COMMISSIONER INCOME TAX vs. M/S HUGHES SERVICES AS AGENT OF STEWART A.T.

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ITA/364/2000HC UttarakhandUKHC01015117200407 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 reported in (2003) 264 ITR 320, dismissed the appeal. The Court held that free boarding facilities provided by the employer on the 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 operative direction was to dismiss the appeal.

What were the facts?

This Indian ITAT judgment concerns Income Tax Appeal No. 77 of 2001, filed by the Commissioner of Income Tax, Meerut, and the Dy. Commissioner of Income Tax, Special Circle, Dehradun (the appellants/revenue) against M/s Hughes Services (FE) PTE Ltd., acting as the agent of Mr. Stewart A.T. (the respondent/assessee). The appeal challenges an order dated 24.01.2000 passed by the Income Tax Appellate Tribunal (Delhi Bench ‘C’) in ITA No.425(Del) of 1993. The dispute pertains to the Assessment Year 1989-90. The core of the dispute revolves around whether free boarding and lodging provided to the assessee on board a rig in high seas constitutes a perquisite, and whether interest under Section 234-B is chargeable when the entire income was subject to TDS.

What were the issues?

The Tribunal 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, under Section 17(2)(iii) of the Income Tax Act, 1961. 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 T.D.S., whereas this interest is chargeable on assessed tax as defined by Explanation I below Section 234-B. The appellants (revenue) argued that free boarding and lodging on a rig at sea should be considered a perquisite and that interest under Section 234-B is chargeable on assessed tax. The respondent (assessee) contended that these facilities are not perquisites and that interest under Section 234-B is not leviable due to TDS covering the entire income. The judgment does not explicitly detail the arguments for each side beyond framing the questions and referencing a prior ruling.

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. 77 of 2001 (Old No.364 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. Stewart A.T., Dehradun

… Respondent

Dated: December 07, 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 order dated 24.01.2000, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘C’ New Delhi) in ITA No.425(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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