THE DDIT (IT) 4(2), MUMBAI v. M/S. NOBEL ASSET COMPANY LTD,

ITA 1891/MUM/2008 | 2000-2001
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 189119914 RSA 2008
Assessee PAN OFJAN2011S
Bench Mumbai
Appeal Number ITA 1891/MUM/2008
Duration Of Justice 2 year(s) 10 month(s) 14 day(s)
Appellant THE DDIT (IT) 4(2), MUMBAI
Respondent M/S. NOBEL ASSET COMPANY LTD,
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted L
Tribunal Order Date 28-01-2011
Date Of Final Hearing 04-01-2011
Next Hearing Date 04-01-2011
Assessment Year 2000-2001
Appeal Filed On 14-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L MUMBAI BEFORE SHRI J SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)4-2 133 SCINDIA HOUSE BALLARD PIER MUMBAI-400038 APPELLANT VS M/S NOVEL ASSET COMPANY LTD C/O PRICE WATER HOUSE COOPERS SHIVAJI PARK DADAR MUMBAI. RESPONDENT APPELLANT BY : SHRI KESHAVE SAXENA RESPONDENT BY : S/SHRI KANCHAN KAUSHAL AND DHANESH BAFANA O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 31.12.2007 OF CIT(A) FOR THE ASSESSMENT YEA R 2000- 01. 2. ONLY GROUND RAISED BY THE REVENUE IN THIS APPEA L IS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT 10% O F HE BUSINESS OPERATION I.E. OPERATION CONNECTED WITH MOBILIZATION IS CARRIED OUT IN INDIAN JURISDICTION AND HENCE ONLY 10% O F US$1 00 000 IS TAXABLE IN INDIA AND ACCORDINGLY DIRECTING THE AO TO INCLUDE ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 2 US$1 00 000 WITH THE TOTAL RECEIPT AND COMPUTE THE INCOME UNDER SECTION 44AB OF THE ACT 2.1 FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY 7 IS INCORPORATED IN CAYMAN ISLAND AND ENTERED INTO A C HARTER AGREEMENT WITH NEPTURE EXPLORATION AND INDUSTRIES L TD (NEPL) TO GIVE ON HIRE A RIG CALLED NOBLE JIMMI PUCKETT F OR CARRYING OUT ITS OPERATIONS UNDER THE CONTRACT BEING AWARDED TO THE HIRER BY ONGC. UNDER THE SAID AGREEMENT THE HIRER HAS TO PAY THE ASSESSEE A SUM OF US$10 LAKHS TOWARDS MOBI LIZATION FEES TO COVER THE COST OF MOVING THE DRILLING RIG F ROM SHARJAH TO BOMBAY HIGH. THE ASSESSEE FILED ITS RETURN O F INCOME FOR THE ASSESSMENT YEAR 2000-01 ON 24.11.2000 DECLARIN G A TOTAL INCOME OF RS.2 76 06 590. IN THE SAID RETURN THE ASSESSEE DID NOT DISCLOSE THE ABOVE RECEIPT OF US$1000000 ON THE GROUND THAT NO INCOME HAS ACCRUED IN INDIA IN RESPE CT OF THIS PAYMENTS. THE AO ISSUED NOTICE U/S 142(1) DATED 1 8.10.2002 CALLING UPON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM AS TO HOW THE MOBILIZATION OF RIG WOULD NOT BE TAXABLE IN IND IA IN VIEW OF THE PROVISIONS OF SECTION 44AB OF THE ACT. IN REP LY TO THE SAID NOTICE THE ASSESSEE CONTENDED THAT THE MOBILIZATIO N FEE ACCRUED TO THE ASSESSEE OUTSIDE INDIA SINCE IT WAS IN RESPECT O MOBILIZING THE RIG FROM OUTSIDE INDIA TO ITS FIRST LOCATION IN INDIA. THE ASSESSEE FURTHER CONTENDED THAT AS PER EXPLANATION ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 3 (1) TO SECTION 9(1)(I) OF THE ACT NO