FORAMER S A Vs. DEPUTY COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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Vimal Gandhi, Judicial Member -
(1.) THE appellant in appeal against order of CIT(A) is a French company which closed its accounts for the assessment year 1987-88 on 31st March, 1987 covering the following contracts awarded by Oil & Natural Gas Commission :-
(a) Contract dated 17th October, 1986 for carrying drilling operations in off-shore Bombay area through appellant's own rig lled' Amsterdam (hereinafter referred for brevity sake IDA); and
(b) contract dated 24th March, 1987 for carrying on manning and management services on the drilship Sagar Vijay owned by ONGC.
(2.) The assessee maintained regular books of accounts on mercantile basis in respect of operations carried out in India which were duly audited in accordance with law.
The assessee made a claim for the benefit of Indo-French Double Taxation Avoidance Treaty (hereinafter referred to as 'treaty') by invoking :-
(a) Article 111 of the Treaty in respect of contract proceeds arising from the operations of Rig IDA and thus tax is chargeable on the net business income derived from the permanent establishment in India.
(b) Article XVI of the Treaty in respect of Sagar Vijay management and manning contract being the technical fees earned on the development of its expatriates which are chargeable to tax on income net of expenses incurred in India.
(3.) THE results of operations of two contracts as per Profit & Loss Account for the period ending 31st March, 1987 were disclosed as under:-
Besides above, an amount of Rs. 1,96,205 was recovered from ONGC against expenses specifically incurred on their behalf under IDA Contract.;
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