R and B FALCON DRILLING CO.AGENT RICKY VINSON vs. THE COMMISSIONER OF INCOME - TAX DEHRADUN

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ITA/24/2005HC UttarakhandUKHC01004233200523 December 2005Author: HON'BLE MR. JUSTICE M. M. GHILDIYAL1 pages
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What did the High Court hold?

The High Court held that the amount paid to the assessee for 'off period salary' shall not be included in the income accrued, in view of the explanation of Section 9(1)(ii) of the Income Tax Act, 1961. The Court's decision was based on a prior judgment of the Hon'ble Supreme Court in Civil Appeal nos. 351-355 of 2005, titled Sedco Forex International Drill Inc. and ors. Vs. Commissioner of Income Tax, Dehradun and another. The High Court found that this precedent directly addressed the issue at hand. Consequently, the question was answered in favour of the assessee and against the revenue. No order as to costs was made. The appeal was decided accordingly.

What were the facts?

The appellant, M/s R & B Falcon Drilling Co., acting as the agent of Mr. Ricky Vinson, filed an appeal under Section 260A of the Income Tax Act, 1961. The appeal challenged an order of the Income Tax Appellate Tribunal, New Delhi, pertaining to the assessment year 1999-2000. The core of the dispute involved the taxability of 'off period salary' paid to the assessee. The appellant was represented by Km. Krishi Shukla and Sri Udyog Shukla, while the respondent, the Commissioner of Income Tax, Dehradun, was represented by Sri S.K. Posti. The High Court heard arguments from both sides.

What were the issues?

1. Whether the amount paid to the assessee for 'off period salary' shall be included in the income accrued in view of the explanation of Section 9(1)(ii) of the Income Tax Act, 1961? The assessee contended that the 'off period salary' should not be included in the income accrued, likely arguing it did not accrue or arise in India as per the relevant provisions. The revenue, conversely, argued for the inclusion of this amount in the assessee's taxable income, presumably asserting that it constituted income accrued in India under Section 9(1)(ii). The Tribunal's order, which is under challenge, would have addressed this specific point. The High Court considered this as the sole substantial question of law.

Which sections of the Income-tax Act were involved?

Section 260A,Section 9(1)(ii)

AI-generated summary — verify with the full judgment below

HIGH COURT OF UTTARANCHAL AT- NAINITAL.

Income Tax Appeal No. 24 of 2005

M/s R & B Falcon Drilling Co. Km. Krishi Shukla, Adv. & Sri Udyog Shukla, Advocate for the appellant, Sri S.K. Posti, learned counsel for the respondent.

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

Heard learned counsel for both the parties.

The assessee has filed the present appeal u/s 260A of Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, New Delhi for the assessment year 1999- 2000. Though, several questions have been framed in the memo of appeal but in substance the only question involve in this appeal is that “whether the amount paid to the assessee for off period salary shall be included in the income accrued in view of the explanation of Section 9(1) (ii) of the Act 1961”?

Since the said question has already been decided by the Hon’ble Supreme Court in Civil Appeal nos. 351-355 of 2005 appeal is decided in view of the judgment of Hon’ble the Supreme Court and the question is answered in favour of the assessee and against the revenue. No order as to costs.

The appeal is decided accordingly.

(B.S. Verma, J.) (M.M. Ghildiyal, J.) December 23, 2005: SKSharma:

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