COMMISSIONER INCOME TAX vs. SAI PEM AS AGENT OF MR, TRINGALI CARMELO and OTHERS

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ITA/338/2000HC UttarakhandUKHC01015108200417 April 2006Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, answering both substantial questions of law against the appellants (Revenue) and in favour of the assessee. The Court followed its own Division Bench judgment in Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases (2003) 264 ITR 320. In that precedent, it was held that free boarding facilities provided by the employer on a rig were not a perquisite under Section 17(2)(iii) and their value could not be added to the assessee's income. Furthermore, the precedent established that the imposition of interest under Section 234-B was not justified without hearing and without reasons. Therefore, the Tribunal's findings on both issues were upheld.

What were the facts?

The appeal is filed by the Commissioner of Income Tax, Meerut, and the Assistant Commissioner of Income Tax, Special Circle, Dehradun, against an order dated March 22, 2000, passed by the Income Tax Appellate Tribunal (Delhi Bench 'C') in ITA No. 4577(Del) of 1993. The dispute pertains to Assessment Year 1990-91. The assessee is Saipem SPA as agent of Mr. Tringali Carmelo, represented by Arthur Anderson & Co., Bombay. The core of the dispute involves whether free boarding and lodging on board a rig in high seas constitutes a perquisite and whether interest under Section 234-B is chargeable when the entire income is subject to TDS.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether, on the facts and circumstances, the Tribunal was justified in holding that free boarding and lodging facilities provided by the employer on board a rig in high seas cannot be construed as a perquisite, under Section 17(2)(iii) of the Income Tax Act. 2. Whether, on the facts and circumstances, the Tribunal was justified in holding that interest under Section 234-B cannot be charged since the entire income of the assessee was subject to TDS, despite the explanation below Section 234-B defining 'assessed tax'. The appellants (Revenue) argued that free boarding and lodging are perquisites and that interest under Section 234-B is chargeable on assessed tax. The respondent (Assessee) contended that the facilities were not perquisites and that interest under Section 234-B was not leviable due to TDS. The judgment does not explicitly detail the arguments of each side beyond framing the questions.

Which sections of the Income-tax Act were involved?

Section 17(2)(iii),Section 234-B

AI-generated summary — verify with the full judgment below

COURT NO. 2 IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No.94 of 2001

(Old No.338 of 2000)

1.

The Commissioner of Income Tax, Meerut.

2.

Assistant Commissioner of Income Tax, Special Circle,

Dehradun

......Appellants

Versus

Saipem SPA as agent of Mr. Tringali Carmelo, Arthur Anderson & Co., Bombay

.....Respondent

Dated: April 17, 2006

Mr. P.Maulekhi, Advocate for the appellants. Mr. Krishi Shukla, Advocate for the respondent.

Coram: Hon. P.C. Verma, J. Hon. B.C. Kandpal, J.

This appeal is against the order dated 22.03.2000, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘C’ New Delhi) in ITA No. 4577(Del) of 1993. The dispute relates to the Assessment Year 1990-91. 2. The substantial questions of law raised in the appeal are as follows: “Whether on the facts and circumstances of the case the Ld. Income Tax Appellate Tribunal was legally justified in holding that free boarding and lodging facilities provided by the employer on board the rig in high seas cannot be construed to be perquisite?”

“Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding that interest under Section 234-B of the I.T. Act cannot be charged since the entire income of the assessee was subject to T.D.S. whereas this interest is chargeable on

assessed tax as defined by Explanation I below Section 231-B”?

3.

234-B was not justified without hearing and without reasons.

4.

Following the above-mentioned judgment of a Division Bench of this Court, we dismiss the appeal. Both the questions are answered against the appellants and in favour of the assessee.

(B.C. Kandpal, J.)

(P.C. Verma, J.) Rajeev Dang

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