INCOME DEEMED TO ACCRUED OR ARISE IN INDIA. HOWEVER THE AO HAS NOT ACCEPT ED THE CONTENTION OF THE ASSESSEE. THE AO WAS OF THE VIEW THAT NOWHERE IN THE CONTRACT IT HAS BEEN STIPULATED THAT THE MOBILIZATION OF THE VESSEL IN QUESTION WOULD BE REG ARDED AS SERVICES NOT CONNECTED WITH THE CONTRACT. THE AO F URTHER OBSERVED THAT THERE IS NOTHING IN AGREEMENT WHICH H AS CATEGORIZED THE SERVICES OF THE ASSESSEE INSIDE IND IA OR OUTSIDE INDIA. THE AO OBSERVED THAT ALL THE WORK REFERRED IN THE AGREEMENT IS AS SCOPE OF WORK AS ARMING OPERA TIONS IN THE OFFSHORE WATERS OF INDIA AND CHARTER HIRE OF TH E RIG. THEREFORE THE AO WAS OF THE VIEW THAT ALL THE OPE RATIONS MENTIONED IN THE AGREEMENT ARE IN CONNECTION WITH THE DRILLING OPERATIONS WHICH IS NOTHING BUT INDIAN OPE RATIONS. THEREFORE THE AO HELD THAT THE PAYMENT MADE FOR MO BILIZATION IS ALSO FOR THE BUSINESS CARRIED OUT IN INDIA AND H ENCE IT SHOULD BE INCLUDED IN THE TOTAL RECEIPT FOR THE CA LCULATION OF TOTAL INCOME U/S 44AB OF THE ACT. THE AO ALSO FI ND THAT THE ACTUAL MOBILIZATION WAS NOT CARRIED OUT WITH REGAR D TO THE RIG. 2.2 ON APPEAL THE CIT(A) HAS HELD THAT 10% OF TH E BUSINESS OPERATIONS INDICATE THAT THE MOBILIZATION IS CARRIED OUT IN INDIAN TERRITORY AND HENCE ONLY 10% OF 10 LAKHS US$ IS TAXABLE IN INDIA. ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 4 2.3 BEFORE US THE LEARNED DR HAS SUBMITTED THAT A S PER THE TERMS OF CLAUSE (IV) OF THE CHARTER AGREEMENT THE HIRER IS UNDER AN OBLIGATION TO PAY THE ASSESSEE A SUM OF US$10 00 000/- TOWARDS MOBILIZATION FEE TO THE ASS ESSEE TO COVER THE COST OF MOVING THE RIG FROM SHARJAH TO BOMBAY HIGH. SINCE THE ASSESSEE HAS NOT AT ALL MOBILIZED THE RIG AS THE SAME WAS ALREADY IN THE BOMBAY HIGH UNDER THE EXISTING AGREEMENT WITH THE SAME HIRER M/S NEPTUNE EXPLORATI ON AND INDUSTRIES LIMITED. THE LEARNED DR FURTHER CONTEN DED THAT THE MOBILIZATION CHARGES RECEIVED BY THE ASSESSEE IN C ONNECTION WITH THE BUSINESS IN INDIA AND THEREFORE AS PER THE PROVISIONS OF SECTION 44BB THE AMOUNT PAID OR PAYABLE (WHETH ER IN OR OUT OF INDIA) TO THE ASSESSEE OR TO ANY PERSON ON H IS BEHALF ON ACCOUNT OF THE PROVISION OF SERVICES AND FACILITIES IN CONNECTION WITH EXTRACTION OR PRODUCTION OF MINERAL OILS IN INDIA IS TAXABLE IN INDIA . THE MOBILIZATION FEES RECEIVED BY THE ASSESSEE IN CONNECTION WITH THE PLANT AND MACHINE RY GIVEN ON HIRE TO BE USED FOR EXTRACTION OR PRODUCTION OF MINERAL OILS IN INDIA. THEREFORE EVEN IF THE SAID PAYMEN T WAS RECEIVED BY THE ASSESSEE OUTSIDE THE INDIA THE SAM E SHALL BE DEEMED TO BE PROFIT AND GAINS OF SUCH BUSINESS CHAR GEABLE TO TAX IN INDIA. HE HAS SUBMITTED THAT THE PROVISION S OF SECTION 44BB HAS SPECIFICALLY PROVIDED THAT IF ANY AMOUNT P AID OR PAYABLE IN OR OUTSIDE INDIA IF THE SAME IS ON ACCOU NT OF ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 5 PROVIDING THE SERVICES OR FACILITIES IN CONNECTION WITH OR SUPPLYING THE PLANT OR MACHINERY