SEDCO FOREX INTERNATIONAL,AGENT MICHEL BOUTEVIN vs. COMMISSIONER OF INCOME TAX

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ITA/102/2004HC UttarakhandUKHC01004881200430 November 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 pronouncements. For the first issue, concerning the deductibility of remuneration, the Court referred to its own Division Bench decision in the case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" (decided on July 22, 2005), which answered this question in favour of the Revenue. For the second issue, regarding the taxability of off-period salary, the Court relied on the Hon'ble Apex Court's decision 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, Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. Michel Boutevin, filed an appeal against a consolidated order dated January 30, 2004, passed by the Income Tax Appellate Tribunal (Bench 'F', New Delhi) for the assessment year 1996-97. The appeal was preferred before the High Court of Uttaranchal at Nainital. The parties agreed to argue only two specific questions of law, abandoning the rest. The appeal concerns the taxability of remuneration and off-period salary.

What were the issues?

The Tribunal had 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 90 of the Income Tax Act, 1961, read with the relevant Double Taxation Avoidance Agreement (DTAA). - Assessee's contention: Not recorded in the judgment. - Revenue's contention: Not recorded in the judgment. 2. Whether off-period salary was taxable under Section 9(1)(ii) read with the Explanation as it stood at the relevant time. - Assessee's contention: Not recorded in the judgment. - Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 90,Section 9(1)(ii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Appeal No. 102 of 2004

Sedco Forex International Drilling Inc. as agent of its employee Mr. Michel Boutevin 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 Assistant Commissioner of Income-Tax,

Special Range, Dehradun having office

at Subhash Raod, Dehradun-248001

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

Mr. Arvind Vashisth, Advocate for the appellants. Mr. S.K. Posti, Advocate for the respondents.

Dated: November 30, 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 30.01.2004 for the assessment year 1996-97, 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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