bmr edge: uttarakhand high court reiterates inclusion of mobilization / demobilization revenues for...
TRANSCRIPT
Vol 11 Issue 72 July 15 2015
About BMR Advisors | BMR Newsletters | BMR Insights | Events | Contact Us | Feedback
Uttarakhand High Court reiterates inclusion of revenue arising from
mobilization and demobilization of vessels outside India in relation
to seismic survey activities under section 44BB of the Income-tax
Act 1961
Section 44BB of the Income-tax Act 1961 (ldquoActrdquo) provides for taxation of non-
residents engaged inter-alia in the business of providing services or facilities in
connection with prospecting for extraction and production of mineral oil on a
deemed profit basis of 10 percent on the gross receipts One of the debate under
section 44BB of the Act is whether revenue arising from mobilization and
demobilization of vessel outside Indian territorial waters would be included in the
gross receipts for computing the deemed profits under the said provisions
The Uttarakhand High Court (ldquoHCrdquo)[1] has held that the revenue arising from
mobilization and demobilization of vessel outside Indian would be included in the
gross receipts while computing the deemed profits for the purposes of section 44BB
of the Act
Facts of the case
Fugro Geoteam AS the taxpayer a foreign company incorporated in Norway
entered into contracts with oil and gas companies in India viz Oil and Natural
Gas Corporation Limited (ldquoONGCrdquo) and Reliance Industries Ltd (ldquoRILrdquo) for
acquisition of 3D seismic data In the return of income for the year under
consideration ie Assessment Year (ldquoAYrdquo) 2008-09 the taxpayer offered its
income from carrying out acquisition of 3D seismic data to tax under the
provisions of section 44BB of the Act The revenue from mobilization and
demobilization of vessel outside Indian territorial waters was not offered to tax in
India
During the course of assessment proceedings the Assessing Officer (ldquoAOrdquo)
sought to deny the benefit of section 44BB of the Act and held that income
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Forbes Survey on one year of Narendra
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2015
Tier 1 firm in International Tax Review
earned by the taxpayer from carrying out acquisition of 3D seismic data is in the
nature of lsquofees for technical servicesrsquo taxable under section 44DA read with
section 9(1)(vii) of the Act by adopting a presumptive profit rate of 25 percent
Further mobilization and demobilization revenue for transportation of vessel
outside Indian territorial waters was also held liable to tax in India Both the
variations proposed in the draft assessment order by the AO were confirmed by
the Dispute Resolution Panel (ldquoDRPrdquo)
On appeal by the taxpayer the Delhi Bench of Income Tax Appellate Tribunal
(ldquoITATrdquo) held as follows
shy In relation to income earned from carrying out acquisition of 3D seismic data -
relying on the decision of the Delhi HC in the case of OHM Limited[2] and
PGS Geophysical AS[3] the ITAT allowed benefit of section 44BB of the Act
to the taxpayer and
shy On taxability of revenue from mobilization and demobilization of vessel
outside Indian territorial waters ndash relying on various decision of the
Uttarakhand HC[4] the ITAT held that the said revenue would be included in
the gross receipts while computing the deemed profits under the provisions of
section 44BB of the Act
Aggrieved by the order of the ITAT in relation to the inclusion of the revenue from
mobilization and demobilization in section 44BB of the Act the taxpayer
preferred appeal before the Uttarakhand HC
Arguments of the taxpayer before the HC
As per section 5(2) of the Act in case of a non-resident taxpayer if the income is
not received in India the same would be taxable only if it accrues arises or is
deemed to accrue arise in India Thus unless there is receipt or accrual of
income by the non-resident taxpayer within the territory of India there cannot be
any levy of tax Since the revenue arising from mobilization and demobilization
of vessel outside Indian territorial waters is neither received in India nor accrues
arises in India is deemed to accrue or arise in India it cannot be brought to tax
in India
Section 5 of the Act is the charging section and section 44BB of the Act is merely
a computation provision Unless an income falls within the purview of section 5
