THE COMMISSIONER OF INCOME TAX vs. SEDCO FOREX INTERNATIONAL

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ITA/62/2003HC UttarakhandUKHC01009126200323 February 2006Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court referred to a previous Division Bench decision in the case of Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320. In that precedent, it was held that the imposition of interest under Section 234-B was not justified without a proper hearing and without providing reasons. The question raised in the present appeal was answered in favour of the assessee and against the Department, following the ratio decidendi of the cited case. The operative direction was to dismiss the appeal.

What were the facts?

This is an appeal by the Commissioner of Income Tax, Dehradun, and the Assistant Commissioner of Income Tax, Special Range, Dehradun (the Revenue) against the judgment and order dated June 4, 2002, passed by the Income Tax Appellate Tribunal (Delhi Bench 'E'). The dispute pertains to the Assessment Year 1993-94. The appeal challenges the Tribunal's decision to dismiss the Revenue's appeal and its holding that interest under Section 234-B was not leviable on incomes subject to deduction of tax at source. The respondent in this appeal is Sedco Forex International Drilling, Inc., acting as the agent of Mr. Carlon Hagan.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally justified in dismissing the appeal of the revenue in holding that interest under Section 234-B was not leviable in respect of incomes which are subject to deduction of tax at source? The Revenue's contention is that the Tribunal was not legally justified in dismissing their appeal and holding that interest under Section 234-B is not leviable on incomes subject to TDS. The Revenue implicitly argues for the levy of interest under Section 234-B. The Assessee (Respondent) implicitly argues that interest under Section 234-B is not leviable on income where tax has already been deducted at source, as the conditions for its levy are not met. The judgment does not explicitly detail the arguments made by each side before the High Court, but rather relies on a previous High Court decision.

Which sections of the Income-tax Act were involved?

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.62 of 2003

1.

The Commissioner of Income Tax, Dehradun

2.

Assistant Commissioner of Income Tax, Special

Range, Dehradun

....Appellants

Versus

Sedco Forex International Drilling, Inc. as agent of Mr. Carlon Hagan, Dehradun

…..Respondent

Dated: February 23, 2006

Learned standing counsel for the appellants. Mr. Porus Kaka, Advocate for the respondent.

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

This is an appeal against the judgment and order-dated 04.06.2002, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘E’ Delhi) in ITA No.5521 (Del) of 1996. The dispute relates to the Assessment Year 1993-94. 2. The substantial question of law raised in the appeal is as follows:

Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in dismissing the appeal of revenue in holding that interest u/s 234-B was not leviable in respect of incomes which are subject to deduction of tax at source?”

3.

interest under Section 234-B was not justified without hearing and without reasons and the question was answered in favour of the assessee and against the Department.

4.

In view of the above, we dismiss the appeal. The question in this appeal is answered against the Revenue and in favour of the assessee.

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

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