THE COMMISSIONER OF INCOME TAX vs. HUGHES SERVICE PVT. LTD.AGENT MR.SUYADAM P.R.S.

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ITA/563/2001HC UttarakhandUKHC01005623200423 December 2005Author: HON'BLE MR. JUSTICE M. M. GHILDIYAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court decided both questions of law in favour of the assessee and against the Revenue. For the first question, the Court referred to its own decision in Commissioner of Income Tax and another Vs. Sedco Forex, reported in Volume 264 ITR page 320, which held that subsistence allowance comprising free boarding on a rig in high seas is not a perquisite. For the second question, the Court relied on the Hon'ble Apex Court's decision in Sedco Forex International Drill Inc. and others Vs. Commissioner of Income Tax, Dehradun and Anr., reported in JT 2005 (9) SC 639, which also favoured the assessee. Following these precedents, the appeal was disposed of in terms of these judgments.

What were the facts?

This appeal by the Revenue (Commissioner of Income Tax and Deputy Commissioner of Income Tax) is against the judgment and order dated March 20, 2001, passed by the Income Tax Appellate Tribunal (ITAT), Delhi. The ITAT's order pertains to assessment year 1990-91 and concerns the assessee, Hughes Services (FE) Pvt. Ltd., acting as an agent for Mr. Suyadam PRS. The appeal requires the High Court to answer two questions of law that were decided by the ITAT.

What were the issues?

The High Court was required to decide the following two questions of law: 1. Whether, on the facts and circumstances of the case, the ITAT was legally justified in holding that subsistence allowance comprising free boarding facility provided by the employer on board the rig in high seas cannot be construed as a perquisite, under Section 17(2) of the Income Tax Act (implied, as perquisite is mentioned). 2. Whether, on the facts and circumstances of the case, the ITAT erred in law by holding that off-period salary was taxable in India under Section 19(1)(ii) of the Income Tax Act. Contentions: Assessee: The judgment does not record specific contentions for the assessee, but the outcome indicates their arguments prevailed. Revenue: The judgment does not record specific contentions for the revenue, but the outcome indicates their arguments did not prevail.

Which sections of the Income-tax Act were involved?

Section 17(2),Section 19(1)(ii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL.

Income Tax Appeal No. 563 of 2001

1.

The Commissioner of Income, Meerut.

2.

Deputy  Commissioner  of  Income  Tax,  Special  Circle, Dehradun. …Appellants

Versus

Hughes Services (FE) Pvt. Ltd. as Agent of Mr. Suyadam PRS, C/o G.C. Nagalia (Advocate), 20 – A, New Road, Dehradun.

….Respondent.

Hon’ble M.M. Ghildiyal, J. Hon’ble B.S. Verma, J.:

Heard  Sri  S.K.  Posti,  learned  counsel  for  the  appellant and Sri Arvind Vashisth, learned counsel for the respondent.

The  present  appeal  is  filed  against  the  judgment  and order  dated  20.03.2001  passed  by  Income  Tax  Appellate Tribunal,  Delhi  in  ITA  No.  Nil/  D  /1994  pertaining  to  the assessment  year  1990  –  91. In  this  appeal,  we  required  to answer two questions of law they are as follows:

Whether  on  the  facts  and  circumstances  of  the  case  ITA was legally justified in holding that substance allowance comprising  free  boarding  facility  provided  by  the  employer  on board the rig in high seas cannot be constructed to be perquisite?

Whether  on  the  facts  and  circumstances  of  the  case  the Tribunal  erred  in  law  for  holding  off  period  salary  was  taxable  in India under Section 19 (1) (ii) of the Income Tax Act? Hon’ble  Apex  Court  reported  in  JT  2005  (9)  SC  639  (Sedco SKSharma

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