ON HIRE TO BE USED FOR EXTRACTION OR PRODUCTION OF MINERAL OIL SHALL BE T REATED AS PROFIT AND GAINS OF SUCH BUSINESS AND CHARGEABLE TO TAX. THE LEARNED DR HAS SUBMITTED THAT WHEN SECTION 44BB HA S SPECIFICALLY PROVIDED THE PROVISIONS FOR COMPUTATIO N OF INCOME IN CONNECTION WITH THE BUSINESS OF EXPLORATION OF EXTRACTION OF THE MINERAL OIL THEN THE PROVISIONS OF SECTION 5 AN D SECTION 9 ARE NOT RELEVANT SO FAR AS THE INCOME ACCRUED OR AR ISES OR DEEMED TO BE ARISEN OR ACCRUED IN INDIA. HE HAS F URTHER CONTENDED THAT SECTION 5 OF THE ACT BEGINS WITH SUBJECT TO THE PROVISIONS OF THIS THEREFORE THE PROVISIONS OF SECTION 44BB HAS THE OVERRIDING EFFECT OVER THE SECTION 5. AS FAR AS THE PROVISIONS OF SECTION 9 OF THE INCOME TAX ACT IS CONCERN IT IS A DEEMING PROVISION REGARDING THE INCOME ACCR UED OR ARISES IN INDIA. THESE PROVISIONS ARE GENERAL IN N ATURE AND APPLICABLE TO THE NON-RESIDENCE-ASSESSEE. WHEREAS THE PROVISIONS OF SECTION 44BB PROVIDE ;THE DEEMING PRO VISIONS SPECIFICALLY FOR THE BUSINESS OF EXPLORATION OF MIN ERAL OIL. HE HAS RELIED UPON THE ORDER OF THE AO. 2.4. ON THE OTHER HAND THE LEARNED AR HAS SUBMITT ED THAT THE ASSESSEE IS IN THE BUSINESS OF HIRING OUT THE R IG AND NOT IN THE BUSINESSES OF TRANSPORTATION OF RIG WHICH IS O NLY A PART OF THE FACILITATING THE RIG ON HIRE. THE ASSESSEE OFF ERED THE ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 6 CONTRACT AMOUNT TO TAX U/S 44AB BUT THE MOBILIZATIO N AMOUNT WAS NOT ACCRUED OR RECEIVED IN INDIA THEREFORE TH E ASSESSEE DID NOT OFFER THE SAME. THE MOBILIZATION FEES HAS ACCRUED OUTSIDE INDIA BECAUSE THE RIG WAS MOBILIZED FROM OU TSIDE INDIA TO THE FIRST LOCATION IN INDIA THEREFORE THE SAM E IS NOT SUBJECT TO TAX IN INDIA AS PER THE PROVISION OF LAW. HE HA S FURTHER POINTED OUT THAT DURING THE FIRST APPELLATE PROCEED INGS THE CIT(A) ISSUED REMAND ORDER AND IT HAS BEEN BROUGHT ON RECORD THAT THE RIG WAS MOBILIZED FROM SHARJAH TO W ORKING SITE IN INDIA. THE INCOME OF THE NON-RESIDENT IS TAXABL E IN INDIA AS PER SECTION 5(2) OF THE ACT WHICH IS A CHARGING PR OVISIONS. THEREFORE SECTIONS 44BB HAS NO OVERRIDING EFFECT W HEN THE INCOME IS NOT CHARGEABLE TO TAX UNDER THE PROVISION S OF SECTION 5(2) WHICH IS CHARGING PROVISION. HE HAS FURTHER C ONTENDED THAT AS PER CLAUSE( A ) OF THE EXPLANATION (1) TO SECTION 9(1)(I) OF THE ACT IN CASE OF NON-RESIDENT INCOME BEING ACC RUED OR ARISES IN INDIA IS DEEMED ONLY THAT PART OF INCOM E AS IS REASONABLY ATTRIBUTABLE TO THE OPERATION CARRIED OU T IN INDIA. IN ASSESSEES CASE THE ACTIVITIES/OPERATION OF MOVING THE RIG FROM SHARJAH TO INDIA WERE CARRIED OUT SIDE THE IN DIA THEREFORE MOBILIZATION FEES CANNOT BE ACCRUED OR A RISEN IN INDIA AS PER THE PROVISIONS OF SECTION 9(1)(I) OF T HE ACT. HE HAS FURTHER CONTENDED THAT THE PROVISIONS OF SECTIO N 44BB PROVIDED ONLY MODES OF COMPUTATION OF PROFIT OR TH E GAINS OF ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 