M/S HUGHES SERVICE F.E. PVT.LTD AS AGENT.R.ALLAN vs. INCOME TAX APPELLATE TRIBUNAL and ORS

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ITA/90/2002HC UttarakhandUKHC01007278200305 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own Division Bench judgment in Commissioner of Income Tax vs. Sedco Forex International Drilling Co. Ltd. and connected cases (2003) 264 ITR 320. In that precedent, the Court had held that payment of salary for an "off period" constituted income earned in India for services rendered in India under Section 9(1)(ii) and was taxable under that section. Therefore, the Tribunal was justified in treating the "off period" salary as income taxable in India for the Assessment Year 1990-91. The operative direction was the dismissal of the appeal.

What were the facts?

The appeal was filed by M/s Hughes Services (Far East) Pvt. Ltd., acting as the agent of Mr. Rostant Allan, against an order dated July 29, 2002, passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘B’. The dispute pertains to the Assessment Year 1990-91. The assessee is challenging the ITAT's decision to treat an amount paid for an "off period" as income earned in India. The procedural history leading to this appeal involves the ITAT's order, which is now under challenge before the High Court.

What were the issues?

The primary question of law before the High Court was: Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in treating the amount paid for the "off period" as income earned in India, in view of the explanation to Section 9(1)(ii) of the Income Tax Act, 1961, especially since no services were rendered in India during the off period, and considering that a subsequent amendment effective from April 1, 2000, regards such payments as income accrued in India only from that date? The appellant argued that no services were rendered in India during the "off period" and pointed to the subsequent amendment of the explanation to Section 9(1)(ii) which clarified that payments for "off period" or leave period are regarded as income accrued in India only from April 1, 2000. The revenue's contentions were not explicitly recorded in the judgment.

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. 90 of 2002 M/s Hughes Services (Far East) Pvt. Ltd. as agent of Mr. Rostant Allan, Mumbai ……Appellant Versus 1. Income Tax Appellate Tribunal Delhi Bench ‘B’ New Delhi. 2. Commissioner of Income Tax(Appeals) Dehradun. 3. Assistant Commissioner of Income Tax, Special Circle, Dehradun …Respondents Mr. V.K. Bist, Advocate for the appellant. Mr. S.K.Posti, Advocate for the respondents. 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 29.07.2002 passed by the Income Tax Appellate Tribunal , Delhi Bench ‘B’, New Delhi in I.T.A. No. 3077/Del/1994. The appellant is the assessee. The dispute relates to the Assessment Year 1990-91. 2. The substantial question of law raised in the appeal is as follows:

“Whether on the facts and in the circumstances of the case, Tribunal is legally justified in treating the amount paid for the “off period” as the income earned in India in view of the explanation to section 9(1)(ii) while admittedly no service has been rendered during off period in India and inasmuch as, the subsequent amendment made in the explanation w.e.f. 01.04.2000 shows that the amount paid for “off period” or leave period is regarded as the income accrued in India only w. e. f. 01.04.2000?”

3.

In Commissioner of Income Tax- and another Vs. Sedco Forex International Drilling Col. 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.)

09.09.

2005 09.09.2005 A

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