COMMISSIONER INCOME TAX vs. M/S HUGHES SERVICES AGENT OF MR. BOWIE STEVEN

PDF · subscribers
ITA/358/2000HC UttarakhandUKHC01015112200407 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court followed its own earlier 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, a Division Bench of 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. The Court also noted that the Sedco Forex judgment held that the imposition of interest under Section 234-B was not justified without hearing and without reasons. Consequently, the High Court dismissed the appeal, answering both substantial questions of law against the appellants (Revenue) and in favour of the assessee.

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'), New Delhi. The dispute pertains to the assessment year 1989-90. The assessee is M/s Hughes Services (FE) PTE Ltd., acting as an agent for Mr. Bowie Steven. The core of the dispute revolves around whether free boarding and lodging provided by the employer on a rig in high seas constituted a perquisite, and whether interest under Section 234-B was 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, the learned Income Tax Appellate Tribunal was legally justified in holding that free boarding and lodging facilities provided by the employer on board a 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, the learned Income Tax Appellate Tribunal was legally justified in holding that interest under Section 234-B of the Income Tax Act, 1961, 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 contentions: Not recorded. Revenue's contentions: The revenue argued that free boarding and lodging should be considered a perquisite and its value added to the assessee's income. They also contended that interest under Section 234-B is chargeable on 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. 71 of 2001

( Old No.358 of 2000)

1.

The Commissioner of Income Tax, Meerut.

2.

Dy. Commissioner of Income Tax, Special Circle, Dehradun

…Appellant

Versus

M/s Hughes Services (FE) PTE Ltd. As agent of Mr. Bowie Steven, Dehradun

……………. Respondent

Dated: December 07, 2005

Mr. S.K. Posti, Advocate for the appellant. Ms. V.K. Bisht, Advocte 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.413(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 be 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

More judgments on Section 17(2)(iii)

All 33 judgments and leading authorities on Section 17(2)(iii) →

Recent GST High Court judgments

Search GST case law →