ENSCO MARITIME LIMITED vs. THE COMMISSIONER OF INCOME TAX

PDF · subscribers
ITA/1/2005HC UttarakhandUKHC01002957200501 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 framed questions of law based on prior judicial pronouncements. For the first question, concerning the condition that remuneration is not deductible in computing profits chargeable to tax in another State, the Court held that this question 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" (Income Tax Appeal No.165 of 2001) decided on July 22, 2005. That judgment answered the question in favour of the Revenue. For the second question, regarding the taxability of off-period salary under section 9(1)(ii) read with the Explanation, 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). This Supreme Court judgment answered the question in favour of the assessee. Consequently, the appeal was disposed of in light of these decisions.

What were the facts?

The appellant, Ensco Maritime Ltd. (formerly Dual Offshore Ltd.), acting as an agent for Mr. Joel Mario Miranda, filed an appeal against the consolidated order dated October 14, 2004, passed by the Income Tax Appellate Tribunal (ITAT), Bench 'F', New Delhi. The appeal pertains to the assessment year 1998-99. The parties agreed that only two specific questions of law were to be determined by the High Court, and the rest were not pressed. The dispute involves the taxability of remuneration and off-period salary.

What were the issues?

The High Court had to decide two questions of law: 1. Whether the learned ITAT erred in law by holding that the appellant 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 active employment, under the specified section of the Income Tax Act. Contentions: Assessee: The assessee did not explicitly argue their case for these specific issues as the judgment relies on previous decisions. However, their implied position aligns with the favorable outcomes in those cited cases. Revenue: The revenue's position was that the conditions for non-deductibility of remuneration were not met, and off-period salary was taxable, as reflected in the ITAT's order which the appeal challenges.

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.01 of 2005

Ensco Maritime Ltd. (earlier known as Dual Offshore Ltd.) As agent of Mr. Joel Mario Miranda 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 14.10.2004 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 assesse.

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 →