THE COMMISSIONER OF INCOME TAX and ORS vs. READING and BATES EXPLORATION

ITA/45/2003HC UttarakhandUKHC01006248200303 November 2003Author: OTHER2 pages
AI SummaryPartly Allowed

What were the facts?

This case involves an appeal by the Commissioner of Income Tax, Dehradun, and the Income Tax Officer, Special Ward, Dehradun (the Revenue) against an order of the Income Tax Appellate Tribunal. The respondent is M/s Reading & Bates Exploration Co., acting as agent for Mr. G. Macfarlane. The appeal concerns assessment years not explicitly stated in the judgment. The High Court was asked to decide on questions of law referred under Section 260A of the Income Tax Act. The High Court noted that the matter was covered by its previous decision in CIT, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd., dated October 9, 2003. The respondent was not represented before the High Court.

What did the High Court hold?

The High Court answered the first question in the negative, in favour of the Department and against the assessee. This means the Tribunal was not right in holding that "OFF Period Salary" was not taxable under Section 9(1)(ii) read with the Explanation. The reasoning for this reversal is based on the High Court's prior decision in CIT, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd. The High Court answered the second question in the affirmative, in favour of the assessee and against the Department. This means the Tribunal was right in holding that the free boarding facility provided by the employer on the rig is not a perquisite under Section 17(2)(iii). The operative direction is that the appeal is disposed of in accordance with these answers. No costs were awarded. The specific reasoning for each answer is not detailed but is stated to be covered by the cited precedent.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether the Tribunal was right in holding that "OFF Period Salary" was not taxable under Section 9(1)(ii) read with the Explanation as it stood at the relevant time? 2. Whether the Tribunal was right in holding that a free boarding facility provided by the employer on the rig is not a perquisite under Section 17(2)(iii)? The Revenue contended that "OFF Period Salary" was taxable and that the free boarding facility constituted a perquisite. The judgment does not explicitly record the arguments made by the assessee before the Tribunal or the High Court, other than the Tribunal's findings which are the subject of the questions. The Revenue's arguments are implicitly understood through the questions posed and the eventual answers.

Which sections of the Income-tax Act were involved?

Section 260A,Section 9(1)(ii),Section 17(2)(iii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Application No. 45 of 2003

1.

The Commissioner of Income Tax, Dehradun

2.

The Income Tax Officer, Special Ward, Dehradun ........................ Appellants

Versus

M/s Reading & Bates Exploration Co., As agent of Mr. G. Macfarlane, New Delhi ........................ Respondent

Mr. S. K. Posti, Adovocate for appellants. None for the respondent.

Coram: Hon. S.H. Kapadia, C.J.

Hon. M.M. Ghildival, J.

Date: 03.11.2003

PC:-

Affidavit providing services taken on record.

The matter is squarely covered by our decision dated 9th October 2003 in Income Tax Appeal No. 57 of 2002; The Commissioner of Income Tax, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd.

The questions referred to us for opinion under section 260A of the Income Tax Act are as follows:- QUESTIONS: 1. "Whether, the Tribunal was right in holding that "OFF Period Salary" was not taxable u/s 9/(1)(ii) read with the Explanation as it stood

The order continues below.

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