C.A.T. GEODATA GMBH KAERNTNER RINGH 11-13, A- 1010, VIENNA, AUSTRIA Vs. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - I NEW DELHI

JUDGEMENT

(1.) ESSAR Oil Limited and Essar Engineering Holdings Limited were awarded a contract by the Government of India for exploration of block AA -ONN -2004/3 under the New exploration licensing policy VII. The award of the block to the Consortium is governed by the production sharing contract between the Government of India and the Consortium members. The applicant is a company incorporated under the laws of Austria and claims to be a tax resident of Austria. It is engaged in the business of acquisition and processing of 2D/3D Seismic Data for companies engaged in the exploration and production of mineral oil in various countries. Seismic data acquisition, according to the applicant, means the generation and recording of seismic data relating to the formation of sub -surface wherein the required data is collected on large storage tapes and then processed by specialist professionals with the help of specialized equipment to present the sub -surface data in the manner that can help the geologist to draw a conclusion about the existence of hydro -carbon in the concerned area. The applicant was awarded the work of acquisition and processing of 3D land seismic data over 50 sq. kms in a block in Assam by Essar Oil Limited which had entered into a contract in that behalf with the Government of India. The applicant entered into an agreement dated 3.5.2011 with Essar Oil Limited for the purpose of carrying out detailed design, plan and execute acquisition of 3D seismic data in the concerned area and provide related services in accordance with the terms of the contract. In pursuance of the above work being awarded to the applicant, the applicant entered into a Memorandum of Understanding dated 16.3.2011 with Hardson Oil Fields Services Private Limited. Thereunder, the applicant has assigned the work to that sub -contractor by work order dated 21.3.2011 followed by a detailed agreement dated 21.3.2011. The work thus commenced and is continuing under the arrangement. The applicant submitted three running bills to Essar Oil Limited. Essar Oil Limited, while releasing the payments withheld taxes in terms of section 195 of the Income -tax Act. Since according to the applicant, withholding of tax as done by Essar Oil Limited was not warranted under the Act, the applicant approached this Authority for an advance ruling on the questions posed by it in the application.

(2.) AFTER hearing the applicant and the Revenue, this Authority allowed the application under section 245R(2) of the Act for rendering the rulings under section 245R(4) of the Act on the following four questions:

(3.) QUESTION No. 1, raised is whether the agent of the applicant could be treated to be a permanent establishment of the applicant within the meaning of Article 5 of the DTAC between India and Austria. On behalf of the applicant, at the hearing, it was fairly pointed out that under paragraph 3 of Article 5 of the DTAC, the applicant shall be deemed to have a PE in India and to carry on business through that PE if it provided services and facilities in connection with prospecting or extraction or exploration of mineral oil in India. One has, therefore, only to rule on this question by stating that the applicant has a PE in India or will be deemed to have a PE in India.