SEDCO FOREX INTERNATIONAL,AGENT JAMES ROY vs. COMMISSIONER OF INCOME TAX

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ITA/104/2004HC UttarakhandUKHC01004883200430 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 rulings. For the first issue, concerning the deductibility of remuneration in another state, 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 22.07.2005), which answered this question in favour of the Revenue. For the second issue, regarding the taxability of off-period salary under Section 9(1)(ii), 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 decision answered the second question in favour of the assessee. Consequently, the appeal was disposed of in view of these pronouncements.

What were the facts?

The appeal was filed by Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. James Roy Alford, a Panamanian company. The appeal challenged a consolidated order dated January 30, 2004, passed by the Income Tax Appellate Tribunal (Bench 'F', New Delhi) for the assessment year 1994-95. The appellant and respondents were represented by their respective counsel. The High Court noted that both parties were ready to argue the matter. The parties agreed that only two specific questions of law arose for determination, and the rest were not pressed.

What were the issues?

The Tribunal had to decide two questions of law. The first question was 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' (Section 9(1)(ii) of the Income Tax Act, 1961). The second question was whether off-period salary was taxable under Section 9(1)(ii) read with the Explanation as it stood at the relevant time. The appellant did not press other questions. The judgment does not record specific arguments made by the assessee or the revenue for each question, but it refers to prior decisions that addressed these issues.

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.104 of 2004

Sedco Forex International Drilling Inc. as agent of its employee Mr. James Roy Alford 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 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 1994-95, 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.)

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