- (1.) RULING 1. AB Ltd. was a company incorporated in the UK on June 2, 1983. Subsequently, it changed its name to "Z" Ltd. (hereinafter referred to as "the applicant"). This change in name was registered with Companies Registration Office, UK on December 11, 1984. The applicant entered into three agreements with "X" (an oil company in India) for rendering consulting services for gas flaring reduction project, etc., in December, 1993, May, 1994, and June, 1994. The applicant filed three applications under Section 245Q(1) of the Income-tax Act, 1961 ("the I.T. Act"), on March 9, 1995, in respect of the above three agreements.
(2.) It was stated by the applicant in its application that the company is based in UK having no branch, office or any local presence in India and that none of the services provided by the applicant to "X" had been utilised in India. It was also stated that all work on the contract awarded by the "X" to the applicant was carried out in England, using the applicant's own staff and consultants and that the company and its staff are subject to the tax jurisdiction of the United Kingdom. On these grounds it was claimed that the provisions of Section 9(l)(vi)(b) of the I. T. Act do not apply, and, therefore, no tax should be levied on the applicant with regard to its contract with "X". The facts and the questions raised in all the three applications are identical ; therefore, these were heard together and are being disposed of by this single order for the sake of convenience. For proper appreciation of the arguments the facts relating to these applications are set out below.
(3.) THE first agreement between the applicant and the "X" was drawn on December 23, 1993. THE purpose of this agreement was in depth reservoir management study of the Offshore-Oil Field on behalf of "X" which included : (a) reservoir simulation studies, (b) history matching, reservoir performance production and reservoir management, (c) review of "X" plans, (d) independent assessment of recoverable reserves by generating reservoir simulation models and carrying out well-wise history matching and provide future production for profile, etc., (e) assessment and recommendations for oil zones and wells, (f) recommendations regarding reservoir management system, and (g) making development work programme for three reservoirs of offshore oil field.;