ENSCO MARITIME LTD.HOWARD WINSTON POE JR vs. COMMISSIONER OF INCOME TAX DEHRADUN

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ITA/197/2004HC UttarakhandUKHC01004961200420 February 2006Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided the two questions of law. For the first question, regarding the failure to satisfy the condition of non-deductibility of remuneration in another State, the Court held that this question had already been decided by a Division Bench of the same High Court in the case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" (decided on July 22, 2005, in Income Tax Appeal No.165 of 2001). That judgment answered the question in favor of the Revenue. For the second question, concerning the taxability of off-period salary under section 9(1)(ii), the Court held that this issue had been decided by the Hon'ble Apex Court in "Sedco Forex International Drill Inc. and others Vs. Commissioner of Income Tax, Dehradun and Another" (JT 2005(9) SC 639). The Apex Court's decision answered this question in favor of the assessee. Consequently, the appeal was disposed of in view of these decisions.

What were the facts?

The appeal was filed by Ensco Maritime Ltd., acting as agent for Mr. Howard Winston Poe Jr., against the Commissioner of Income Tax, Dehradun. The assessment year in question is 1998-99. The appeal challenges an order dated July 26, 2004, passed by the Income Tax Appellate Tribunal, Bench 'F', New Delhi. The parties agreed that only two specific questions of law arising from the Tribunal's order were to be determined, and the rest were not pressed. The appellant is represented by Ms. Krishi Shukla, Advocate, and the respondent by the Commissioner of Income Tax.

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 turns on the interpretation of relevant provisions concerning international taxation and 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 income earned outside the period of active service, under the Income Tax Act, 1961. Contentions: Assessee: The assessee did not press certain questions. For the two questions to be decided, the assessee would have argued in favor of their position based on the precedents that would be cited. Revenue: The Revenue would have argued in favor of the taxability of the remuneration and the off-period salary, likely relying on the provisions of the Income Tax Act and relevant case law. The judgment does not explicitly record the revenue's arguments for these specific issues, but their stance is implied by the court's findings.

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. 197 of 2004

Ensco Maritime Ltd. (earlier known as Dual Offshore Ltd.) As agent of Mr. Howard Winston Poe Jr. 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.

Dated: February 20, 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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