SEDCO FOREX INTERNATIONAL AGENT G. FORTUNE vs. COMMISSIONER OF INCOME TAX

PDF · subscribers
ITA/108/2004HC UttarakhandUKHC01004887200430 November 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided the appeal based on prior judicial pronouncements. For the first issue, concerning whether the appellant failed to satisfy the condition that remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other 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" on July 22, 2005. That judgment answered the question in favor of the Revenue. For the second issue, regarding the taxability of off-period salary under section 9(1)(ii) read with the Explanation, the Court held that this question had been decided by 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". The Apex Court's decision answered this question in favor of the assessee. Consequently, the appeal was disposed of in light of these decisions.

What were the facts?

The assessee, Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. G Fortune, a Panamanian company, filed an appeal against the consolidated order dated January 30, 2004, for assessment year 1995-96, passed by the Income Tax Appellate Tribunal, Bench 'F', New Delhi. The appeal was preferred before the High Court of Uttaranchal at Nainital. The appeal challenged two specific questions of law that the parties agreed were the only ones arising for determination. The procedural history indicates that the High Court was considering the appeal against the ITAT's order.

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'? This question concerns the deductibility of remuneration and its taxability in another state. 2. Whether off-period salary was taxable under section 9(1)(ii) read with the Explanation as it stood at the relevant time? This question pertains to the taxability of salary earned during periods when the employee was not actively working. Contentions: Assessee: The assessee relied on the decision of the High Court in "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" (decided on 22.07.2005) for the first question, which was answered in favor of the Revenue. For the second question, the assessee 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". Revenue: The judgment does not record specific arguments for the Revenue on these two questions, but it notes that the High Court's prior decision on the first question was in favor of the Revenue.

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.108 of 2004

Sedco Forex International Drilling Inc. as agent of its employee Mr. G Fortune 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, Cuffee 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 Road, 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 1995-96, 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

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 →