SEDCO FOREX INTERNATIONAL vs. THE COMMISSIONER OF INCOME TAX

ITA/185/2001HC UttarakhandUKHC01009187200314 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions of law raised in this appeal were identical to those decided in a previous case, "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another," decided on July 22, 2005, in Income Tax Appeal No. 165 of 2001. In that prior judgment, the Division Bench of the High Court, which included one of the judges in the current bench, had answered the framed questions in favour of the Revenue Department. Consequently, following the precedent set by its own Division Bench, the High Court dismissed the present appeal. No specific reasoning for the decision on the two issues is provided in this judgment, other than reliance on the prior ruling. The operative direction is to dismiss the appeal.

What were the facts?

The appellant, Sedco Forex International Drilling Inc. (formerly Forex Neptune International Inc.), acting as agent for its employee Mr. R. Coop, filed an appeal against the consolidated order dated April 20, 2000, for assessment year 1989-90, passed by the Income Tax Appellate Tribunal (Bench 'E', New Delhi). The appeal was preferred before the High Court of Uttaranchal at Nainital. The parties agreed that only two specific questions of law were to be determined, waiving the rest. The High Court noted that these questions had already been answered by a Division Bench of the same court in a previous case involving the same appellant.

What were the issues?

1. Whether the learned ITAT erred in law by holding that the appellants 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'? (Question of law) 2. Whether the learned ITAT erred in law by holding that the appellants are not governed by the provisions of the Agreement for Avoidance of Double Taxation (AADT)? (Question of law) Assessee's Contentions: The judgment does not record specific contentions made by the assessee for these two issues. However, the framing of the questions implies the assessee argued that the conditions for non-deductibility were met and that the AADT was applicable. Revenue's Contentions: The judgment does not record specific contentions made by the revenue for these two issues. However, the outcome suggests the revenue argued successfully that the conditions for non-deductibility were not met and that the AADT was not applicable, or at least that the ITAT's findings in their favor were correct.

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No.185 of 2001

Sedco Forex International Drilling Inc. (Formerly Known as Forex Neptune International Inc.) as agent of its employee Mr. R.Coop a company incorporated in the Republic of Panama having its registered office at No.8 Acquitino de la Guardia Street, City of Panama, Republic of Panama, present Address C/o A.F. Ferguson & Co. Maker Towers, Cuffe Parade, Mumbai

………. Appellant

Versus

The Commissioner of Income Tax, Meerut having office at Income Tax Office, Opp. Bhasali Ground, Meerut

The Assistant Commissioner of Income-Tax,

Special Circle, Dehradun having office

at Subhash Road, Dehradun-248001

………. Respondents

Sri Vikram Gulati, Advocate for the appellant. Mr. S.K. Posti, Advocate for the respondents.

Dated: December 14, 2005

Coram: Hon. P.C. Verma, J. Hon. J.C.S. Rawat, J.

Both the parties are ready to argue the matter today.

This appeal has been preferred against the consolidated order dated 20.04.2000 for the assessment year 1989-90, passed by the Income Tax Appellate Tribunal, (Bench ‘E’ New Delhi).

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

“Whether, the learned I.T.A.T. has erred in law in holding that the appellants have 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’?”

“Whether, the learned I.T.A.T. has erred in law in holding that the appellants are not governed by the provisions of the Agreement for Avoidance of Double Taxation (AADT)?”

The aforementioned questions were answered by the 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 questions framed in the said appeal were answered in favour of the Revenue Department.

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.) Rajeev Dang

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