C.A.T. Geodata Gmbh, Austria - A.A.R. No. 1119 dt. 31/07/2012(AAR)

S.9(1)(vii) : Income deemed to accrue or arise in India - Fees for technical services - Business of exploration, etc. of mineral oil- Gathering of seismic data for contractor - FTS and not as undertaking the mining project - Exemption under Explanation 2 to section 9(1)(vii) is not available - covered under section 44D and not section 44BB.(S.44BB, 44DA )

The applicant, an Austrian company, was awarded work of acquisition & processing of 3D land seismic data in a block by an Indian consortium. It contended that the activity rendered by it is a mining activity and the fees received were not covered within the definition of FTS by virtue of the exception enacted by Expln. 2 to section 9(1)(vii) of the Act which provides for specific exclusion for any consideration received for any construction, assembly, mining or like project undertaken by the recipient. It further relied on the ruling in Geofizvka Torun Sp. zo.o (AAR No. 813 of 2009) and contended that it would be assessable only under section 44BB(1).

The Authority observed that a person who has merely gathered seismic data for a contractor who has undertaken a mining or like project cannot be said to have undertaken a mining project. Hence, it cannot claim benefit of exception contained in Expln. (2) of section 9(1)(vii) and hence consideration is in nature of Fees for Technical Services. Further, section 44DA was introduced w.e.f. 1.4.2011 after the ruling in Geofizvka was given. Subsequent to such amendment, the instant case cannot be brought under section 44BB if section 44DA or section 115A is applicable to it. Hence, it ruled that the said consideration is not covered under section 44BB but is liable to be taxed as fees for technical services under section 9(1)(vii).