ENSCO MARITIME LTD. vs. COMMISSIONER OF INCOME TAX DEHRADUN

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ITA/170/2004HC UttarakhandUKHC01004936200416 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
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What did the High Court hold?

The High Court decided the first issue by referring to its own prior decision in "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 that judgment, the question was answered in favour of the Revenue. Therefore, on this issue, the Tribunal's holding that the appellant failed to satisfy the condition was upheld. The second issue regarding the taxability of off-period salary was decided by referring to the Hon’ble Apex Court's decision in Civil Appeal Nos.351-355 of 2005 "Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another". In view of the Apex Court's decision, this question was answered in favour of the assessee. The appeal was disposed of accordingly.

What were the facts?

The appeal was filed by Ensco Maritime Ltd. (formerly Dual Offshore Ltd.), acting as the agent of Mr. Richard Ira Stevenson, 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 appellant is challenging the ITAT's decision. The High Court of Uttaranchal at Nainital was seized of this appeal. Both parties were ready to argue the matter. The appeal was preferred against the order of the ITAT.

What were the issues?

The Tribunal had to decide two questions of law. The first question was whether the appellant 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'. The second question was whether off-period salary was taxable under section 9(1)(ii) read with the Explanation as it stood at the relevant time. The appellant did not press other questions framed in the appeal. The revenue's contentions are not explicitly recorded for the first issue, but the High Court's decision in a similar case implies the revenue argued in favour of the deductibility not being satisfied. For the second issue, the judgment does not record specific arguments from either side, but refers to a Supreme Court decision.

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.170 of 2004

Ensco Maritime Ltd. (earlier known as Dual Offshore Ltd.) As agent of Mr. Richard Ira Stevenson C/o Nangia & Company, Chartered Accountants, 75/7 Rajpur Road, Dehraudn …….… 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. P.C. Verma, J. Hon. 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 arise 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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