IN RE: FOSTER PTY. LTD Vs. STATE

JUDGEMENT

(1.) THE applicant is a company incorporated in Australia and is a tax resident of that country. The applicant entered into a contract with Ravva Oil Singapore (Singapore) Pte. Ltd., a company incorporated under the laws of Singapore for provision of services in connection with the business of oil and gas exploration and production. Ravva Oil Singapore alongwith others has in turn entered into a production sharing contract with the Government of India for the exploration, development and production of mineral oil and gas in the Ravva Oil and Gas Field. The applicant submits that Ravva Oil Singapore was not deducting tax on payments made by it to the applicant under the belief that such payments were not chargeable to tax in India. In this context, the applicant has approached this Authority with the present application seeking an advance ruling on the question whether the consideration received/receivable by the applicant under the terms of the agreement with Ravva Oil Singapore is liable to tax as royalty as defined in Article 12 of the Double Taxation Avoidance Agreement between India and Australia.

(2.) IN its application, while narrating the facts in support of its application, the applicant has disclosed that the revenue Authorities while completing the assessment on the tax return filed by Ravva Oil Singapore, disallowed the payments made by it to the applicant. It is alleged that this was on the ground that Ravva Oil Singapore had not withheld any tax on such payment and by invoking section 40(a) (i) of the Income -tax Act. Ravva Oil Singapore has filed an appeal against that order of assessment and the same was pending.

(3.) THE matter was posted for hearing in terms of section 245R(2) of the Act and senior counsel for the applicant and the representative of the revenue were heard in detail.