Case Law Details
Siem Offshore Inc. Vs Commissioner concerned Director of Income Tax, Advance Ruling Authority – The payment for hire of vessels provided by the Applicant to Trans ocean would be covered under the definition of ‘plant’ as defined under section 44BB of the Act. Accordingly, consideration received for supply of vessels on hire used for offshore drilling activities and marine operations would be covered within the purview of section 44BB of the Act.
The basic intention to exclude construction, assembly, mining or like project from the purview of fee for technical services was to distinguish between business activities undertaken by a taxpayer vis-à-vis mere rendering of services. The receipt on account of provision of supply vessel on hire basis cannot have the character of fee for technical services. The services required by Trans ocean are rendered by the Applicant by using the vessel under its control and command which cannot bear the character of fee for technical services. Reliance was placed on AAR’s own ruling in the case of Geofizyka Torun SP z o o (AAR No. 813 of 2009).
The AAR has held that sea logistic services are not technical in nature and consequently income therefrom is covered within the scope of section 44BB of the Act. While an advance ruling is binding on the applicant, it has a persuasive value in the case of other taxpayers and hence this ruling may provide welcome relief to service providers providing similar services to oil and gas exploration industry in respect of applicability of presumptive taxation.
BEFORE THE AUTHORITY FOR ADVANCE RULINGS (INCOME TAX) NEW DELHI
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