THE COMMISSIONER OF INCOME TAX vs. SAIPEM SPA AS AGENTOF MR. ORSI TULIO

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ITA/307/2000HC UttarakhandUKHC01025234200314 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, following its own Division Bench judgment in Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd and connected cases (2003) 264 ITR 320, held that free boarding facilities provided by the employer on a rig were not a perquisite under Section 17(2)(iii) and their value could not be added to the assessee's income. Furthermore, the Court affirmed that the imposition of interest under Section 234-B was not justified without proper hearing and reasons. Consequently, both substantial questions of law were answered against the appellants and in favour of the assessee. The appeal was dismissed, upholding the Tribunal's order.

What were the facts?

This appeal by the Commissioner of Income Tax and another against Saipem SPA (as agent of Mr. Orsi Tulio) concerns Assessment Year 1990-91. The appeal challenges an order dated March 22, 2000, passed by the Income Tax Appellate Tribunal (Delhi Bench 'SMC'). The dispute revolves around whether free boarding and lodging provided by the employer on a rig in high seas constitutes a perquisite, and whether interest under Section 234-B of the Income Tax Act is chargeable when the entire income was subject to Tax Deducted at Source (TDS). The High Court is hearing the appeal against the Tribunal's decision.

What were the issues?

The High Court was asked to decide two substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding that free boarding and lodging facilities provided by the employer on board the rig in high seas cannot be construed as a perquisite, concerning Section 17(2)(iii) of the Income Tax Act. 2. Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding that interest under Section 234-B of the Income Tax Act cannot be charged since the entire income of the assessee was subject to TDS, whereas this interest is chargeable on assessed tax as defined by Explanation I below Section 234-B. The appellants (Revenue) argued that the Tribunal erred in its findings on both issues. The respondent (Assessee) contended that the Tribunal's decision was correct. The judgment does not explicitly detail the arguments made by each side beyond referencing the Tribunal's findings and the High Court's prior judgment.

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

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 467 of 2001 (Old No.307 of 2000)

1.

The Commissioner of Income Tax, Meerut.

2.

A.C.I.T., Special Circle, Dehradun … Appellants

Versus

Saipem SPA as agent of Mr. ORSI TULIO, Arthur Anderson & Co., Bombay … Respondent

Dated: December 14, 2005

Mr. S.K. Posti, Advocate for the appellants. Ms. Krishi Shukla, Advocate for the respondent.

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

Hon. J.C.S. Rawat, J.

This appeal is against the order dated 22.03.2000, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘SMC’ New Delhi) in ITA No.4575(Del) of 1993. The dispute relates to the Assessment Year 1990-91. 2. The substantial questions of law raised in the appeal are as follows:

“Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding the free boarding and lodging facilities provided by the employer on board the rig in high seas cannot be construed to the perquisite?”

“Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding that interest under Section 234-B of the I.T. Act cannot be charged since the entire income of the assessee was subject to T.D.S. whereas this

interest is chargeable on assessed tax as defined by Explanation I below Section 234-B”?

3.

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 the appeal. Both the questions are answered against the appellants and in favour of the assessee.

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

(P.C. Verma, J.)

Rajeev Dang

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