SEDCO FOREX INTERNATIONAL DRILLING vs. THE COMMISSIONER OF INCOME TAX and ANR

PDF · subscribers
ITA/134/2005HC UttarakhandUKHC01003016200501 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided the two questions of law based on previous pronouncements. For the first question, the Court held that it had already been decided by a Division Bench of the same High Court in the case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" on July 22, 2005, in Income Tax Appeal No.165 of 2001. In that judgment, the question was answered in favour of the Revenue. For the second question, the Court noted that it had been decided by 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". In view of the Supreme Court's decision, this question was answered in favour of the assessee. The appeal was disposed of accordingly, with the first issue decided against the appellant and the second issue decided in favour of the appellant.

What were the facts?

The appellant, Sedco Forex International Drilling Inc., as agent of its employee Mr. Walter Summers, filed an appeal against the consolidated order dated January 28, 2005, passed by the Income Tax Appellate Tribunal (Bench 'E' New Delhi) for the assessment year 1998-99. The appeal was preferred before the High Court of Uttaranchal at Nainital. The appellant is a company incorporated in the Republic of Panama. The respondents are the Commissioner of Income Tax, Dehradun, and the Deputy Commissioner of Income-Tax, Special Range, Dehradun. The parties agreed that only two questions of law were to be determined in the appeal, and the rest were not pressed.

What were the issues?

The Tribunal had 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 outside the period of employment in India, under Section 9(1)(ii) of the Income Tax Act. Assessee's contentions: Not explicitly recorded for either issue, but the appeal itself implies disagreement with the Tribunal's findings on these points. Revenue's contentions: Not explicitly recorded for either issue, but the appeal itself implies disagreement with the Tribunal's findings on these points.

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.134 of 2005

Sedco Forex International Drilling Inc. as agent of its employee Mr. Walter Summers a company incorporated in the Republic of Panama having its registered office at No.8 Acquitino de la Guardia Street, City of Panama, Republic of Panama, Present Address C/o A.F. Ferguson & Co. Maker Towers, Cuffe Parade, Mumbai

............ Appellant

Versus

1.

The Commissioner of Income Tax, Dehradun

having office at Subhash Road, Dehradun-248001

2.

The Deputy Commissioner of Income-Tax,

Special Range, Dehradun having office

at Subhash Road, Dehradun-248001

........... Respondents

Mr. Menka Tripathi, 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 28.01.2005 for the assessment year 1998-99, passed by the Income Tax Appellate Tribunal, (Bench ‘E’ 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

More judgments on Section 9(1)(ii)

All 123 judgments and leading authorities on Section 9(1)(ii) →

Recent GST High Court judgments

Search GST case law →