READINGandBATES DRILING CO.AGENT MR.MICHAEL SCHMIDT vs. THE COMMISSIONER OF INCOME TAX

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ITA/116/2004HC UttarakhandUKHC01003856200428 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own previous judgment in Commissioner of Income Tax vs. Sedco Forex International Drilling Co. Ltd. and connected cases. In that precedent, a Division Bench of the High Court had held that salary paid for an '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 decision.

What were the facts?

The appellant, M/s Reading & Bates Drilling Co., acting as agent for Mr. Michael Schmidt, filed an appeal against an order dated March 26, 2004, passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’. The appeal pertains to the Assessment Year 1997-1998. The core of the dispute involves the taxability of salary paid to the appellant during an 'off period'. The appellant is the assessee, and the respondent is the Commissioner of Income Tax, Dehradun. The procedural history indicates the matter reached the High Court after the Tribunal's decision.

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 Contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the appeal itself implies a challenge to the Tribunal's finding regarding the taxability of 'off period' salary. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue before the High Court. However, the revenue would have supported the Tribunal's order holding the 'off period' salary as taxable 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. 116 of 2004 M/s Reading & Bates Drilling Co. as agent of Mr. Michael Schmidt 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. 1522 /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 is 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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