COMMISSIONER INCOME TAX vs. HALLIBURTON OFFSHORE SERVICE INC.

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ITA/116/2000HC UttarakhandUKHC01015058200402 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the first question regarding the taxability of salary paid for the off-period outside India was already decided by the Hon'ble Apex Court in the case of Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another. Following this precedent, the question was answered in favour of the assessee. Regarding the second question concerning interest under Section 234-B, the Court referred to a Division Bench decision of its own in Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases. This decision held that the imposition of interest under Section 234-B was not justified without affording an opportunity of being heard and without providing reasons. Consequently, the appeal was dismissed, with both questions being answered against the Revenue 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, Meerut, and the Assistant Commissioner of Income Tax, Special Circle, Dehradun (the Revenue) against an order dated September 29, 1999, passed by the Income Tax Appellate Tribunal (Delhi Bench 'C'). The dispute pertains to the Assessment Year 1990-91. The assessee is M/s Halliburton Offshore Services Inc., acting as the agent of Mr. Cook R.K. 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 Tribunal had 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 1 of the Income Tax Act, 1961? The Revenue contended that the salary paid for the off-period outside India was taxable. The Revenue also implicitly supported the charging of interest under Section 234-B. The assessee contended that the salary paid for the off-period outside India was not taxable in India and that interest under Section 234-B was not leviable. The Tribunal's decision favored the assessee on both counts.

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.114 of 2001 (Old No.116 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. Cook R.K. C/o Arthur Anderson & Co. Maker Towers, P.Cuffe Parade, Bombay

……Respondent

Dated: December 6, 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 29.09.1999, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘C’ Delhi) in ITA No.4306(Del) of 1993. The dispute relates to the Assessment Year 1990-91. 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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