Law:

Section:

Section 44BB of the Income-tax Act, 1961 - Non residents - Mineral Oil, business for prospecting / exploration, etc., In case of  Where Tribunal had given a finding that mobilization fees paid by ONGC to assessee-company under a contract had no nexus with actual amounts incurred by assessee-company for transportation of drilling unit/rigs to specified drilling location in India and even if actual expenditures incurred by appellant-company would have been substantially less, ONGC was liable to pay fixed amount of mobilization fee stipulated in respective agreements, assessee's claim that such mobilization charges were to be excluded while computing its income under section 44BB was to be rejected. [A.Y. 1986-87, 1987-88]. Section 44BB does not take into account the income for calculating the aggregate amount to calculate 10 per cent profits and gains. Profits and gains are types of incomes to be taxed under a legal fiction, i.e., at 10 per cent of the amount specified in sub-section (2) of section 44BB. Section 44BB is a special provision relating to the non-resident assessee, who is providing services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in or outside India. The section is a complete code in itself. The amounts referred to in sub-section (2) of section 44BB are four types of amounts all of which are mutually inclusive and either all of them or any of them and its clauses themselves provide whether the payment to be taken into account has been made inside India or outside India. The assessee, a non-resident company, had entered into an agreement with the ONGC, India, for a drilling contract. It was assessed by the Assessing Officer on amounts under section 44BB which included the mobilization charges in the relevant assessment years. The assessee's contention was that mobilization charges were not actually charges but were expenses towards the mobilization of the machineries from Portugal to Bombay seashore which were reimbursed by the ONGC to the assessee and, therefore, the amounts of charges paid to the assessee as mobilization…

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