THE COMMISSIONER OF INCOME TAX and ORS vs. ATWOOD OCEANICS INTAL.

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ITA/41/2003HC UttarakhandUKHC01009116200312 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
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What did the High Court hold?

The High Court, by referring to its own prior judgment in the case of Commissioner of Income Tax and another Vs. Atwood Oceanics International S.A. (reported in Income Tax Reports, Vol.264 {2003} Page 761), answered both substantial questions of law in the affirmative. This means the Court held that the continental shelf to the Exclusive Economic Zone was not considered part of India prior to April 1, 1983, for the purposes of the Income Tax Act, 1961. Consequently, the salary income earned by the respondent employee for services rendered prior to April 1, 1983, on a rig located outside India's territorial waters was not chargeable to tax for Assessment Year 1983-84. The appeal was disposed of in favour of the assessee and against the Department.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Dehradun, and the Income Tax Officer, Ward, Dehradun, against the order dated October 31, 2001, passed by the Income Tax Appellate Tribunal (Delhi Bench 'A', New Delhi) in ITA No. 5857(Del) of 1990. The dispute pertains to the Assessment Year 1983-84. The respondent is Atwood Oceanics International, acting as an agent for Mr. N. Richardson. The core of the dispute revolves around whether income earned by an employee for services rendered prior to April 1, 1983, on a rig located in offshore areas outside India's territorial waters was taxable in India.

What were the issues?

1. Whether the learned Income Tax Appellate Tribunal was legally correct in treating the continental shelf to the Exclusive Economic Zone as not forming part of India prior to April 1, 1983, for the purposes of the Income Tax Act, 1961? (Question of law) 2. Whether the learned Appellate Tribunal was justified in holding that the salary income earned by the respondent employee for services rendered prior to April 1, 1983, in a rig located in the offshore areas outside the territorial waters of India, was not chargeable to tax under the Income Tax Act, 1961, for the assessment year 1983-84? (Question of mixed law and fact) Assessee's contentions: Not recorded in the judgment. Revenue's contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 196

AI-generated summary — verify with the full judgment below

COURT NO.2 IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Appeal No.41 of 2001

1.

The Commissioner of Income Tax, Dehradun.

2.

Income Tax Officer, Ward, Dehradun … Appellants

Versus

Atwood Oceanics International, As agent of Mr.N. Richardson, C/o Nangia & Co., C.A.s, D-11, Greater Kailash Enclave-1, New Dlehi-48 … Respondent

Dated: December 13, 2005

Mr. S.K. Posti, Advocate for the appellants.

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

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

This appeal is against the judgment and order-dated 31.10.2001, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘A’ New Delhi) in ITA No.5857(Del) of 1990. The dispute relates to the Assessment Year 1983-84. 2. The substantial questions of law raised in the appeal are as follows:

“Whether the learned Income Tax Appellate Tribunal was legally correct to treat the continental shelf to the Exclusive Economic Zone as not forming part of India prior to 01.04.1983 for the purposes of Income Tax Act, 196?

“Whether the Ld. Appellate Tribunal was justified in holding that the salary income earned by the respondent employee for services rendered prior to 01.04.1983 in a rig located in the offshore areas outside the territorial waters of India, was not chargeable to tax under the Income Tax Act, 1961 for the assessment 1983-84?”

3.

which was reported in Income Tax Reports, Vol.264 {2003} Page

761.4.

For the reasons given in the above judgment, we answer both the questions in the affirmative that is in favour of the assessee and against the Department.

5.

The appeal is disposed of accordingly. No order as to costs.

(J.C.S. Rawat, J.) (P.C. Verma, J.) Rajeev Dang

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