ENSCO MARITIME LTD. vs. COMMISSIONER OF INCOME TAX DEHRADUN

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ITA/174/2004HC UttarakhandUKHC01004940200416 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided the appeal by relying on previous pronouncements. For the first issue, concerning the deductibility of remuneration and the failure to satisfy a condition related to taxation in another state, the Court held that this question had already been decided by a Division Bench of the same High Court in the case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" (decided on 22.07.2005). That judgment had answered the question in favour of the Revenue. For the second issue, regarding the taxability of off-period salary under section 9(1)(ii) read with the Explanation, the Court referred to a decision of the Hon'ble Apex Court in "Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another" (JT 2005(9) SC 639). This Supreme Court judgment answered the question in favour of the assessee. Consequently, the appeal was disposed of in light of these decisions.

What were the facts?

The appellant, Ensco Maritime Ltd. (formerly Dual Offshore Ltd.), acting as agent for Mr. Rosungan Andrie Wantah, filed an appeal against an order dated 26.07.2004 passed by the Income Tax Appellate Tribunal (ITAT), Bench 'F', New Delhi, for the assessment year 1998-99. The appeal was preferred before the High Court of Uttaranchal at Nainital. The parties agreed to argue only two specific questions of law, foregoing the rest framed in the appeal. The appeal was listed for hearing on December 16, 2005.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the learned I.T.A.T. has erred in law in holding that the appellant has failed to satisfy the condition that ‘the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State’? This question turns on the interpretation of provisions related to the deductibility of remuneration in international tax contexts. 2. Whether the Tribunal 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? This question concerns the taxability of salary earned during periods when an employee is not actively working, under the specific provisions of the Income Tax Act. Arguments: Assessee: The judgment does not record specific arguments made by the assessee for either question. The assessee's counsel agreed to argue only the two framed questions. Revenue: The judgment does not record specific arguments made by the revenue for either question. The revenue's counsel agreed to argue only the two framed questions.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii)

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 174 of 2004

Ensco Maritime Ltd. (earlier known as Dual Offshore Ltd.) As agent of Mr. Rosungan Andrie Wantah C/o Nangia & Company, Chartered Accountants, 75/7 Rajpur Road, Dehradun

…………… Appellant

Versus

The Commissioner of Income Tax, Dehradun

………….. Respondents

Ms. Krishi Shukla, Advocate for the appellant. Mr. S.K. Posti, Advocate for the respondents.

Dated: December 16, 2005

Coram: Hon’ble P.C. Verma, J.

Hon’ble J.C.S. Rawat, J.

Both the parties are ready to argue the matter today.

2.

This appeal has been preferred against the order dated 26.07.2004 for the assessment year 1998-99, passed by the Income Tax Appellate Tribunal, (Bench ‘F’ New Delhi).

3.

The learned counsel for the parties agree that the following only two questions of law rise in this appeal for the determination. They do not press the rest of the questions framed in the appeal: -

1.

Whether the learned I.T.A.T. has erred in law in holding that the appellant has failed to satisfy the condition that ‘the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State’?

2.

Whether the Tribunal 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?

4.

So far as the question No.1 is concerned, this question has already been decided by Division Bench of this Court {in which one of us (P.C. Verma,J.) was a member} in case of “Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another”, which was decided on 22.07.2005 in Income Tax Appeal No.165 of 2001. In the said judgment, the question framed in the said appeal was answered in favour of the Revenue.

5.

The second question has also been decided by the Hon’ble Apex Court in Civil Appeal Nos.351-355 of 2005 “Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another, JT 2005(9) SC 639”. In view of the aforesaid decision of the Hon’ble Apex Court, this question is answered in favour of the assessee.

6.

In view of the above, we dispose of the appeal accordingly.

(J.C.S. Rawat, J.)

(P.C. Verma, J.)

Rawat

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