ENSCO MARITIME LTD. vs. COMMISSIONER OF INCOME TAX DEHRADUN

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ITA/189/2004HC UttarakhandUKHC01004954200401 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
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What did the High Court hold?

The High Court decided the appeal based on previous judgments. For the first question, concerning the deductibility of remuneration, the Court held that the issue had already been decided by a Division Bench of the same Court in the case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" (decided on July 22, 2005, in Income Tax Appeal No.165 of 2001). In that precedent, the question was answered in favour of the Revenue. For the second question, regarding the taxability of off-period salary, the Court referred to the decision of the Hon'ble Apex Court in "Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another" (JT 2005(9) SC 639). Following the Apex Court's ruling, this question was answered in favour of the assessee. Consequently, the appeal was disposed of in light of these decisions.

What were the facts?

The appeal was filed by Ensco Maritime Ltd., acting as the agent of Mr. Winnie Albert Gany Martin, against the consolidated order dated July 26, 2004, for the assessment year 1998-99, passed by the Income Tax Appellate Tribunal (Bench 'F', New Delhi). The appellant and the respondent (The Commissioner of Income Tax, Dehradun) agreed that only two questions of law were to be determined by the High Court, and the rest were not pressed. The appeal was heard by a Division Bench of the High Court of Uttaranchal at Nainital.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether the learned I.T.A.T. has erred in law in holding that the appellant has failed to satisfy the condition that ‘the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State’? This question turns on the interpretation of provisions related to the deductibility of remuneration in international taxation. 2. Whether the Tribunal was right in holding that off-period salary was not taxable under section 9(1)(ii) read with the Explanation as it stood at the relevant time? This question concerns the taxability of salary earned during periods when an employee is not actively working. Assessee's contentions were not explicitly recorded for either question. The Revenue's contentions were also not explicitly recorded. However, the judgment implies that the Tribunal had made findings on these issues which were being challenged.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii)

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No.189 of 2004

Ensco Maritime Ltd. (earlier known as Dual Offshore Ltd.) As agent of Mr. Winnie Albert Gany Martin C/o Nangia & Company, Chartered Accountants, 75/7 Rajpur Road, Dehradun ………..Appellant Versus

The Commissioner of Income Tax, Dehradun ………… Respondents Ms. Krishi Shukla, Advocate for the appellant. Mr. S.K. Posti, Advocate for the respondents.

Dated: December 01, 2005

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

Hon. J.C.S. Rawat, J.

Both the parties are ready to argue the matter today.

2.

This appeal has been preferred against the consolidated order dated 26.07.2004 for the assessment year 1998-99, passed by the Income Tax Appellate Tribunal, (Bench ‘F’ New Delhi).

3.

The learned counsel for the parties agree that the following only two questions of law arise in this appeal for the determination. They do not press the rest of the questions framed in the appeal: -

1.

Whether the learned I.T.A.T. has erred in law in holding that the appellant has failed to satisfy the

condition that ‘the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State’?

2.

Whether the Tribunal was right in holding that off period salary was not taxable under section 9(1)(ii) read with the Explanation as it stood at the relevant time?

4.

So far as the question No.1 is concerned, this question has already been decided by Division Bench of this Court {in which one of us (P.C. Verma,J.) was a member} in case of “Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another”, which was decided on 22.07.2005 in Income Tax Appeal No.165 of 2001. In the said judgment, the question framed in the said appeal was answered in favour of the Revenue.

5.

The second question has also been decided by the Hon’ble Apex Court in Civil Appeal Nos.351-355 of 2005 “Sedco of Income Tax, Dehradun and Another, JT 2005(9) SC 639”. In view of the aforesaid decision of the Hon’ble Apex Court, this question is answered in favour of the assessee.

6.

In view of the above, we dispose of the appeal accordingly. (J.C.S. Rawat, J.) (P.C. Verma, J.) Rajeev Dang

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