In Brief
Foreign drilling companies providing oil exploration services and equipment to ONGC in India under fixed-price contracts sought to exclude mobilization and demobilization charges from taxable income under Section 44BB of the Income Tax Act, 1961. They argued these were reimbursements for services rendered outside India and thus not taxable in India. The Supreme Court held that mobilization fees paid for provision of services and equipment for mineral oil extraction in India fall within Section 44BB(2)(a), constituting deemed profits chargeable to 10% tax. While charging provisions (Sections 4-9) establish the foundational taxing jurisdiction, Section 44BB provides a simplified computation mechanism for non-resident mineral oil contractors. Fixed contractual fees are income regardless of actual expenses incurred. Appeals dismissed.
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