of the Act it cannot be brought to tax under section 44BB of the Act
Ruling of the HC
World Tax 2015 Guide to Worldrsquos
Leading Tax Firms for the eighth
consecutive year
Tier 2 firm in International Tax Review
World Transfer Pricing 2015 Guide for
the second consecutive year
2014
Tier 1 firm in International Tax
Review World Tax 2014 Guide to
Worldrsquos Leading Tax Firms
Tier 2 firm in International Tax
Review World Transfer Pricing 2014
Guide
Most Active Transaction Advisor for
Private Equity MampA by Venture
Intelligence
Mukesh Butani New Delhi
+91 11 3066 3010
mukeshbutanibmrlegalin
Rajeev Dimri New Delhi
+91 124 669 5050 rajeevdimribmradvisorscom
Gokul Chaudhri New Delhi
+91 124 669 5040
gokulchaudhribmradvisorscom
Bobby Parikh Mumbai
+91 22 6135 7010
bobbyparikhbmradvisorscom
Amit Jain Pune
+91 20 668 19010
Shweta Aggarwal
Sahil Gupta
Section 44BB of the Act contains special provisions for taxing the income of 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 Section 44BB(2)
of the Act provides that amounts received by the non-resident (whether in India
or outside India) would be included in the gross receipts while computing the
deemed profits under section 44BB(1) of the Act
Instead of section 44BB of the Act the taxpayer may choose to be governed by
the provisions of section 4 and 5 of the Act read with section 28 to 42 of the Act
which deal with the computation of income under the head lsquoprofits and gains of
business and professionrsquo The same is also manifested in section 44BB(3) of the
Act as per which it is open to the taxpayer to maintain books of accounts and
claim lower profits than 10 percent as provided in section 44BB(1) of the Act
As the taxpayer has not maintained books of accounts as per sub-section (3)
the taxpayer cannot argue that the revenue from mobilization and demobilization
of vessel outside Indian territorial waters is not to be included in gross receipts
under section 44BB(1) of the Act
The provisions of section 5(2) of the Act would not restrict Indian Revenue
Authorities (ldquoIRArdquo) from insisting on taxation of revenue arising from mobilization
and demobilization of vessel outside Indian territorial waters under section 44BB
of the Act in view of the explicit provisions of section 44BB(2) of the Act
BMR Comments
The decision seeks to affirm the applicability of section 44BB of the Act on
income earned from acquisition of 3D seismic data and while doing so the
Delhi Bench of ITAT seems to have deviated from its earlier decision in the
case of CGG Veritas Services SA[5] In the case of CGG Veritas the
benefit of section 44BB was granted to the taxpayer on income from seismic
activities subject to constitution of Permanent Establishment (ldquoPErdquo) for AYs
prior to AY 2011-12 In taxpayerrsquos case the ITAT has allowed the benefits
of section 44BB of the Act by specifically following the principles laid down
by the decision of Delhi HC in case of OHM Limited ie following the
lsquospecific vs general rulersquo without deliberating on the applicability of
amendment made by Finance Act 2010 in section 44DA and proviso to
section 44BB of the Act and constitution of PE This certainly seems to
bring hope for the non-resident oilfield service providers operating in India
Interestingly it appears that till now the IRA have not filed an appeal with
the Uttarakhand HC against the said ITAT decisions regarding taxability of
amitjainbmradvisorscom
income earned from acquisition of 3D seismic data under the provisions of
section 44BB of the Act This is welcome and in the absence of any appeal
by the IRA one may presume that the IRA have finally accepted the
taxability of non-resident oilfield service providers under section 44BB of the
Act Nevertheless it would be useful to monitor whether the IRA files an
appeal with the Uttarakhand HC on this issue
The IRA have filed a Special Leave Petition with the Supreme Court (ldquoSCrdquo)
against the order of Delhi HC in the case of OHM Limited Recently the SC
in the case of ONGC vs CIT[6] has addressed this issue and affirmed
taxation on deemed profit basis under the provisions of section 44BB of the
Act to a wide variety of services including the services of lsquocarrying out
seismic surveys for exploratory drillingrsquo While the decision of SC should
settle a decade long dispute on taxability of non-resident oilfield service
