COMMISSIONER OF INCOME TAX vs. READING and BATES EXPLOR. CO.AGENT B.M C PHERSON

PDF · subscribers
ITA/530/2001HC UttarakhandUKHC01009205200316 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court answered the first question in favour of the assessee, relying on the Supreme Court decision in Sedco Forex International Drill Inc. & others Vs. Commissioner of Income Tax, Dehradun. For the second question, the Court followed its own Division Bench decision in Commissioner of Income Tax and another Vs. SEDCO Forex International Drilling Co. Ltd. and connected cases, holding that free boarding facility provided on a rig in high seas is not a perquisite under Section 17(2)(iii) and its value cannot be added to the assessee's income. Regarding the third question, the Court held that the imposition of interest under Section 234-B was not justified without a proper hearing and reasons. The appeal was disposed of in light of these decisions.

What were the facts?

This appeal by the Commissioner of Income Tax and the Income Tax Officer, Dehradun (the Revenue) is against an order dated March 2001 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘B’. The assessment year in dispute is 1993-94. The assessee is Mr. B. Mc. Pherson, represented by Reading & Bates Exploration Co. The appeal challenges the Tribunal's findings on the taxability of 'Off Period Salary', the status of 'Free Boarding Facility' as a perquisite, and the direction to charge interest under Section 234-B.

What were the issues?

The High Court was asked to decide three questions of law: 1. Whether 'Off Period Salary' was taxable under Section 9(1)(ii) read with the Explanation as it stood at the relevant time. 2. Whether 'Free Boarding Facility' provided on a rig in high seas constituted a perquisite under Section 17(2)(iii). 3. Whether the Assessing Officer was justified in directing the charge of interest under Section 234-B, considering amendments by the Finance Act, 2001. The Revenue argued for the taxability of 'Off Period Salary' and 'Free Boarding Facility', and the justification for charging interest under Section 234-B. The assessee contended that 'Off Period Salary' was not taxable, 'Free Boarding Facility' was not a perquisite, and interest under Section 234-B was not leviable. The judgment does not explicitly detail the arguments for each side beyond the framing of the questions and the reliance on case law.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii),Section 17(2)(iii),Section 234-B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Appeal No.530 of 2001 1. The Commissioner of Income Tax Dehradun 2. Income Tax Officer Spl. Ward Dehradun ... Appellants Versus Reading & Bates Exploration Co. As agent of Mr. B. Mc. Pherson S. V. Road, Viley Parely, Bombay ... Respondent Mr. S.K. Posti, Advocate for the appellants. Coram: Hon. P.C. Verma, J. Hon. J.C.S. Rawat, J.

JUDGMENT

1.

This appeal is filed against the order dated March 2001 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘B’, Delhi in I.T.A. No. 6785/Del/1995. The dispute relates to the Assessment Year 1993-94. The assessee is Mr. B. Mc. Pherson, represented by Reading & Bates Exploration Co.

2.

The learned counsel for the parties agree that the following only three questions of law arise in this appeal for consideration:-

i. “Whether on the facts and circumstances of the case, the ITAT 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?” ii. “Whether on the facts and in the circumstances of the case, the ITAT was legally correct in holding that “Free Boarding Facility” provided by the employer on the board the rig in high seas cannot be construed to be perquisite?” iii. “Whether on the facts and in the circumstances of the case, the ITAT was legally justified in directing the AO to charge interest u/s 234-B which also stands amended by the Finance Act, 2001 with retrospective effect from 1.4.1989?”

3.

So far as the question No.1 is concerned, this question has been decided by the Hon’ble Supreme Court in Sedco Forex International Drill Inc. & in J.T. 2005(9) S.C. p/639. In view of this decision, this question is answered further held that the imposition of interest under section 234-B was not justified without hearing and without reasons. 5 In view of the above, we dispose of the appeal accordingly.

(J.C.S. Rawat, J.) (P.C. Verma, J) Dated 16.12.2005 LSR

More judgments on Section 9(1)(ii)

All 123 judgments and leading authorities on Section 9(1)(ii) →

Recent GST High Court judgments

Search GST case law →