COMMISSIONER INCOME TAX vs. M/S HUGHES SERVICES AS AGENT OF MR. DUGNOID A.

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ITA/357/2000HC UttarakhandUKHC01015111200407 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court followed its own Division Bench judgment in Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases (2003) 264 ITR 320. In that precedent, it was 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 established that the imposition of interest under Section 234-B was not justified without proper hearing and reasons. Consequently, the High Court dismissed the appeal, answering both questions against the appellants and in favour of the assessee. No issue was expressly left undecided.

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). The dispute pertains to the Assessment Year 1989-90. The assessee is M/s Hughes Services (FE) PTE Ltd., acting as the agent of Mr. Duguoid A. The Tribunal's order was challenged on two substantial questions of law concerning the taxability of free boarding and lodging facilities provided on a rig at sea and the charging of interest under Section 234-B.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the free boarding and lodging facilities provided by the employer on board a rig in high seas could be construed as a perquisite under Section 17(2)(iii) of the Income Tax Act. 2. Whether interest under Section 234-B of the Income Tax Act was chargeable when the entire income of the assessee was subject to Tax Deducted at Source (TDS), despite the explanation defining assessed tax for the purpose of this interest. The appellants (Revenue) contended that the free boarding and lodging constituted a perquisite and that interest under Section 234-B was leviable on the assessed tax. The respondent (Assessee) argued that the facilities were not perquisites and that interest under Section 234-B was not applicable due to TDS covering the entire income. The judgment does not explicitly record arguments for each side on each issue, but rather refers to a precedent.

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.70 of 2001

(Old No. 357 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. Duguoid A., 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.414(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

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