THE COMMISSIONER OF INCOME TAX vs. M/S HUGHES SERVICE PVT. LTD. AGENT OF MR. HOLLAND

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ITA/330/2000HC UttarakhandUKHC01015102200407 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court followed its own previous judgment in Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd and connected cases (2003) 264 ITR 320. In that judgment, a Division Bench 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 earlier judgment also held that the imposition of interest under Section 234-B was not justified without proper hearing and reasons. Consequently, the High Court dismissed the present appeal, answering both substantial questions of law against the appellants (Revenue) and in favour of the assessee.

What were the facts?

The Commissioner of Income Tax and the Dy. Commissioner of Income Tax, Special Circle, Dehradun (appellants) filed an appeal against an order dated 24.01.2000, passed by the Income Tax Appellate Tribunal, Delhi Bench ‘C’ (respondent). The appeal pertains to Assessment Year 1989-90 and concerns M/s Hughes Services (FE) PTE Ltd., acting as the agent of Mr. Holland D.W. The dispute revolves around whether free boarding and lodging provided on a rig in high seas constituted a perquisite, and whether interest under Section 234-B was correctly charged 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 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? Assessee's contention: Not recorded. Revenue's contention: Not recorded. 2. Whether, on the facts and in the circumstances of the case, the 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: Not recorded. Revenue's contention: Not recorded.

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. 444 of 2001 (Old No.330 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. Holland D.W., 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.430(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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