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

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ITA/143/2005HC UttarakhandUKHC01003021200501 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 two questions of law as follows: 1. Regarding 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 that judgment, the question was answered in favour of the Revenue. Therefore, on this issue, the Tribunal's finding was upheld, implying the assessee had failed to satisfy the condition. 2. Regarding the second question, the Court noted that this issue 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". The Apex Court's decision was in favour of the assessee. Therefore, this question was answered in favour of the assessee. The appeal was disposed of in view of these decisions.

What were the facts?

This Indian ITAT judgment concerns an appeal filed by Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. Michael Timms, against an order dated January 28, 2005, passed by the Income Tax Appellate Tribunal (Bench 'E', New Delhi). The appeal pertains to the assessment year 1998-99. The appellant is a company incorporated in Panama. The respondents are the Commissioner of Income Tax, Dehradun, and the Deputy Commissioner of Income-Tax, Special Range, Dehradun. The appeal was preferred against the consolidated order of the Tribunal. The parties agreed to argue only two specific questions of law.

What were the issues?

The Tribunal was asked to decide two questions of law: 1. Whether 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' under Section 9(1)(ii) read with the Explanation as it stood at the relevant time. Contentions: * **Assessee:** The judgment does not record specific contentions for the assessee on this issue, but the framing of the question implies the assessee argued they *did* satisfy the condition. * **Revenue:** The judgment does not record specific contentions for the revenue on this issue, but the framing of the question implies the revenue argued the assessee *failed* to satisfy the condition. 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. Contentions: * **Assessee:** The judgment does not record specific contentions for the assessee on this issue. * **Revenue:** The judgment does not record specific contentions for the revenue on this issue.

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.143 of 2005

Sedco Forex International Drilling Inc. as agent of its employee Mr. Michael Timms 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

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