COMMISSIONER INCOME TAX vs. HALLIBURTON OFF SHARE SERVICES.

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ITA/94/2000HC UttarakhandUKHC01015042200402 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court answered both questions in favour of the assessee and against the Revenue. For the first issue concerning the taxability of salary paid for the off-period outside India under Section 9(1)(ii), the Court relied on the decision of the Hon'ble Apex Court in Civil Appeal Nos. 351-355 of 2005, 'Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another'. This precedent established that such salary was not chargeable to Indian Income Tax. For the second issue regarding interest under Section 234-B, the Court followed a Division Bench decision of the same High Court in 'Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases' reported in (2003) 264 ITR 320. This ruling held that the imposition of interest under Section 234-B was not justified without providing an opportunity of being heard and without assigning reasons. Consequently, the appeal filed by the Revenue was dismissed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax and Assistant Commissioner of Income Tax, Meerut and Dehradun respectively, against an order dated September 29, 1999, passed by the Income Tax Appellate Tribunal (Delhi Bench 'C') in ITA No. 4311(Del) of 1993. The dispute pertains to Assessment Year 1991-92. The respondent is M/s Halliburton Offshore Services Inc., acting as an agent for Mr. Jalufka J.C. The appeal challenges the Tribunal's decision regarding the taxability of salary paid to the assessee for an off-period outside India and the charging of interest under Section 234-B.

What were the issues?

The High Court was required 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 correct in holding that the salary paid to the assessee for the off-period outside India was not chargeable to Indian Income Tax under Section 9(1)(ii) 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 correct in holding that no interest could be charged under Section 234-B in view of the definition of 'assessed tax' provided by Explanation I of the Income Tax Act, 1961? The Revenue contended that the salary paid for the off-period outside India was taxable in India. The Revenue also contended that interest under Section 234-B was leviable. The judgment does not explicitly record the assessee's arguments but implies their position through the questions posed and the court's reliance on precedents.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii),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. 57 of 2001 (Old No. 94 of 2000)

1.

The Commissioner of Income Tax, Meerut

2.

Assistant Commissioner of Income Tax, Special Circle, Dehradun

Appellants

Versus

M/s Halliburton Offshore Services Inc. As agent of Mr. Jalufka J.C. C/o Arthur Anderson & Co. Maker Towers, P.Cuffe Parade, Bombay

…Respondent

Dated: December 02, 2005

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

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

This appeal is against the order-dated 2909.1999, passed by the Income tax Appellate Tribunal, (Delhi Bench ‘C” Delhi) in ITA No. 4311(Del) of 1993. The dispute relates to the Assessment Year 1991-92. 2. The substantial questions of law raised in the appeal are as follows:

(i)

Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct to hold that the salary paid to the assessee for the said off-period outside India was not chargeable to Indian Income tax Act in terms of Section 9(1)(ii) of the Income Tax Act, 1961?”

(ii)

Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct to hold that no interest can be charged u/s 234-B in view of the definition of the assessed tax given in by Explanation I of I.T. Act, 1961?”

3.

The first question has been decided by the Hon’ble Apex Court in Civil Appeal Nos. 351-355 of 2005 “Sedco Forex Income Tax, Dehradun and Another, JT 2005(9) SC 639”. In view of the aforesaid decision of the Hon’ble Apex Court, this that the imposition of interest under Section 234-B was not justified without hearing and without reasons.

5.

In view of the above, we dismiss the appeal. Both the questions in this appeal are answered against the Revenue and in favour of the assessee.

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

(P.C. Verma, J.) Shiv

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