Non-resident: Fees for technical services- Section 9(1)(vii) Expl. 2 and 44BB(1)- A. Y. 2008-09- Geophysical services- Activity of two dimensional and three dimensional seismic survey carried on in connection with exploration of oil on land and off-shore- Consideration for services rendered cannot be construed as ”fees for technical services” Assessee was assessable u/s. 44BB(1) of the Act-

The assessee a company incorporated under the laws of Norway, was principally engaged in the business of providing geophysical services world wide. These services included the services of acquiring and processing two dimensional and three dimensional seismic data both on land and offshore. In the A. Y. 2008-09, the assessee opted to be taxed on presumptive basis u/s. 44BB(1) of the Act at the rate of 10% of the gross revenue. The Assessing Officer rejected the contention of the assessee that its income was liable to be taxed u/s. 44BB(1) of the Act and held that the services provided by the assessee were technical in nature and the consideration payable to the assessee for rendering services in terms of the contract was ”fees for technical services” within the scope of section 9(1)(vii) of the Act and that the tax on such income was to be computed u/s. 115A of the Act and not u/s. 44BB(1). The Tribunal upheld the decision of the Assessing Officer.

On appeal by the assessee, the Delhi High Court reversed the decision of the Tribunal and held as under:

“i) The Tribunal was not justified in holding that the activity of two dimensional and three dimensional seismic survey carried on by the assessee in connection with the exploration of oil was in the nature of “fees for technical services” in terms of Explanation 2 to section 9(1)(vii) of the Act.

ii) Since the A. Y. 2008-09 fell within the period from April 1, 2004 to April 1, 2011, the Income of the assessee to the extent it fell within the scope of section 44DA(1) of the Act and excluded from section 115A(1)(b) of the Act, would be computed in accordance with section 44BB(1) of the Act.”