Commissioner Of Income Tax (International Taxation)–III vs M/s Grant Geophysical International Inc

Ravi Malimath, J

The appellant has raised the following substantial questions of law:

“(1) Whether on the facts and circumstances of the case, the Hon’ble ITAT has erred in holding that the amount received by the assessee on

account of the provision of seismic survey services as also alleged ‘reimbursement’ of expenses is not in the nature of Fee for Technical

Services (FTS as defined u/s 9(1) (vii) of the Income Tax Act, 1961 (‘the Act) and was not taxable under the provisions of Sec. 44DA r.w. Section

115A of the Act.

(2) Whether on the facts and in the circumstances of the case, the Hon’ble ITAT has erred holding that the revenues earned by the assessee on

account of conduct of seismic surveys were in connection with prospecting etc. Of mineral oil and hence eligible for treatment u/s 44BB of the Act,

without adjudicating the aspect of eligibility under the second limb of the exclusionary proviso (Explanation to Section 9(1)(vii) of the I.T. Act, 1961)

i.e. “for a project undertaken by the recipient†in terms of decisions of Hon’ble Delhi High Court in DIT vs. Rio Tinto Technical Services

[2012-TII-01-HC-Del-INTL].

(3) Whether on the facts and in the circumstances of the case the Hon’ble ITAT has erred in his interpretation of the legislative intent behind the

scheme of taxation envisaged in 9 (1)(vi) read with sections 44DA and 44BB, ignoring the decisions in the cases of M/s Rolls Royce Pvt. Ltd. [2007-

TII-03-HC-UKHAND-INTL] and M/s ONGC as agent of M/s Foramer France [920080299 ITR438 Uttarakhand].

(4) Whether on the facts and in the circumstances of the case, the Hon’ble ITAT has erred in ignoring the distinct scheme of taxation of Royalty

& Fee for Technical Services are disregarding the insertion of provisos in section 44BB/44DA/115 and the rationale behind the introduction of said

claificatory provisos in the Finance Bill 2010 in holding that the income of the assessee company was covered under the provisions of Section 44BB.

(5) Whether on the facts and in the circumstances of the case, the Hon’ble ITAT has erred in not appreciating that since sections 44DA/115A

are special provisions for taxation of income in the nature of Royalties’ and FTS and if a special provisions is made respecting a certain matter

that matter us excluded from the general provision under the rule of “Generalities speciallibus non derogantâ€​

(6) Whether on the facts and circumstances of the case, the Hon’ble ITAT has erred in not appreciating the fact that proviso to section 44DA

brought by the Finance Act, 2011 was only clarificatory in nature and its application has to be read into the main provisions with effect from the time

the main provision came into effect in view of the decisions of the Hon’ble Supreme Court in the case of Sedco Forex International Drilling vs.

CIT.â€​

On considering the contentions, it transpires that the said questions of law have already been answered by the order of the Hon’ble Supreme

Court of India in 376 ITR 306 (Supreme Court) ONGC vs. CI.T In terms whereof, the substantial questions of law were answered in favour of the

assessee and against the revenue. The said position is not disputed by both the learned counsels.

In view thereof, the appeal is disposed off. The substantial questions of law are answered in favour of assessee and against the revenue, by

following the judgment of the Hon’ble Supreme Court reported in 376 ITR 306 (Supreme Court) ONGC vs. CIT.