IN RE: SPECTRUM GEO LTD. Vs. STATE

JUDGEMENT

(1.) THE applicant is a company formed and registered under the laws of the United Kingdom. It is a wholly owned subsidiary of a company incorporated in Norway. The Oil and Natural Gas Corporation of India (ONGC) award a contract to a company based in the United Arab Emirates (UAE), for undertaking a Seismic survey on the Cauvery and Krishna Godavari basin. The UAE company carried out the seismic data acquisition on board its vessels. That company entered into an agreement with the applicant for the processing of the acquired seismic data. In terms of that agreement the applicant had to render to the UAE company during the period from December, 2007 to June 2008 on board its vessels the processing and reprocessing the raw data obtained from it, interpreting the processed data and preparing data packages of the processed data and providing them to that company. For this purpose, the data processing analyst along with the required hardware and software were present on board the vessels of the UAE Company.

(2.) THE applicant approached the concerned authority under the Income -tax Act for determination of the withholding rate of tax. The applicant was not given the benefit of rate of taxation on the basis of the applicability of section 44BB (1) of the Act. In that context, the applicant approached this Authority for advance rulings on the questions posed by it.

(3.) IT is submitted on behalf of the applicant that even if the services rendered by the applicant are taken to be technical services, the consideration received by it under the contract with the UAE company would not be fees for technical services in terms of section 9(1)(vii) of the Act since it will come under the exception contained in Explanation (2) to that section, namely, 'does not include consideration for any construction, assembly, mining or like project, undertaken by the recipient.......' since the services were rendered in connection with exploration for oil. It is further contended that even if it is treated as fees for technical services, it is covered by section 44BB(1) of the Act and the proviso to that provision has no application. It is pointed out that the income derived by the applicant related to the assessment years 2009 -10 and 2010 -11 and the amendment to the proviso to section 44BB(1) of the Act with effect from 1.4.2011 had no application. It is also pointed out that in any event, section 44D, section 44DA and section 115A had no application, since the applicant, a nonresident, was not deriving any income from the Government or an Indian concern, but was receiving income from a UAE company. Since the services provided by the applicant are in connection with prospecting for mineral oils, section 44BB(1) of the Act squarely applied.