READING and BATES DRILING CO.AGENT MR. EGON NIELSON vs. THE COMMISSIONER OF INCOME TAX

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ITA/120/2004HC UttarakhandUKHC01003859200428 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own prior Division Bench judgment in Commissioner of Income Tax vs. Sedco Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320. In that precedent, the court had held that salary paid for the 'off period' constituted income earned in India, specifically for services rendered in India, and was therefore taxable under Section 9(1)(ii) of the Income Tax Act, 1961. The High Court found no reason to deviate from this established legal position. The operative direction was the dismissal of the appeal, affirming the Tribunal's order.

What were the facts?

The appellant, M/s Reading & Bates Drilling Co. as agent of Mr. Egon Nielson, filed an appeal against the order dated 26.03.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi. The appeal pertains to Assessment Year 1997-1998. The core of the dispute revolves around the taxability of 'off period' salary paid to the appellant in India. The procedural history indicates that the appeal was filed before the High Court of Uttaranchal at Nainital.

What were the issues?

1. Whether on the facts and circumstances of the case, the Tribunal erred in law in holding that the “off period” salary paid to the appellant was liable to tax in India, turning on the interpretation of Section 9(1)(ii) of the Income Tax Act, 1961. Assessee's Contention: The assessee (appellant) argued that the Tribunal erred in law by holding the 'off period' salary taxable in India. Revenue's Contention: The judgment does not explicitly record the revenue's contentions. However, it relies on a previous judgment that held 'off period' salary as income earned in India.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii)

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. 120 of 2004 M/s Reading & Bates Drilling Co. as agent of Mr. Egon Nielson C/o Nangia & Company, B-57, Soami Nagar, New Delhi- 110 017 … Appellant Versus The Commissioner of Income Tax, Dehradun. … Respondent Miss. Krishi Shukla / Dr. Udyog Shukla, Advocates for the appellant. Mr. S.K.Posti, Advocate for the respondent. Coram: Hon. Cyriac Joseph, C.J. Hon. J.C.S. Rawat, J.

JUDGMENT

CYRIAC JOSEPH, C.J. (Oral)

1.

This appeal is filed against the order dated 26.03.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi in I.T.A. No. 1526 /Del / 2000. The appellant is the assessee. The dispute relates to the Assessment Year 1997-1998. 2. The substantial questions of law raised in the appeal are as follows:

Whether on the facts and circumstances of the case, the Tribunal erred in law in holding that the “off period” salary paid to the appellant was liable to tax in India.

3.

In Commissioner of Income Tax- and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320, a Division Bench of this Court held that the payment of salary for “off period” was income earned in India, i.e., for services rendered in India

under Section 9(1)(ii) and that “off period salary” was taxable under section 9(1)(ii) of the Income Tax Act, 1961. 4. Following the above mentioned judgment of a Division Bench of this Court, this appeal is dismissed.

(J.C.S. Rawat, J.) (Cyriac Joseph, C.J.)

28.09.

2005

28.09.

2005 A

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