providers it would be interesting to note the strategy of IRA while arguing its
appeal in case of OHM Limited when it comes up for hearing before the SC
In summary the Uttarakhand HC has been consistent that the revenue from
mobilization and demobilization of vessel outside Indian territorial waters will
be included in the gross receipts while computing the deemed profits under
the provisions of section 44BB of the Act and Fugro Geoteam AS decision
affirms this view
[1] Fugro Geoteam AS vs ADIT [2015] 56 taxmanncom 117 (Uttarakhand)
[2] [2012] 352 ITR 406 (Del)
[3] [2015] 55 taxmanncom 394 (Delhi)
[4] CIT vs Halliburton Offshore Services Inc [2008] 300 ITR 265 (Uttarakhand) Sedco Forex
International Inc vs CIT [200]) 214 CTR 192 (Uttarakhand) CIT vs Sundowner Offshore
International Burmuda Ltd [2011] 338 ITR 147 (Uttarakhand) CIT vs Trans Ocean Offshore
Incorporation [2008] 299 ITR 248 (Uttarakhand) CIT vs R and B Falcon Drilling Co [2009] 338
ITR 152 (Uttarakhand)
[5] [2012] 50 SOT 335 (Del)
[6] Civil appeal no 731 of 2007
BMR Business Solutions Pvt Ltd
36B Dr RK Shirodkar Marg Parel Mumbai 400012 India
Tel +91 22 6135 7000 | Fax +91 22 6135 7070
BMR and Community
BMR has a strong commitment to good citizenship and community service We are as dedicated to community work as we are to client
work Wherever appropriate we partner with our clients in fulfilling our social responsibility Through the firmrsquos lsquoGo Green Initiativersquo we
adopt environment friendly practices at our work place The firm actively supports SOS Childrenrsquos Village Indian Red Cross Society and
MillionTrees Gurgaon campaign For more details on our social and environmental responsibility programme click here
Disclaimer
This newsletter has been prepared for clients and Firm personnel only It provides general information and guidance as on date of
preparation and does not express views or expert opinions of BMR Advisors The newsletter is meant for general guidance and no
responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this newsletter will be
accepted by BMR Advisors It is recommended that professional advice be sought based on the specific facts and circumstances This
newsletter does not substitute the need to refer to the original pronouncements
Copyright 2015 BMR Business Solutions Pvt Ltd All Rights Reserved
In case you do not wish to receive this newsletter click here to unsubscribe
earned by the taxpayer from carrying out acquisition of 3D seismic data is in the
nature of lsquofees for technical servicesrsquo taxable under section 44DA read with
section 9(1)(vii) of the Act by adopting a presumptive profit rate of 25 percent
Further mobilization and demobilization revenue for transportation of vessel
outside Indian territorial waters was also held liable to tax in India Both the
variations proposed in the draft assessment order by the AO were confirmed by
the Dispute Resolution Panel (ldquoDRPrdquo)
On appeal by the taxpayer the Delhi Bench of Income Tax Appellate Tribunal
(ldquoITATrdquo) held as follows
shy In relation to income earned from carrying out acquisition of 3D seismic data -
relying on the decision of the Delhi HC in the case of OHM Limited[2] and
PGS Geophysical AS[3] the ITAT allowed benefit of section 44BB of the Act
to the taxpayer and
shy On taxability of revenue from mobilization and demobilization of vessel
outside Indian territorial waters ndash relying on various decision of the
Uttarakhand HC[4] the ITAT held that the said revenue would be included in
the gross receipts while computing the deemed profits under the provisions of
section 44BB of the Act
Aggrieved by the order of the ITAT in relation to the inclusion of the revenue from
mobilization and demobilization in section 44BB of the Act the taxpayer
preferred appeal before the Uttarakhand HC
Arguments of the taxpayer before the HC
As per section 5(2) of the Act in case of a non-resident taxpayer if the income is
not received in India the same would be taxable only if it accrues arises or is
deemed to accrue arise in India Thus unless there is receipt or accrual of
income by the non-resident taxpayer within the territory of India there cannot be
any levy of tax Since the revenue arising from mobilization and demobilization
of vessel outside Indian territorial waters is neither received in India nor accrues
arises in India is deemed to accrue or arise in India it cannot be brought to tax
