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

ITA/42/2003HC UttarakhandUKHC01006245200303 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 appellants/Revenue) against M/s Reading & Bates Exploration Co., acting as agent for Mr. G.P. Orsak (the respondent/assessee). The appeal concerns assessment year(s) not explicitly stated. The order under challenge is from the Income Tax Appellate Tribunal. The High Court of Uttaranchal at Nainital is considering questions of law referred under Section 260A of the Income Tax Act, 1961. The Revenue has filed the appeal, and no one appeared for the respondent.

What did the High Court hold?

The High Court, in view of its prior decision in the SEDCO Forex International Drilling Co. Ltd. case, answered the referred questions. For the first question, concerning "OFF Period Salary," the Court held in favour of the Department and against the assessee, answering it in the negative. This implies the Court found that "OFF Period Salary" was indeed taxable. For the second question, regarding the free boarding facility provided on the rig, the Court held in favour of the assessee and against the Department, answering it in the affirmative. This means the Court found that the free boarding facility was not a taxable perquisite. The appeal was disposed of, with no order as to costs.

What were the issues?

The Tribunal had to decide two questions of law referred under Section 260A of the Income Tax Act, 1961: 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 both "OFF Period Salary" and the free boarding facility were taxable. The judgment does not record specific arguments from the assessee's side for these issues, other than implying their position through the Tribunal's prior ruling. The judgment relies on a previous decision of the same High Court in Income Tax Act Appeal No. 57 of 2002, Commissioner of Income Tax, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd.

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 Appeal No. 42 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.P. Orsak, New Delhi.

………Respondent

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

Coram: Hon’ble S.H. Kapadia, C.J. Hon’ble M.M. Ghildiyal, J.

Date: 03.11.2003

PC:-

Affidavit proving service taken on record.

The matter is squarely covered by our decision dated 9th October 2003 in Income Tax Act 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 at the relevant time?” (2) “Whether, the Tribunal was right in holding that free boarding facility provided by the employer on the rig is not a perquisite u/s 17(2)(iii)?”

The order continues below.

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