In this case, the issue which arose before the Honorable Delhi Tribunal was that whether income received by the assessee for provisioning of technical services in connection with prospecting or extraction or production of mineral oil would be taxable under section 9(1)(vii) read with section 115A of the Income Tax Act,1961(‘the IT Act’) or section 44BB of the IT Act.
The Tribunal held that where the services rendered in connection with exploration activities were in nature of technical services, the income would be assessed under section 44DA or section 11 5A of the IT Act. The same would not be governed by the presumptive taxation regime under section 44BB of the IT Act, the same being applicable only in case of non-technical services in connection with exploration activities. Further, in the present fact of the case, the receipts were not connected with Permanent Establishment (‘PE’) in India and hence the income was held to be assessable under section 11 5A of the IT Act at the rate of 10%.
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