in India
Section 5 of the Act is the charging section and section 44BB of the Act is merely
a computation provision Unless an income falls within the purview of section 5
of the Act it cannot be brought to tax under section 44BB of the Act
Ruling of the HC
World Tax 2015 Guide to Worldrsquos
Leading Tax Firms for the eighth
consecutive year
Tier 2 firm in International Tax Review
World Transfer Pricing 2015 Guide for
the second consecutive year
2014
Tier 1 firm in International Tax
Review World Tax 2014 Guide to
Worldrsquos Leading Tax Firms
Tier 2 firm in International Tax
Review World Transfer Pricing 2014
Guide
Most Active Transaction Advisor for
Private Equity MampA by Venture
Intelligence
Mukesh Butani New Delhi
+91 11 3066 3010
mukeshbutanibmrlegalin
Rajeev Dimri New Delhi
+91 124 669 5050 rajeevdimribmradvisorscom
Gokul Chaudhri New Delhi
+91 124 669 5040
gokulchaudhribmradvisorscom
Bobby Parikh Mumbai
+91 22 6135 7010
bobbyparikhbmradvisorscom
Amit Jain Pune
+91 20 668 19010
Shweta Aggarwal
Sahil Gupta
Section 44BB of the Act contains special provisions for taxing the income of 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 Section 44BB(2)
of the Act provides that amounts received by the non-resident (whether in India
or outside India) would be included in the gross receipts while computing the
deemed profits under section 44BB(1) of the Act
Instead of section 44BB of the Act the taxpayer may choose to be governed by
the provisions of section 4 and 5 of the Act read with section 28 to 42 of the Act
which deal with the computation of income under the head lsquoprofits and gains of
business and professionrsquo The same is also manifested in section 44BB(3) of the
Act as per which it is open to the taxpayer to maintain books of accounts and
claim lower profits than 10 percent as provided in section 44BB(1) of the Act
As the taxpayer has not maintained books of accounts as per sub-section (3)
the taxpayer cannot argue that the revenue from mobilization and demobilization
of vessel outside Indian territorial waters is not to be included in gross receipts
under section 44BB(1) of the Act
The provisions of section 5(2) of the Act would not restrict Indian Revenue
Authorities (ldquoIRArdquo) from insisting on taxation of revenue arising from mobilization
and demobilization of vessel outside Indian territorial waters under section 44BB
of the Act in view of the explicit provisions of section 44BB(2) of the Act
BMR Comments
The decision seeks to affirm the applicability of section 44BB of the Act on
income earned from acquisition of 3D seismic data and while doing so the
Delhi Bench of ITAT seems to have deviated from its earlier decision in the
case of CGG Veritas Services SA[5] In the case of CGG Veritas the
benefit of section 44BB was granted to the taxpayer on income from seismic
activities subject to constitution of Permanent Establishment (ldquoPErdquo) for AYs
prior to AY 2011-12 In taxpayerrsquos case the ITAT has allowed the benefits
of section 44BB of the Act by specifically following the principles laid down
by the decision of Delhi HC in case of OHM Limited ie following the
lsquospecific vs general rulersquo without deliberating on the applicability of
amendment made by Finance Act 2010 in section 44DA and proviso to
section 44BB of the Act and constitution of PE This certainly seems to
bring hope for the non-resident oilfield service providers operating in India
Interestingly it appears that till now the IRA have not filed an appeal with
the Uttarakhand HC against the said ITAT decisions regarding taxability of
amitjainbmradvisorscom
income earned from acquisition of 3D seismic data under the provisions of
section 44BB of the Act This is welcome and in the absence of any appeal
by the IRA one may presume that the IRA have finally accepted the
taxability of non-resident oilfield service providers under section 44BB of the
Act Nevertheless it would be useful to monitor whether the IRA files an
appeal with the Uttarakhand HC on this issue
The IRA have filed a Special Leave Petition with the Supreme Court (ldquoSCrdquo)
against the order of Delhi HC in the case of OHM Limited Recently the SC
in the case of ONGC vs CIT[6] has addressed this issue and affirmed
taxation on deemed profit basis under the provisions of section 44BB of the
Act to a wide variety of services including the services of lsquocarrying out
