THE COMMISSIONER OF INCOME TAX vs. READING and BATES EXPLORATION CO. AGENT S.GRIFFINS

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ITA/538/2001HC UttarakhandUKHC01004969200416 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, following a previous Division Bench judgment in Commissioner of Income Tax and another v. SEDCO Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320, dismissed the appeal. The cited judgment held that free boarding facilities provided by an employer on a rig were not perquisites under Section 17(2)(iii) and their value could not be added to the assessee's income. Furthermore, the imposition of interest under Section 234-B was deemed unjustified without proper hearing and reasons. Consequently, the High Court found no merit in the revenue's appeal on both grounds. The operative direction was to dismiss the appeal, upholding the ITAT's order.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Dehradun, and the Income Tax Officer, Spl. Ward, Dehradun, against an order dated 28.02.2001 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘E’, Delhi, in I.T.A. No. 1723/Del/1995. The dispute pertains to the Assessment Year 1993-94. The assessee is Mr. J. Griffins, represented by Reading & Bates Exploration Co. The core of the dispute involves whether free boarding facilities provided by the employer at a rig site constitute a perquisite and the justification for charging interest under Section 234-B.

What were the issues?

The High Court had to decide two substantial questions of law: 1. 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 at the rig site cannot be construed to be a perquisite, turning on Section 17(2)(iii) of the Income Tax Act. 2. Whether, on the facts and in the circumstances of the case, the ITAT was legally justified in directing the AO to charge interest under Section 234-B, which was also amended retrospectively by the Finance Act, 2001, with effect from 1.4.1989. Assessee's contentions: The judgment does not record specific contentions made by the assessee. The Tribunal's decision, which the appeal challenges, held that free boarding facility is not a perquisite and that interest under Section 234-B was not justified without hearing and reasons. Revenue's contentions: The revenue, represented by Mr. S.K. Posti, Advocate, appealed the ITAT's order.

Which sections of the Income-tax Act were involved?

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.538 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. J. Griffins C/o Arthur Anderson & Co. 426, World Trade Centre Barakhamba Lane, New Delhi ... 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 if filed against the order dated 28.02.2001 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘E’, Delhi in I.T.A. No. 1723/Del/1995. The dispute relates to the Assessment Year 1993-94. The assessee is Mr. J. Griffins, represented by Reading & Bates Exploration Co.

2.

The substantial questions of law raised in the appeal are as follows:

(i) “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 at the rig site can not be construed to be perquisite?” (ii) “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.

In Commissioner of Income Tax and another SEDCO Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320, a Division Bench of this Court held that the free boarding facility provided by the employer on the rig was not a perquisite under section 17(2)(iii) and that its value cannot be added to the income of the assessee. It has been further held that the imposition of interest under section 234-B was not justified without hearing and without reasons.

4.

Following the above-mentioned judgment of a Division Bench of this Court, we dismiss this appeal.

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

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