THE COMMISSIONER OF INCOME TAX MEERUT and ANOTHER vs. SAIPEN SPA AS AGENT OF MR OLINI MAURIZIO

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ITA/314/2000HC UttarakhandUKHC01025241200301 December 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court followed its own previous judgment in the case of Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320. In that precedent, a Division Bench of the Court had held that free boarding facilities provided by the employer on a rig were not a perquisite under Section 17(2)(iii) and their value could not be added to the assessee's income. Furthermore, the Court had held that the imposition of interest under Section 234-B was not justified without proper hearing and reasons. Applying this precedent, the High Court dismissed the appeal. Both substantial questions of law were answered against the appellants and in favour of the assessee. The operative direction was the dismissal of the appeal.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Meerut, and A.C.I.T., Special Circle, Dehradun, against an order dated January 22, 2000, passed by the Income Tax Appellate Tribunal (Delhi Bench ‘SMC’) in ITA No. 4580(Del) of 1993. The assessment year in dispute is 1990-91. The respondent is Saipem SPA, acting as agent for Mr. Olini Maurizio, represented by Arthur Anderson & Co. The appeal challenges the Tribunal's decision regarding the taxability of free boarding and lodging facilities provided to the assessee on a rig at sea and the charging of interest under Section 234-B.

What were the issues?

The High Court was asked to decide two substantial questions of law: 1. Whether the learned Income Tax Appellate Tribunal was legally justified in holding that free boarding and lodging facilities provided by the employer on board a rig in high seas cannot be construed as a perquisite, under Section 17(2)(iii) of the Income Tax Act. 2. Whether the learned Income Tax Appellate Tribunal was legally justified in holding that interest under Section 234-B of the Income Tax Act cannot be charged when the entire income of the assessee was subject to Tax Deducted at Source (TDS), as opposed to interest being chargeable on assessed tax as defined by Explanation I below Section 234-B. The appellants (Revenue) argued that the free boarding and lodging constituted a perquisite and that interest under Section 234-B was chargeable. The judgment does not record specific arguments from the respondent (assessee) but implies their stance was in line with the Tribunal's decision.

Which sections of the Income-tax Act were involved?

Section 17(2)(iii),Section 234-B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 460 of 2001

( Old No.314 of 2000)

1.

The Commissioner of Income Tax, Meerut.

2.

A.C.I.T., Special Circle, Dehradun …Appellant Versus

Saipem SPA as agent of Mr. Olini Maurizio, Arthur Anderson & Co., Bombay …. Respondent Dated: December 07, 2005

Mr. S.K. Posti, Advocate for the appellants.

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

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

This appeal is against the order dated 22.01.2000, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘SMC’ New Delhi) in ITA No.4580(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: “Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding the free boarding and lodging facilities provided by the employer on board the rig in high seas cannot be construed to be perquisite? “

“Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding that interest under Section 234-B of the I.T. Act cannot be charged since the entire income of the assessee was subject to T.D.S. whereas this

interest is chargeable on assessed tax as defined by Explanation I below Section 234-B”?

3.

under Section 234-B was not justified without hearing and without reasons.

4.

Following the above-mentioned judgment of a Division Bench of this Court, we dismiss the appeal. Both the questions are answered against the appellants and in favour of the assessee.

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

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