Halliburton Offshore Service Inc [Uttrakhand High
            Court] [2007-TII-04-HC-UKHAND-INTL] dated September 20,
            2007.





         As the issue of taxation of mobilization and demobilization charges
     has already been settled by the Hon'ble High Court of Uttrakhand favour
     of revenue in the above cases the assessee has no case and so the order of
     the Assessing Officer on this issue is in order. As such, this ground of
     objection is also rejected."

7.              In view of the Hon'ble Uttrakhand High Court judgments

mentioned above, we hold that the revenue of Rs.2,81,23,166/- arising from

mobilization/demobilization of Vessel outside India is taxable.


          Levy of Interest

8.              Interest u/s 234B & 234C is not chargeable, since assessee is a

non-resident and as such tax is to be deducted at source by Indian party. The

Hon'ble High Court in the case of DIT Vs. NGC Network Asia (Supra) and in

the case of DIT Vs. Clifford Chance LLP (Supra) has decided issue in favour

of assessee. The SLP filed from the judgment of the Hon'ble Uttrakhand High

Court in the case of DIT Vs. Clifford Chance LLP was dismissed by the

Hon'ble Supreme Court. Therefore, we hold interest u/s 234B & 234C is not

chargeable.
                                                                ITA No.5823/Del /2011        7
                                                               Assessment Year : 2008-2009




9.      In the light of the above, the appeal of the assessee is partly allowed as

indicated above.


        The decision was pronounced in the open court on 21st November, 2014.

      Sd/-                                                         Sd/-
 (J.S. REDDY)                                           (GEORGE GEORGE K.)
Accountant Member                                         Judicial Member

Dated: 21st November, 2014.

Aks/-

Copy forwarded to
1.   Appellant
2.   Respondent
3.   CIT
4.   CIT(A)
5.   DR
                                                 Asst. Registrar, ITAT, New Delhi

 
 
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