COMMISSIONER INCOME TAX AND ANOTHER vs. ONGC

ITA/113/2007HC UttarakhandUKHC01006574200709 April 2008Author: HON'BLE MR. JUSTICE PRAFULLA C. PANT6 pages
AI SummaryAllowed

What were the facts?

The appeal was filed by the Commissioner of Income Tax and DCIT, Dehradun, against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had set aside an order of the Commissioner of Income Tax (Appeals), who had dismissed the assessee's appeal. The assessee, M/s Noble Denton Europe Ltd. (UK), represented by ONGC, was engaged by ONGC for services related to the exploration, extraction, and production of mineral oils. Specifically, for the assessment year 1997-98, the assessee conducted a feasibility study for revamping ONGC's drillship Sagar Samrat. The Assessing Officer had passed an order under Section 143(3) of the Income Tax Act, 1961.

What did the High Court hold?

The High Court held that the services rendered by the assessee were technical services for which a fee was charged, and not services covered under Section 44BB. The Court noted that Section 44BB(1) contains a proviso stating it shall not apply where the provisions of Section 42, 44D, 115A, or 293A apply. The revenue's argument that the assessee's case falls under Section 115A read with Section 44D was upheld. Section 44D deals with royalties or fees for technical services in the case of foreign companies, and Section 115A provides the rates of tax for such income. The Court found that the CIT (Appeals) and the Assessing Officer were correct in directing the assessee to pay tax at 15% under Section 44D read with Section 115A, instead of 10% chargeable under Section 44BB. The ITAT's order was set aside, and the substantial question of law was answered in favor of the revenue.

What were the issues?

1. Whether, in respect of receipts for services rendered by the non-resident company (NRC) to ONGC for the feasibility study of revamping a drillship, tax is chargeable under Section 44BB of the Income Tax Act, 1961, or under Section 115A read with Section 44D of the Act? Assessee's contention: The assessee argued that tax should be charged under Section 44BB of the Income Tax Act, 1961, which deals with profits and gains of business of profession for non-residents engaged in providing services or facilities in connection with mineral oil exploration or extraction. Revenue's contention: The revenue contended that the assessee rendered technical services for which it received a fee, and therefore, its case is covered under Section 115A read with Section 44D of the Act, which deals with special provisions for computing income by way of royalties or fees for technical services in the case of foreign companies.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3),Section 44BB,Section 44D,Section 115A,Section 42,Section 293A,Section 9

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Chapter VIII, Rule 32(2)(b) Description of case

Date of decision: 09.04.2008 A.F.R. (Approved for Report) Not approved for Reporting

(Initial of Judge)

Date: 09.04.2008

Note: Bench Reader will attach this at the top of first page of the judgment when it is put up before the Judge for signature.

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL (1) Commissioner Income Tax, Dehradun. (2) DCIT Circle I, Aaykar Bhawan, 13A, Subhash Road, Dehradun.

..……..Appellants.

Versus

ONGC as representative assessee of M/s Noble Denton Europe Ltd., UK DGM (F&A), Income Tax, Oil & Natural Gas Corporation Ltd., Income Tax Section, Tel Bhawan, Dehradun.

………….Respondent.

Sri Arvind Vashistha, learned counsel for the appellants. Sri Udyog Shukla, learned counsel for the respondent.

Hon’ble Prafulla C. Pant, J. Hon’ble Dharam Veer, J.

[Oral-Prafulla C. Pant, J.]

This appeal, pr

The order continues below.

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