INCOME TAX ACT, 1961

Section 44BB read with Section 44D Section 195(2)

Presumptive taxation under section 44BB - Business of exploration, etc., of mineral oil - Payment made for availing of supervising drilling operations in oil fields, whether taxable under section 44BB or 44D -

Assessee-company incorporated in Canada entered into joint venture for business of joint exploration and development of oil and gas field in Gujarat. It entered into a contract with a company (HUB International Limited) for providing supervising staff for drilling operation in the oil field in the contract area in India. Assessee sought deduction of tax at source from payment to be made to HUB International Limited claiming that income received by HUB was assessable under section 44BB. AO alleged that payment made by assessee was “Fee for Technical Services” and it was required to deduct tax at source as per the provisions of section 44D read with section 115A. Held: Payment made by assessee to HUB International for providing supervising drilling operations in oil fields, may be “Fees for technical services” but dominant purpose of payment of fees for technical services was for exploration and development of Oil and Gas in India. There was no infirmity in order of Tribunal holding that provisions of section 44D were not applicable in facts of case and from payment made to HUB International Limited, assessee was liable to deduct tax at rate of 4.2%, under section 44BB.

Followed:Oil & Natural Gas Corporation Ltd. v. CIT & Anr. [Civil Appeal No. 731 of 2007, dt. 1-7-2015] : 2015 TaxPub(DT) 2605 (SC)

REFERRED : KP Varghese v. ITO & Anr. 1981 TaxPub(DT) 0972 (SC) CIT v. Dorr Oliver (India) Ltd. (1994) 209 ITR 691 (Bom-HC) : 1994 TaxPub(DT) 0690 (Bom-HC) CIT v. Craigmore Land & Produce Company Ltd. (1977) 110 ITR 730 (Mad-HC) : 1977 TaxPub(DT) 0706 (Mad-HC)

FAVOUR : In assessee's favour

A.Y. :

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