Summary
Non-resident drilling contractors challenged inclusion of fixed mobilisation fees in receipts used for presumptive assessment under Section44BB. The Court upheld inclusion under their indivisible contracts for Indian oil exploration, while correcting the High Court’s exclusion of the charging provisions. In the separate Revenue appeal, compensation for tools lost by ONGC remained excluded.
Issues
- Whether fixed mobilisation fees received abroad for moving drilling rigs to India were included under Section44BB.
- How Section44BB operates with Sections4,5 and9.
- Whether compensation for tools lost in a hole formed part of the specified receipts.
Provisions considered
- Section44BB, Income-tax Act,1961Ten per cent of specified aggregate receipts is deemed business profit; subsection(2)(a) includes covered amounts paid or payable inside or outside India. (¶¶ 4–6, 47–50)
Held
- Sections4,5 and9 cannot be disregarded merely because Section44BB supplies a special computation mechanism. Section44BB must be read with those provisions; its statutory fiction informs whether covered receipts constitute Indian income. The High Court’s contrary observations were corrected. (¶¶ 38–44, 48–49)
- The mobilisation payments were fixed contractual fees under indivisible rig-hire arrangements for oil exploration in India. They were not reimbursements tied to actual expenditure. Whether the contractors spent more or less, or received payment abroad, did not exclude them from the aggregate under subsection(2)(a). (¶¶ 30–34, 46–50)
- In the separate Revenue appeal, ONGC’s payment compensated loss of the contractor’s tools and was outside subsection(2). The High Court’s exclusion was upheld; the Court also noted the tax effect ofRs15,12,344. (¶ 51)
Result
All assessees’ appeals dismissed, upholding inclusion of mobilisation fees. Revenue’s Civil Appeal3695/2012 also dismissed, preserving exclusion of compensation for lost tools.