seismic surveys for exploratory drillingrsquo While the decision of SC should
settle a decade long dispute on taxability of non-resident oilfield service
providers it would be interesting to note the strategy of IRA while arguing its
appeal in case of OHM Limited when it comes up for hearing before the SC
In summary the Uttarakhand HC has been consistent that the revenue from
mobilization and demobilization of vessel outside Indian territorial waters will
be included in the gross receipts while computing the deemed profits under
the provisions of section 44BB of the Act and Fugro Geoteam AS decision
affirms this view
[1] Fugro Geoteam AS vs ADIT [2015] 56 taxmanncom 117 (Uttarakhand)
[2] [2012] 352 ITR 406 (Del)
[3] [2015] 55 taxmanncom 394 (Delhi)
[4] CIT vs Halliburton Offshore Services Inc [2008] 300 ITR 265 (Uttarakhand) Sedco Forex
International Inc vs CIT [200]) 214 CTR 192 (Uttarakhand) CIT vs Sundowner Offshore
International Burmuda Ltd [2011] 338 ITR 147 (Uttarakhand) CIT vs Trans Ocean Offshore
Incorporation [2008] 299 ITR 248 (Uttarakhand) CIT vs R and B Falcon Drilling Co [2009] 338
ITR 152 (Uttarakhand)
[5] [2012] 50 SOT 335 (Del)
[6] Civil appeal no 731 of 2007
BMR Business Solutions Pvt Ltd
36B Dr RK Shirodkar Marg Parel Mumbai 400012 India
Tel +91 22 6135 7000 | Fax +91 22 6135 7070
BMR and Community
BMR has a strong commitment to good citizenship and community service We are as dedicated to community work as we are to client
work Wherever appropriate we partner with our clients in fulfilling our social responsibility Through the firmrsquos lsquoGo Green Initiativersquo we
adopt environment friendly practices at our work place The firm actively supports SOS Childrenrsquos Village Indian Red Cross Society and
MillionTrees Gurgaon campaign For more details on our social and environmental responsibility programme click here
Disclaimer
This newsletter has been prepared for clients and Firm personnel only It provides general information and guidance as on date of
preparation and does not express views or expert opinions of BMR Advisors The newsletter is meant for general guidance and no
responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this newsletter will be
accepted by BMR Advisors It is recommended that professional advice be sought based on the specific facts and circumstances This
newsletter does not substitute the need to refer to the original pronouncements
Copyright 2015 BMR Business Solutions Pvt Ltd All Rights Reserved
In case you do not wish to receive this newsletter click here to unsubscribe
Section 44BB of the Act contains special provisions for taxing the income of 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 Section 44BB(2)
of the Act provides that amounts received by the non-resident (whether in India
or outside India) would be included in the gross receipts while computing the
deemed profits under section 44BB(1) of the Act
Instead of section 44BB of the Act the taxpayer may choose to be governed by
the provisions of section 4 and 5 of the Act read with section 28 to 42 of the Act
which deal with the computation of income under the head lsquoprofits and gains of
business and professionrsquo The same is also manifested in section 44BB(3) of the
Act as per which it is open to the taxpayer to maintain books of accounts and
claim lower profits than 10 percent as provided in section 44BB(1) of the Act
As the taxpayer has not maintained books of accounts as per sub-section (3)
the taxpayer cannot argue that the revenue from mobilization and demobilization
of vessel outside Indian territorial waters is not to be included in gross receipts
under section 44BB(1) of the Act
The provisions of section 5(2) of the Act would not restrict Indian Revenue
Authorities (ldquoIRArdquo) from insisting on taxation of revenue arising from mobilization
and demobilization of vessel outside Indian territorial waters under section 44BB
of the Act in view of the explicit provisions of section 44BB(2) of the Act
BMR Comments
The decision seeks to affirm the applicability of section 44BB of the Act on
income earned from acquisition of 3D seismic data and while doing so the
Delhi Bench of ITAT seems to have deviated from its earlier decision in the
case of CGG Veritas Services SA[5] In the case of CGG Veritas the
benefit of section 44BB was granted to the taxpayer on income from seismic
