THE COMMISSIONER OF INCOME TAX vs. M/S SAIPEM SPA C/O AS AGENT M/S ARTHER ANDERSON

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ITA/512/2001HC UttarakhandUKHC01009200200307 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the free accommodation, food, and beverages provided to employees working on a rig in high seas are a necessity, not a luxury or a perquisite, given the hazardous, arduous, and continuous nature of the work. Consequently, the Department cannot levy interest on the employer under Section 201/201(1-A) of the Income-Tax Act. The court answered the questions of law in the affirmative, in favour of the assessee and against the Department. The appeal was dismissed accordingly. No issue was expressly left undecided.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Dehradun and Dy. Commissioner of Income Tax, Special Range(1), Dehradun (the Revenue) against an order dated 26.02.2001 passed by the Income Tax Appellate Tribunal (Delhi Bench 'C'), New Delhi. The dispute pertains to Assessment Year 1987-88 and concerns M/s Saipem (the Assessee). The core issue revolves around the taxability of free accommodation, food, and beverages provided by the employer to its employees working on a rig in high seas. The Tribunal had previously ruled on similar matters, leading to this appeal.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was not legally justified in holding that free accommodation facility provided by the employer on board the rig in high seas cannot be construed to be a perquisite? 2. Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was not legally justified in holding that no perquisite arose on account of free accommodation facility provided by the employer to its employee and the Assessment Authority was not justified in charging interest under Section 201(1A) of the Income Tax Act? Assessee's Contentions: The judgment does not record specific contentions made by the assessee. However, the reasoning implies the assessee argued that the accommodation, food, and beverages were necessities due to the hazardous and continuous nature of work on the rig, and thus not perquisites. Revenue's Contentions: The judgment does not record specific contentions made by the revenue. However, the appeal itself indicates the revenue's position that the free accommodation constituted a perquisite and interest under Section 201(1A) was leviable.

Which sections of the Income-tax Act were involved?

Section 201(1A),Section 201

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 512 of 2001

1.

The Commissioner of Income Tax, Dehradun.

2.

Dy. Commissioner of Income Tax, Special Range(1), Dehradun

… Appellants

Versus

M/s Saipem, SPA C/o M/s Arther Anderson & Co. 66 Marker Towers, F. Curre Road, Bombay-400005 … Respondent

Dated: December 07, 2005

Mr. S.K. Posti, Advocate for the appellants. Ms. Krishi Shukla, learned counsel for respondent.

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

This appeal is against the order dated 26.02.2001, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘C’ New Delhi) in TDS No.291(Del) of 1995. The dispute relates to the Assessment Year 1987-88. 2. The substantial questions of law raised in the appeal are as follows:

1.

“Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was not legally justified in holding that free accommodation facility provided by the employer on board the rig in high seas cannot be construed to be perquisite?”

2.

“Whether on the facts and in the circumstances of the case, the learned Income tax Appellate Tribunal was not legally justified in holding that no perquisite arose on account of free accommodation facility provided by the employer to its employee and the Assessment Authority was not justified in charging interest under Section 201(1A) of the Income Tax Act?”

3.

9th October, 2003; the reasoning regarding these questions are given as under-

In this case, assessee had to work on the rig. It was hazardous, arduous and continuous. Under such circumstances, free accommodation, food and beverages is a necessity. It is not a luxury. It is not a perquisite. Therefore, the Department cannot levy interest on the employer under Section 201/201(1-A) of the Income-Tax Act.

4.

In view of the above discussion, the above questions of law are answered in the affirmative i.e. in favour of the assessee and against the Department.

5.

The appeal is dismissed accordingly. No order as to costs.

(J.C.S. Rawat, J.)

(P.C. Verma, J.) Rajeev Dang

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