The Supreme Court of India (SC) has disposed off a batch of appeals filed by the taxpayer as a representative of non-resident oil and gas service providers with whom it had entered into separate contracts for rendering drilling, seismic surveys, inspection, testing, training, supply and installation of software, data analysis etc. services in connection with prospecting, extraction or production of mineral oil in India.
The appeals involved a common issue, whether the receipts earned by the non-resident service providers under the contracts entered into with the taxpayer for rendering the aforesaid services were taxable under section 44BB of the Act of the Income-tax Act, 1961 (the Act) or as fees for technical services (FTS) under section 44D of the Act.
The SC held that the services rendered under the contracts were inextricably linked with prospecting, extraction or production of mineral oil and hence eligible for presumptive taxation under section 44BB of the Act.
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