activities subject to constitution of Permanent Establishment (ldquoPErdquo) for AYs
prior to AY 2011-12 In taxpayerrsquos case the ITAT has allowed the benefits
of section 44BB of the Act by specifically following the principles laid down
by the decision of Delhi HC in case of OHM Limited ie following the
lsquospecific vs general rulersquo without deliberating on the applicability of
amendment made by Finance Act 2010 in section 44DA and proviso to
section 44BB of the Act and constitution of PE This certainly seems to
bring hope for the non-resident oilfield service providers operating in India
Interestingly it appears that till now the IRA have not filed an appeal with
the Uttarakhand HC against the said ITAT decisions regarding taxability of
amitjainbmradvisorscom
income earned from acquisition of 3D seismic data under the provisions of
section 44BB of the Act This is welcome and in the absence of any appeal
by the IRA one may presume that the IRA have finally accepted the
taxability of non-resident oilfield service providers under section 44BB of the
Act Nevertheless it would be useful to monitor whether the IRA files an
appeal with the Uttarakhand HC on this issue
The IRA have filed a Special Leave Petition with the Supreme Court (ldquoSCrdquo)
against the order of Delhi HC in the case of OHM Limited Recently the SC
in the case of ONGC vs CIT[6] has addressed this issue and affirmed
taxation on deemed profit basis under the provisions of section 44BB of the
Act to a wide variety of services including the services of lsquocarrying out
seismic surveys for exploratory drillingrsquo While the decision of SC should
settle a decade long dispute on taxability of non-resident oilfield service
providers it would be interesting to note the strategy of IRA while arguing its
appeal in case of OHM Limited when it comes up for hearing before the SC
In summary the Uttarakhand HC has been consistent that the revenue from
mobilization and demobilization of vessel outside Indian territorial waters will
be included in the gross receipts while computing the deemed profits under
the provisions of section 44BB of the Act and Fugro Geoteam AS decision
affirms this view
[1] Fugro Geoteam AS vs ADIT [2015] 56 taxmanncom 117 (Uttarakhand)
[2] [2012] 352 ITR 406 (Del)
[3] [2015] 55 taxmanncom 394 (Delhi)
[4] CIT vs Halliburton Offshore Services Inc [2008] 300 ITR 265 (Uttarakhand) Sedco Forex
International Inc vs CIT [200]) 214 CTR 192 (Uttarakhand) CIT vs Sundowner Offshore
International Burmuda Ltd [2011] 338 ITR 147 (Uttarakhand) CIT vs Trans Ocean Offshore
Incorporation [2008] 299 ITR 248 (Uttarakhand) CIT vs R and B Falcon Drilling Co [2009] 338
ITR 152 (Uttarakhand)
[5] [2012] 50 SOT 335 (Del)
[6] Civil appeal no 731 of 2007
BMR Business Solutions Pvt Ltd
36B Dr RK Shirodkar Marg Parel Mumbai 400012 India
Tel +91 22 6135 7000 | Fax +91 22 6135 7070
BMR and Community
BMR has a strong commitment to good citizenship and community service We are as dedicated to community work as we are to client
work Wherever appropriate we partner with our clients in fulfilling our social responsibility Through the firmrsquos lsquoGo Green Initiativersquo we
adopt environment friendly practices at our work place The firm actively supports SOS Childrenrsquos Village Indian Red Cross Society and
MillionTrees Gurgaon campaign For more details on our social and environmental responsibility programme click here
Disclaimer
This newsletter has been prepared for clients and Firm personnel only It provides general information and guidance as on date of
preparation and does not express views or expert opinions of BMR Advisors The newsletter is meant for general guidance and no
responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this newsletter will be
accepted by BMR Advisors It is recommended that professional advice be sought based on the specific facts and circumstances This
newsletter does not substitute the need to refer to the original pronouncements
Copyright 2015 BMR Business Solutions Pvt Ltd All Rights Reserved
In case you do not wish to receive this newsletter click here to unsubscribe
income earned from acquisition of 3D seismic data under the provisions of
section 44BB of the Act This is welcome and in the absence of any appeal
by the IRA one may presume that the IRA have finally accepted the
taxability of non-resident oilfield service providers under section 44BB of the
