COMMISSIONER OF INCOME TAX vs. READING and BATES EXPLORATIONS CO.AGENT R.S.TEMPLE

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ITA/521/2001HC UttarakhandUKHC01009204200316 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided both issues in favour of the assessee. For the first issue concerning 'Off Period Salary', the Court held that the Hon'ble Supreme Court had already decided this matter in Sedco Forex International Drill Inc. & others Vs. Commissioner of Income Tax, Dehradun and another (J.T. 2005(9) S.C. p/639). Following this Supreme Court decision, the issue was answered in favour of the assessee. For the second issue regarding 'Free Boarding Facility', the Court referred to its own Division Bench decision in Commissioner of Income Tax and another Vs. SEDCO Forex International Drilling Co. Ltd. and connected cases ((2003) 264 ITR 320). In that case, it was held that free boarding facility provided by the employer on a rig was not a perquisite under section 17(2)(iii) and its value could not be added to the assessee's income. Therefore, this issue was also decided in favour of the assessee. The appeal was disposed of accordingly.

What were the facts?

The appeal is filed by the Commissioner of Income Tax and the Income Tax Officer against the order dated 02.01.2001 passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘A’, Delhi in I.T.A. No. 5802/Del/1995. The dispute pertains to the Assessment Year 1991-92. The assessee is Mr. R. S. Temple, represented by Reading & Bates Exploration Co. as his agent. The parties agreed on two specific questions of law for consideration by the High Court.

What were the issues?

The High Court had to decide two questions of law: 1. Whether, on the facts and circumstances, the ITAT was correct 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. 2. Whether, on the facts and in the circumstances, the ITAT was legally correct in holding that 'Free Boarding Facility' provided by the employer on board a rig in high seas could not be construed as a perquisite. Arguments: Assessee: The assessee contended that 'Off Period Salary' was not taxable under section 9(1)(ii) and that 'Free Boarding Facility' on a rig was not a perquisite. The assessee relied on judicial precedents for both contentions. Revenue: The revenue contended that both 'Off Period Salary' and 'Free Boarding Facility' were taxable. The revenue's arguments are not explicitly detailed but are implied by their appeal against the ITAT's decision.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii),Section 17(2)(iii)

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.521 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. R. S. Temple C/o Aurther 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 is filed against the order dated 02.01.2001 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘A’, Delhi in I.T.A. No. 5802/Del/1995. The dispute relates to the Assessment Year 1991-92. The assessee is Mr. R. S. Temple, represented by Reading & Bates Exploration Co.

2.

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

a. “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?” b. “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 constructed to be perquisite?”

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 LSR

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