ONGC AS REPRESENTATIVE ASSESSEE OF GULF PIPING COMPANY, WLL, ABU DHABI, UAE,DEHRADUN vs. DCIT (INTERNATIONAL TAXATION), DEHRADUN

2 impugned appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity.

Briefly stated, the facts of the case are that the assessee had entered into a contract with Clough Engineering Ltd, Australia [CEL, for short] for construction of the deck engineering procurement, installation and commissioning of work in connection with integrated development of G-1 and GS-15 fields of ONGC located in Bay of Bengal. Owing to certain disputes, the contract between CEL and ONGC was terminated in June, 2007 and ONGC took possession of the project. Since the construction of the platform deck was under progress, ONGC entered into a contract dated 31.07.2010 with Gulf Piping for providing services in relation to construction of the deck. The entire scope of work was undertaken by Golf Piping in UAE and ONGC was to collect/sail away the deck therefrom. During the year under consideration, ONGC made payment of Rs. 5.50 crores to Gulf Piping in accordance with the aforesaid contract which was never offered to tax in India since the entire work was executed outside India.

We find that the Assessing Officer brought the aforesaid receipts to tax in India u/s (9)(1)(i) of the Act holding the same to be income accruing or arising in India on the ground that the situs of the contract was in India. Since the books of account were not produced /maintained by the non-resident assessee, the Assessing Officer deemed 25% of the gross contractual revenues received from ONGC amounting to Rs. 1.37 crores on adhoc basis, as income of the non- resident being taxable in India.

Before the first appellate authority, it was strongly contended that since no operations were carried out by Gulf Piping in India, the receipts of the non residents were not taxable in India u/s 9(1)(i) of the Act. It was further brought to the notice of the ld. CIT(A) that the said receipts were in any case exempt from tax in India in accordance with the provisions of Article 5 read with Article 7 of the Indo-UAE DTAA since Gulf Piping does not have any Permanent Establishment [PE] in India.

The ld. CIT(A) was convinced that Gulf Piping did not carry out any business operation in India and did not have any PE in India. This finding of the ld. CIT(A) has attained finality as the Revenue is not in appael before us. However, the ld. CIT(A) has erred in bringing the impugned receipts to tax u/s 44BB of the Act on the ground that the assessee itself opted to be governed by the said provision.

We find that this finding of the ld. CIT(A) is not correct because in its appeal before the ld. CIT(A), the assessee had taken an alternative plea which was without renouncing the main grievance that receipt is not taxable in India because the same is exempt as per Article 5 read with Article 7 of Indo UAE DTAA. In our considered opinion, merely because the assessee had taken same alternative plea without prejudice to the main contention, the same cannot be held against the assessee as there is no estoppel in law. For this proposition, we draw support from the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Bharat General Re-insurance Co. ltd 81 ITR 303[ Del] and HCL Technologies Vs. ACIT 377 ITR 483 [DEL].

Moreover, the Hon'ble Uttarakhand High Court in the case of CIT Vs.Enron Espat Services Inv. 327 ITR 626 has categorically held that if the receipt by a non-resident is exempt from tax under the relevant DTAA, the said amount cannot be brought to tax u/s 44BB of the Act.

Considering the facts of the case in totality in the light of the judicial decisions referred to hereinabove, we hold that receipts of the non residents are not taxable in India u/s 9(1)(i) of the Act under the treaty. We accordingly, set aside the findings of the ld. CIT(A) and allow the appeal of the assessee.

In the result, the appeal of the assessee is allowed.

The grievances of the assessee read as under:

Briefly stated, the facts of the case are that the assessee vide contract dated 20.10.2010 engaged non-resident assessee for carrying out certification of reserves of 63 fields of ONGC. The assessee made payment of Rs. 4.89 crores to the non-resident fro rendering aforesaid services which were claimed as non taxable in India under the provisions of DTAA between India and USA. The Assessing Officer brought the aforesaid receipts to tax as fees for technical services u/s 9(1)(vii) r.w.s 115A of the Act.

The matter was agitated before the ld. CIT(A) and it was strongly contended that the receipts of the non-resident are not taxable in India both under the Act as also in terms of Indo-USA DTAA. In the alternative, it was pleaded that if the receipts are made to be taxable in India, then the same should be considered u/s 44BB of the Act. Both the contentions of the assessee were dismissed by the ld. CIT(A).

Before us, the ld. counsel for the assessee brought to our notice that a similar view was considered by the Tribunal in assessee’s own case in and 1600/DEL/2012.

Per contra, the ld. DR could not bring any distinguishing decision in favour of the Revenue.

We have given thoughtful consideration to the orders of the authorities below. We find force in the contention of the ld. counsel for the assessee. A similar issue was considered by the coordinate

Since we have allowed Ground No. 1, the grievance raised vide Ground No. 2 becomes otiose.

In the result, both the appeals of the assessee are allowed.