SEDCO FOREX INT.DRILLING AGENT MR. JOHN LAIRD vs. THE COMMISSIONER OF INCOME TAX and ANR

ITA/148/2005HC UttarakhandUKHC01003026200523 March 2006Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own previous judgment in the case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" (Income Tax Appeal No. 165 of 2001 and other connected cases), decided on July 22, 2005. In that prior judgment, the Division Bench, which included one of the judges in the present case, had answered the questions framed in that appeal in favour of the Revenue. Therefore, by extension, the present appeal, which raised identical questions of law, was also decided against the appellant. The operative direction was to dismiss the appeal. No issues were expressly left undecided.

What were the facts?

The appellant, Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. Michael Kingston, filed an appeal against a consolidated order dated January 28, 2005, passed by the Income Tax Appellate Tribunal (ITAT), Bench 'E', New Delhi, for the assessment year 1998-99. The appeal was preferred before the High Court of Uttaranchal at Nainital. The appellant and the revenue were ready to argue the matter. The parties agreed that only two specific questions of law arose for determination, and the rest of the questions framed in the appeal were not pressed.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the learned ITAT erred in law in holding that the appellants failed to satisfy the condition that 'the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State?' This question pertains to the deductibility of remuneration and its impact on taxability in another state. 2. Whether the learned ITAT erred in law in holding that the appellants are not governed by the provisions of the Agreement for Avoidance of Double Taxation (AADT)? This question concerns the applicability of the AADT to the appellant's case. The appellant argued that the ITAT's findings on these issues were erroneous. The judgment does not record specific arguments made by the revenue for each issue, but it notes that the parties agreed on the questions of law. The judgment refers to a previous decision by a Division Bench of the same court in a similar case.

AI-generated summary — verify with the full judgment below

COURT NO. 2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 148 of 2005

Sedco Forex International Drilling Inc. as agent of its employee Mr. Michael Kingston a company incorporated in the Republic of Panama having its registered office at No. 8 Acquitino de la Guardia Street, City of Panama, Republic of Panama, present Address C/o A.F. Ferguson & Co. Maker Towers, Cuffe Parade, Mumbai

........... Appellant

Versus

The Commissioner of Income Tax, Dehradun having office at Subhash Road, Dehradun-248001

The Assistant Commissioner of Income-248001

Special Range, Dehradun having office

at Subhash Road, Dehradunn-248001

.................

Respondents

Ms. Menka Tripathi, Advocate for the appellant. Mr. Pitamber Maulekhi,Advocate for the respondents.

Dated: March 23, 2006

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

Hon. B.C. Kandpal, J.

Both the parties are ready to argue the matter today.

This appeal has been preferred against the consolidated

order dated 28.01.2005 for the assessment year 1998-99, passed by the Income Tax Appellate Tribunal, (Bench ‘E’ New Delhi).

The learned counsel for the parties agree that the following only two questions of law arise in this appeal for

the determination. They do not press the rest of the questions framed in the appeal:-

“Whether the learned I.T.A.T. has erred in law in holding that the appellants have failed to satisfy the condition that ‘the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State?

“Whether, the learned I.T.A.T. has erred in law in holding that the appellants are not governed by the provisions of the Agreement for Avoidance of Double Taxation (AADT)?”

The aforementioned questions were answered by the Division Bench of this Court {in which one of us (P.C. Verma, J.) was a member} in case of “Sedco another”, which was decided on 22.07.2005 in Income Tax Appeal No. 165 of 2001 and other connected cases. In the said judgment, the questions framed in the said appeal were answered in favour of the Revenue.

Following the above-mentioned judgment of a Division Bench of this Court, we dismiss this appeal.

(B.C. Kandpal, J.) (P.C. Verma, J.)

Rajeev Dang

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