Act Nevertheless it would be useful to monitor whether the IRA files an
appeal with the Uttarakhand HC on this issue
The IRA have filed a Special Leave Petition with the Supreme Court (ldquoSCrdquo)
against the order of Delhi HC in the case of OHM Limited Recently the SC
in the case of ONGC vs CIT[6] has addressed this issue and affirmed
taxation on deemed profit basis under the provisions of section 44BB of the
Act to a wide variety of services including the services of lsquocarrying out
seismic surveys for exploratory drillingrsquo While the decision of SC should
settle a decade long dispute on taxability of non-resident oilfield service
providers it would be interesting to note the strategy of IRA while arguing its
appeal in case of OHM Limited when it comes up for hearing before the SC
In summary the Uttarakhand HC has been consistent that the revenue from
mobilization and demobilization of vessel outside Indian territorial waters will
be included in the gross receipts while computing the deemed profits under
the provisions of section 44BB of the Act and Fugro Geoteam AS decision
affirms this view
[1] Fugro Geoteam AS vs ADIT [2015] 56 taxmanncom 117 (Uttarakhand)
[2] [2012] 352 ITR 406 (Del)
[3] [2015] 55 taxmanncom 394 (Delhi)
[4] CIT vs Halliburton Offshore Services Inc [2008] 300 ITR 265 (Uttarakhand) Sedco Forex
International Inc vs CIT [200]) 214 CTR 192 (Uttarakhand) CIT vs Sundowner Offshore
International Burmuda Ltd [2011] 338 ITR 147 (Uttarakhand) CIT vs Trans Ocean Offshore
Incorporation [2008] 299 ITR 248 (Uttarakhand) CIT vs R and B Falcon Drilling Co [2009] 338
ITR 152 (Uttarakhand)
[5] [2012] 50 SOT 335 (Del)
[6] Civil appeal no 731 of 2007
BMR Business Solutions Pvt Ltd
36B Dr RK Shirodkar Marg Parel Mumbai 400012 India
Tel +91 22 6135 7000 | Fax +91 22 6135 7070
BMR and Community
BMR has a strong commitment to good citizenship and community service We are as dedicated to community work as we are to client
work Wherever appropriate we partner with our clients in fulfilling our social responsibility Through the firmrsquos lsquoGo Green Initiativersquo we
adopt environment friendly practices at our work place The firm actively supports SOS Childrenrsquos Village Indian Red Cross Society and
MillionTrees Gurgaon campaign For more details on our social and environmental responsibility programme click here
Disclaimer
This newsletter has been prepared for clients and Firm personnel only It provides general information and guidance as on date of
preparation and does not express views or expert opinions of BMR Advisors The newsletter is meant for general guidance and no
responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this newsletter will be
accepted by BMR Advisors It is recommended that professional advice be sought based on the specific facts and circumstances This
newsletter does not substitute the need to refer to the original pronouncements
Copyright 2015 BMR Business Solutions Pvt Ltd All Rights Reserved
In case you do not wish to receive this newsletter click here to unsubscribe
BMR Business Solutions Pvt Ltd
36B Dr RK Shirodkar Marg Parel Mumbai 400012 India
Tel +91 22 6135 7000 | Fax +91 22 6135 7070
BMR and Community
BMR has a strong commitment to good citizenship and community service We are as dedicated to community work as we are to client
work Wherever appropriate we partner with our clients in fulfilling our social responsibility Through the firmrsquos lsquoGo Green Initiativersquo we
adopt environment friendly practices at our work place The firm actively supports SOS Childrenrsquos Village Indian Red Cross Society and
MillionTrees Gurgaon campaign For more details on our social and environmental responsibility programme click here
Disclaimer
This newsletter has been prepared for clients and Firm personnel only It provides general information and guidance as on date of
preparation and does not express views or expert opinions of BMR Advisors The newsletter is meant for general guidance and no
responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this newsletter will be
accepted by BMR Advisors It is recommended that professional advice be sought based on the specific facts and circumstances This
newsletter does not substitute the need to refer to the original pronouncements
Copyright 2015 BMR Business Solutions Pvt Ltd All Rights Reserved
In case you do not wish to receive this newsletter click here to unsubscribe