7 THE NON-RESIDENT ENGAGED IN THE BUSINESS OF SERVIC ES OR FACILITATES FOR THE EXPLORATION OF MINERAL OILS AND THE SAID PROVISION DOES NOT OVERRIDE THE PROVISIONS OF SECTI ON 5(2) WHICH IS A CHARGING SECTION. HE HAS RELIED UPON TH E FOLLOWING DECISIONS: 1 ACIT V/S JINDAL DRILLING ITA NO.6452/BOM/91 2 SAIPEM SPA V/S DCIT 88 ITD 213(DEL) TM 3 DCIT V/S SONAT OFFSHORE DRILLING INC(APPROVED BY THE BOMBAY HIGH COURT (ITA NO.508 OF 2007) VIDE ORDER DATED 16 TH SEPT 2008) ITA NO.7414/NOM/94 4 TRANSOCEAN OFFSHORE INC V/C DCIT ITA NO.05/DEL/2003 5 MC DERMOTT ETPM INC V DCIT 92 ITD 385 (MUM) 6 R AND B FALCON DRILLING CO. V ACIT 14 SOT 281 (DEL) 7 JDIT(IT) 3(1) V/S J RAY MC. DERMOTT EASTERN HEMISPHERE LTD 2010-TII-41- ITAT-MUM-INTL 2.5 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD. THE AO HAS REPRODUCED THE RELEVANT TERMS AND CONDITIONS OF THE AGREEMENT DATED 3.12.1998 BETWEEN THE ASSESSEE AND NEPL IN PARAGRAPH 3 AND 4 OF THE ASS ESSMENT ORDER WHICH AS UNDER : THE CONTENTIONS OF THE ASSESSEE ARE DEALT WITH AS UNDER : THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH NE PTUNE EXPLORATION AND INDUSTRIES LTD ON 3.12.1998. THE R ELEVANT CLAUSES OF THE AGREEMENT ARE REPRODUCED AS UNDER : ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 8 WHEREAS THE CHARTERER HAS PARTICIPATED IN ONGCL TENDER NO. MRBC/DBG/RIGS/(CH)/05(B)/97/)T-780 (HEREINAFTER CALLED ONGCL TENDER FOR CHARTER HIRE OF JACK-UP RIG. NOBLE JIMMY PUCKETT AND THE CHARTER4ER HAS BEEN AWARDED HE CONTRACT FOR JACK-UP RIG NOBLE JIM MY PUCKETT BY ONGCL IN LINE WITH THE AFOREMENTIONED TENDER: AND WHEREAS THE CHARTERER IS DULLY ORGANIZED VALI DLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF IND IA AND THE EXECUTION DELIVERY AND PERFORMANCE OF THIS CHA RTER IS WITHIN CHARTERERS POWER AND HAS BEEN DULY AUTHORIZ ED BY ALL NECESSARY CORPORATE ACTION AND WHEREAS THE OWNER HAS THE TYPE OF OFFSHORE JAC K UP RIG NAMELY NOBLE JIMMY PUCKETT WHICH CAN BE USED B Y THE CHARTERER FOR CARRYING OUT OPERATIONS UNDER THE CON TRACT AWARDED TO CHARTERER BY ONGCL AND WHEREAS THE OWNER IS THE LEGAL BENEFICIAL AND SOLE OWNER OF THE JACKUP RIG NOBLE JIMMY PUCKETT WHICH IS A 3PP INDEPENDENT LEG CANTILEVER JACKUP RIG CAPABLE OF DRILLING TO A DEPTH OF 25000 FEET. THE OWNER REPR ESENTS THAT THE JACKUP RIG NOBLE JIMMY PUCKETT IS IN EF FICIENT OPERATING CONDITION AND IS CAPABLE OF DRILLING EXPLORATORY DEVELOPMENT OIL AND GAS WELL AS AND FO R WORK OVER OPERATIONS INCLUDING HIGH ANGLE WELLS SHORT DRIFT SIDE TRACK LONG DRIFT SIDE TRACK DRAIN HOLD AND MULTILATERAL HOLE DRILLING. THE OWNER AT ITS COST AND EXPENSES INCLUDING DUTIES AND TAXES IF ANY OTHER T HAN AS MENTIONED ELSEWHERE IN THIS AGREEMENT AGGREES TO C ARRY OUT THE ADDITIONS MODIFICATIONS AND UPGRADE THE RI G AND EQUIPMENT AS ONGCL TENDER AN TO PROVE THE RIG AND EQUIPMENT REQUIRED TO OPERATE UNDER THE ABOVE CONTR ACT EXCEPT THE CEMENTING UNIT WHICH SHALL BE PROVIDED B Y THE