THE COMMISSIONER OF INCOME TAX vs. SEDCO FOREX INTERNATIONAL

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ITA/59/2003HC UttarakhandUKHC01009125200323 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 relied on its own prior 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, the Court had held that the imposition of interest under Section 234-B was not justified without affording a hearing and without providing reasons. Consequently, the question of law was answered in favour of the assessee and against the Department. The operative direction was to dismiss the appeal.

What were the facts?

This appeal concerns Assessment Year 1993-94 and is filed by the Commissioner of Income Tax, Dehradun, and the Assistant Commissioner of Income Tax, Special Range, Dehradun (collectively, the Revenue). The appeal challenges the judgment and order dated June 4, 2002, passed by the Income Tax Appellate Tribunal (Delhi Bench 'E', Delhi) in ITA No. 5525 (Del) of 1996. The dispute revolves around the levy of interest under Section 234-B of the Income Tax Act, 1961, on incomes that are subject to deduction of tax at source. The Tribunal had dismissed the appeal of the Revenue.

What were the issues?

1. 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 under Section 234-B was not leviable in respect of incomes which are subject to deduction of tax at source? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the Tribunal's decision, which was upheld, implies that interest under Section 234-B was not leviable on income subject to TDS. Revenue's Contention: The Revenue's appeal implicitly argues that the Tribunal erred in holding that interest under Section 234-B is not leviable on incomes subject to deduction of tax at source, and that such interest is indeed leviable.

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. 59 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. J.C. Carde, 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. 5525 (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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