SEDCO FOREX vs. COMMISSIONER INCOME TAX

ITA/167/2001HC UttarakhandUKHC01004933200413 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own prior Division Bench judgment in the case of "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 and connected cases. In that precedent-setting judgment, the questions framed in that appeal, which were identical to the two questions of law in the present appeal, were answered in favour of the Revenue. Therefore, by applying the ratio decidendi of the earlier judgment, the High Court held that the ITAT's findings, which were consistent with the Revenue's position as upheld in the prior case, were correct. The operative direction was to dismiss the appeal. No issues were expressly left undecided.

What were the facts?

The appeal was filed by Sedco Forex International Drilling Inc., acting as the agent for its employee Mr. S.J. Burnett, against a consolidated order dated April 20, 2000, passed by the Income Tax Appellate Tribunal (ITAT), Bench 'E', New Delhi. The assessment year in question was 1990-91. The appellant is a company incorporated in Panama. The respondents are the Commissioner of Income Tax, Meerut, and the Assistant Commissioner of Income-Tax, Special Circle, Dehradun. The parties agreed that only two specific questions of law arose for determination, and the rest were not pressed.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the 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'? This question turns on the interpretation of provisions related to the deductibility of remuneration in international taxation. 2. Whether the ITAT erred in law by holding that the appellants are not governed by the provisions of the Agreement for Avoidance of Double Taxation (AADT)? This question relates to the applicability of the AADT to the appellant's situation. The appellant contended that the ITAT's findings on these issues were erroneous. The revenue contended that the ITAT's decision was correct. The judgment does not explicitly detail the specific arguments or authorities relied upon by each side for each question, beyond stating that the questions were answered in favour of the revenue in a previous, similar case.

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 167 of 2001

Sedco Forex International Drilling Inc. as agent of its employee Mr. S.J. Burnett 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

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

Dated: December 13, 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 1990-91, 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 a 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 and other connected cases. In the said judgment, the questions framed in the said appeal were answered in favour of the Revenue.

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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