CHARTERER 2.6 IT IS CLEAR FROM THE ABOVE TERMS OF AGREEMENT T HAT THE ASSESSEE WAS RESPONSIBLE AT ITS OWN COSTS FOR ANY ADDITION MODIFICATION OR UPGRADATION AND SUPPLY OF EQUIPMENT S AS PER THE REQUIREMENT OF ONGCL AND TO PROVIDE THE RIG AN D EQUIPMENT REQUIRED TO OPERATE UNDER THE SAID CONTRA CT WITH THE ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 9 ONGC. THE ASSESSEE REPRESENTED IN THE AGREEMENT TH AT RIG IS IN EFFICIENT OPERATING CONDITION AND IS CAPABLE OF DRILLING EXPLORATORY DEVELOPMENT OIL AND GAS WELLS AND FOR WORKOVER OPERATIONS INCLUDING HIGH ANGLE WELLS SHORT DRIFT SIDE TRACK LONGDRIFT SIDE TRACK DRAIN HOLE AND MULTILATERAL H OLE DRILLING. FURTHER IT IS TO BE NOTED THAT BEFORE ENTERING INT O THE AGREEMENT DATED 3.12.1998 WHICH IS A SUBJECT MATTER OF THIS APPEAL THERE WAS A AGREEMENT ALREADY SUBSISTING B ETWEEN THE ASSESSEE AND NEPL DATED 12.11.1997 AND WAS ALR EADY IN PROGRESS ON THE DATE WHEN NEW AGREEMENT WAS SIGNED . THE RIG IN QUESTION HAD BEEN WORKING IN INDIA AT THE TI ME OF SIGNING OF THE AGREEMENT IN QUESTION AND WORKING IN INDIA AS PER THE AGREEMENT BETWEEN THE SAME PARTIES WHICH A S BEEN REFERRED AS CURRENT AGREEMENT IN THE AGREEMENT IN Q UESTION. THEREFORE IT IS CLEAR THAT AT THE TIME OF THE SIGN ING OF THE AGREEMENT DATED 3.12.1998 THE RIG IN QUESTION WAS VERY MUCH IN INDIA AND WORKING AT THE SITE UNDER HIRE WITH T HE SAME HIRER I.E. NEPL. ALL THESE FACTS ARE NOT CONTROVERTED B Y THE ASSESSEE. THE CIT(A) ISSUED A REMAND ORDER WHEN TH E ASSESSEE HAS FILED SOME ADDITIONAL EVIDENCE TO PRO VE THAT THE RIG WAS TAKEN TO SHARJAH AND THEN BROUGHT BACK TO INDIA. IT IS CLEAR FROM THE REMAND REPORT DATED 30.7.2004 EXTRA CTED BY THE CIT(A) AT PAGES 14 15 AND 16 OF THE IMPUGNED ORDER THAT AFTER AGREEMENT DATED 3.12.1998 THE RIG WAS TAKEN TO SHARJAH ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 10 FOR REPAIRS. THIS FACTS HAS ALSO NOT BEEN DISPUT ED BY THE ASSESSEE. THEREFORE THERE IS NO INITIAL MOBILIZATI ON OF THE RIG FROM OUTSIDE INDIA. THE RIG AT THE TIME OF AGREEM ENT WAS VERY MUCH IN INDIA AND AT THE SITE ITSELF WITH NEPL WORK ING AS PER THE EARLIER AGREEMENT DATED 12.11.1997. AS PER THE TERMS OF THE AGREEMENT ASSESSEE HAS DECLARED THAT THE RIG I S IN EFFICIENT OPERATING CONDITION AND IS CAPABLE OF DR ILLING EXPLORATORY DEVELOPMENT OIL AND GAS WELLS AND FOR WORKOVER OPERATIONS INCLUDING HIGH ANGLE WELLS SHORT DRIFT SIDE TRACK LONGDRIFT SIDE TRACK DRAIN HOLE AND MULTILATERAL H OLE DRILLING ETC. 2.7 THUS THE RIG WAS NOT STATIONED OR ANCHORED OUT SIDE INDIA AT THE TIME OF AGREEMENT AND CONSEQUENTLY THERE WA S NO INITIAL MOBILIZATION OF THE RIG FOR BRINGING THE S AME AT THE DRILLING SITE. THE REPAIRS MAINTENANCE AND OTHER I MPROVEMENTS WORK OF THE EQUIPMENT IS THE RESPONSIBILITY OF THE ASSESSEE AT ITS COSTS. THEREFORE THE PAYMENT RECEIVED BY THE ASSESSEE UNDER THE HEAD OF MOBILIZATION FEES IS NOT FOR INI TIAL MOVEMENT OF THE RIG FROM