THE COMMISSIONER OF INCOME TAX and ANR. vs. SAIPEM SPA AS AGENT MR. GALLINARI ENRISO

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ITA/317/2000HC UttarakhandUKHC01025243200329 November 2005Author: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court followed its own prior Division Bench judgment in *Commissioner of Income Tax and another Vs. SEDCO Forex International Drilling Co. Ltd. and connected cases* reported in (2003) 264 ITR 320. In that judgment, it was held that free boarding facilities provided by the employer on a rig were not a perquisite under Section 17(2)(iii) and their value could not be added to the assessee's income. Furthermore, the imposition of interest under Section 234-B was held to be unjustified without a proper hearing and reasons. Based on this precedent, the High Court dismissed the present appeal. No issues were expressly left undecided.

What were the facts?

The appeal by the Commissioner of Income Tax and A.C.I.T. challenges an order dated March 22, 2000, passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The dispute pertains to Assessment Year 1990-91 and concerns Mr. Gallinari Enrico, represented by Saipem SPA. The core issues revolve around whether free boarding and lodging provided on a rig at sea constitute a perquisite and the legality of charging interest under Section 234-B when the entire income was subject to Tax Deducted at Source (TDS). The High Court of Uttaranchal at Nainital is hearing this appeal.

What were the issues?

The High Court was required to decide two substantial questions of law: 1. Whether, on the facts and circumstances, the ITAT was legally justified in holding that free boarding and lodging facilities provided by the employer on board the rig in high seas cannot be construed as a perquisite, under Section 17(2)(iii) of the Income Tax Act. 2. Whether, on the facts and circumstances, the ITAT was legally justified in holding that interest under Section 234-B of the Income Tax Act cannot be charged since the entire income of the assessee was subject to TDS, whereas this interest is chargeable on assessed tax as defined by Explanation I below Section 234-B. The appellants (Revenue) did not present arguments in the provided text. The respondent (Assessee) implicitly argued that the ITAT's findings on both issues were correct. The judgment references a prior High Court decision in *Commissioner of Income Tax and another Vs. SEDCO Forex International Drilling Co. Ltd. and connected cases*.

Which sections of the Income-tax Act were involved?

Section 17(2)(iii),Section 234-B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Appeal No.457 of 2001 (Old No. 317/2000) 1. The Commissioner of Income Tax Meerut 2. A.C.I.T., Special Circle Dehradun ... Appellants Versus Saipem SPA as agent of Mr. Gallinari Enrico, Arthur Andersen & Co. Bombay ... Respondent Mr. S. K. Posti, Advocate for the appellants. Coram: Hon. P. C. Verma, J. Hon. J.C.S. Rawat, J.

JUDGMENT

1.

This appeal is filed against the order dated 22.03.2000 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘SMC’, New Delhi in I.T.A. No. 4576/D/93. The dispute relates to the Assessment Year 1990-91. The assessee is Mr. Gallinari Enrico represented by Saipem SPA.

2.

The substantial questions of law raised in the appeal are as follows:

(iii) “Whether on the facts and circumstances of the case, the

Ld. ITAT was legally justified in holding that free boarding

and lodging facilities provided by the employer on board

the rig in high seas cannot be construed to be perquisite?”

(iv) “Whether on the facts and circumstances of the case, the

Ld. ITAT was legally justified in holding that interest u/s

234-B of the Income Tax Act cannot be charged since the

entire income of the assessee was subject to T.D.S. whereas

this interest is chargeable on assessed tax as defined by

Explanation I below Section 234-B?”

3.

that the imposition of interest under section 234-B was not justified without hearing and without reasons.

4.

Following the above-mentioned judgment of a Division Bench of this Court, we dismiss this appeal.

(J.C.S. Rawat, J.) (P.C. Verma, J.)

29.11.

2005 29.11.2005 LSR

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