COMMISSIONER INCOME TAX vs. M/S HUGHES SERVICES AGNET OF MR FILED S.T.

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ITA/360/2000HC UttarakhandUKHC01015114200407 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, answering both substantial questions of law against the appellants (Revenue) and in favour of the assessee. The Court followed its own Division Bench judgment in the case of Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320. In that precedent, the Court had 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 precedent also held that the imposition of interest under Section 234-B was not justified without hearing and without reasons. Consequently, the Tribunal's order upholding these positions was affirmed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax and Dy. Commissioner of Income Tax against an order dated January 24, 2000, passed by the Income Tax Appellate Tribunal (Delhi Bench 'C'). The dispute pertains to Assessment Year 1989-90. The assessee is M/s Hughes Services (FE) PTE Ltd., acting as the agent of Mr. Field S.T. The core of 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).

What were the issues?

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 under Section 17(2)(iii) of the Income Tax Act? Assessee's Contention: The judgment does not record specific arguments from the assessee regarding this issue, but it implies the Tribunal ruled in favour of the assessee. Revenue's Contention: The revenue likely argued that the free boarding and lodging constituted a perquisite taxable in the hands of the employee. 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? Assessee's Contention: The assessee likely argued that since TDS covered the entire income, interest under Section 234-B was not leviable. Revenue's Contention: The revenue likely argued that interest under Section 234-B is chargeable on the assessed tax, irrespective of TDS, as per Explanation I to Section 234-B.

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. 73 of 2001 (Old No.360 of 2000)

1.

The Commissioner of Income Tax, Meerut.

2.

Dy. Commissioner of Income Tax, Special Circle, Dehradun … Appellants

Versus

M/s Hughes Services (FE) PTE Ltd. As agent of Mr. Field S.T., Dehradun

… Respondent

Dated: December 07, 2005

Mr. S.K. Posti, Advocate for the appellants. Mr. V.K. Bisht, Advocate for the respondent.

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

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

This appeal is against the order dated 24.01.2000, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘C’ New Delhi) in ITA No.428(Del) of 1993. The dispute relates to the Assessment Year 1989-90. 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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