OUTSIDE INDIA AND TO THE SITE OF T HE WORK . WHEN THERE IS NO PROVISION FOR PAYMENT OF ANY REPAIRS AND MAINTENANCE OF THE RIG IN THE AGREEMENT THEN THE P AYMENT RECEIVED BY THE ASSESSEE UNDER ANY HEAD OR NOMENCLA TURE WOULD DEEMED AS PAYMENT FOR THE OPERATION CARRIED O UT IN ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 11 INDIA AND THEREFORE THE INCOME HAS ACCRUED/ARISEN I N CONNECTION WITH THE BUSINESS OPERATION OF THE ASSES SEE IN INDIA. THERE IS NO QUARREL IN RESPECT OF THE P ROVISIONS OF SECTION 5 WHICH IS A CHARGING PROVISIONS AND SECT ION 44BB IS A MACHINERY PROVISION FOR COMPUTATION OF THE INCOME SPECIFICALLY FOR THE PROFIT AND GAINS IN CONNECTION WITH THE BUSINESS OF EXPLORATION OF MINERAL OIL. THUS TH E PROVISIONS OF SECTION 44BB IS IN FURTHERANCE OF SECTION 5 AS WELL AS SECTION 9 OF THE ACT AND NOT IN CONTRAVENTION OR DE ROGATORY TO THE SAME.. THEREFORE THERE IS NO SCOPE OF ANY CL ASH BETWEEN THE PROVISIONS OF SECTION 44BB AND SECTIONS 5 AND 9 . 2.8 IN THE CASE IN HAND THE ENTIRE BUSINESS OPERAT ION IS CONDUCTED IN INDIA AND THEREFORE THE INCOME WHICH IS PAID OUTSIDE INDIA IS DEEMED TO HAVE ACCRUED IN INDIA TH ROUGH BUSINESS CONNECTION AS THE OPERATIONS ARE CARRIED O UT IN INDIA. THUS THERE WOULD BE NO APPORTIONMENT OF INCOME BY APPLICATION OF SECTION 9(1) OR THE EXPLANATION (1) (A) TO SECTION 9(1)(I). AS FAR AS THE APPLICABILITY OF SE CTION 44BB IS CONCERNED THE CIT(A) HAS ALSO UPHELD THE APPLICAB ILITY OF THE SECTION IN THE CASE OF THE ASSESSEE. THEREFORE TH ERE IS NO ISSUE BEFORE US REGARDING THE APPLICABILITY OF THE PROVISIONS OF SECTION 44BB. AS REGARDS THE DECISIONS RELIED UP ON BY THE ASSESSEE FIRST OF ALL IT IS TO BE NOTED THAT ALL THESE DECISIONS ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 12 ARE IN RESPECT OF MOBILIZATION FEES FOR THE INITIAL MOBILIZATION OF THE RIG/MACHINERY/EQUIPMENTS FROM OUTSIDE INDIA TO THE WORKING SITE AT INDIA. MOREOVER THERE ARE DIVERG ENT VIEWS TAKEN BY THE DIFFERENT BENCHES OF THIS TRIBUNAL. SOME OF THE DECISIONS ARE IN FAVOUR OF THE ASSESSEE AND SOME AR E IN FAVOUR OF THE REVENUE. WITHOUT GOING INTO THE CONTROVERSY OF THE ISSUE OF OVERRIDING EFFECT OF THE PROVISIONS OF SEC TION 5 9 AND 44BB WE ARE OF THE VIEW THAT WHEN THERE WAS NO IN ITIAL MOBILIZATION OF RIG FOR BRINGING THE MACHINERY FRO M OUTSIDE INDIA TO THE SITE OF WORK IN INDIA THE PAYMENT REC EIVED BY THE ASSESSEE CANNOT BE TREATED FOR THE SERVICES PROVIDE D OUTSIDE INDIA OR FOR OPERATING ACTIVITY OUTSIDE INDIA. HENC E THE EXPLANATION (1)(A) TO SECTION 9 (1)(I) IS NOT APPLI CABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THAT OF AO. 3. THE APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.1.2011. SD SD (J.SUDHAKAR REDDY) (V IJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ON THIS 28 TH DAY OF JAN 2011 SRL:14111 ITA NO. 1891/MUM/2008 (ASSESSMENT YEAR: 2001-02) 13 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI