ENSCO MARITIME LTD. vs. COMMISSIONER OF INCOME TAX DEHRADUN

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ITA/182/2004HC UttarakhandUKHC01004948200421 February 2006Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided both questions based on previous pronouncements. For the first issue, the Court held that the appellant had failed to satisfy the condition regarding the non-deductibility of remuneration in the other state. This was decided in favor of the Revenue, following a Division Bench judgment of the same High Court in "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" (Income Tax Appeal No.165 of 2001), decided on July 22, 2005. For the second issue, concerning the taxability of off-period salary under Section 9(1)(ii), the Court held in favor of the assessee. This decision was based on the Hon'ble Apex Court's ruling in Civil Appeal Nos.351-355 of 2005 "Sedco Forex International Drill Inc. and others Vs. Commissioner of Income Tax, Dehradun and Another". The appeal was disposed of in accordance with these decisions.

What were the facts?

The appeal was filed by Ensco Maritime Ltd. (formerly Dual Offshore Ltd.), acting as agent for Mr. Mangatas Sihombing, against an order dated July 26, 2004, passed by the Income Tax Appellate Tribunal (ITAT), Bench 'F', New Delhi, for the assessment year 1998-99. The appellant and the revenue agreed that only two specific questions of law arose for determination, and the rest of the framed questions were not pressed. The High Court of Uttaranchal at Nainital was hearing the appeal.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the appellant 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 relates to the deductibility of remuneration). 2. Whether off-period salary was taxable under Section 9(1)(ii) read with the Explanation as it stood at the relevant time? (This question concerns the taxability of salary earned during periods when the employee was not actively working). Assessee's Contentions: The judgment does not explicitly record the assessee's contentions for either issue. It only states that the parties agreed on the questions and that the second question was decided in favor of the assessee based on a Supreme Court ruling. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions for either issue. It only states that the first question was decided in favor of the revenue based on a High Court ruling.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii)

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No.182 of 2004

Ensco Maritime Ltd. (earlier known as Dual Offshore Ltd.) As agent of Mr. Mangatas Sihombing C/o Nangia & Company, Chartered Accountants, 75/7 Rajpur Road, Dehradun

…………. Appellant

Versus

The Commissioner of Income Tax, Dehradun

…………. Respondents

Ms. Krishi Shukla, Advocate for the appellant. Sri. P. Maulekhi, ld. Standing counsel for the Revenue.

Dated: March 31, 2006

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

Both the parties are ready to argue the matter today.

2.

This appeal has been preferred against the order dated 26.07.2004 for the assessment year 1998-99, passed by the Income Tax Appellate Tribunal, (Bench 'F' New Delhi).

3.

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:-

1.

Whether the learned I.T.A.T. has erred in law in holding that the appellant has 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?

2.

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?

4.

So far as the question No.1 is concerned, this question has already been decided by a Division Bench of this Court {in which one of us (P.C.Verma,J.) was a member} in case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another", which was decide on 22.07.2005 in Income Tax Appeal No.165 of 2001. In the said judgment, the question framed in the said appeal was answered in favour of the Revenue.

5.

The aforementioned second question has also been decided by the Hon'ble Apex Court in Civil Appeal Nos.351-355 of 2005 "Sedco Forex International Drill Dehradun and Another, JT 2005(9) SC 639". In view of the aforesaid decision of the Hon'ble Apex Court, this question is answered in favour of the assessee.

6.

In view of the above, we dispose of the appeal accordingly.

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

Rajeev Dang

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