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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