SEDCO FOREX INTERNATIONAL DRILLING vs. THE COMMISSIONER OF INCOME TAX

ITA/10/2002HC UttarakhandUKHC01009103200308 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 other connected cases. In that precedent-setting judgment, the questions framed in that appeal, which were identical to the questions 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 appellant's contentions were not sustainable. The specific reasoning of the Division Bench in the prior case, which led to the dismissal of the appeal, was not reiterated in this judgment but was adopted as the basis for the decision. The operative direction was to dismiss the appeal.

What were the facts?

The appellant, Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. G.D. Foster, a Panamanian company, filed an appeal against a consolidated order dated May 31, 2001, for the assessment year 1992-93. This order was passed by the Income Tax Appellate Tribunal, Bench 'D', New Delhi. The appeal was preferred against the Commissioner of Income Tax, Meerut, and the Assistant Commissioner of Income-Tax, Dehradun. The parties agreed that only two specific questions of law were to be determined in this appeal, and the rest were not pressed.

What were the issues?

The Tribunal had to decide two questions of law: 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'? 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)? Contentions: Assessee: The appellant argued that the ITAT erred in its findings on both questions of law. The specific arguments for each question were not detailed in the judgment, but the framing of the questions implies the assessee contended they *did* satisfy the condition in question 1 and *were* governed by the AADT in question 2. Revenue: The judgment does not record specific arguments made by the revenue. However, the outcome indicates the revenue's position was upheld.

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 10 of 2002

Sedco Forex International Drilling Inc. as agent of its employee Mr. G.D. Foster 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 Range, Dehradun having office

at Subhash Road, Dehradun-248001

………. Respondents

Ms. Tehmina Punwani, Senior Advocate for the appellant. Mr. S.K. Posti, Advocate for the respondents.

Dated: December 08, 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 31.05.2001 for the assessment year 1992-93, passed by the Income Tax Appellate Tribunal, (Bench ‘D’ 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 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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