M/S B J SERVICES CO. AS AGENT OF MR. PETAR GAZDEK vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/91/2005HC UttarakhandUKHC01001745200505 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own prior judgment in Commissioner of Income Tax and another Vs. SEDCO Forex International Drilling Co. Ltd. and connected cases (2003) 264 ITR 320. In that precedent, a Division Bench of the High Court had held that payment of salary for an "off period" constituted income earned in India, taxable under Section 9(1)(ii) of the Income Tax Act, 1961, for services rendered in India. The High Court found that the "off period" salary was taxable under Section 9(1)(ii). Therefore, applying this established legal principle, the current appeal was dismissed. No specific finding was made on the impact of the subsequent amendment as the appeal was decided based on the existing law at the time.

What were the facts?

The appellant, M/s B. J. Services Co. Middle East, acting as agent for Mr. Petar Gazdek, filed an appeal against an order dated 27.10.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘C’. The dispute pertains to the Assessment Year 1999-2000. The appeal was filed before the High Court of Uttaranchal at Nainital. The respondents are the Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeals), Dehradun, and the Assistant Commissioner of Income Tax, Special Circle, Dehradun. The appellant is represented by Mr. V.K Bist, Senior Advocate, and Mr. A. Chatterji, Advocate, while the respondents are represented by Mr. S.K. Posti, Advocate.

What were the issues?

1. 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 under the explanation to section 9(1)(ii), despite no services being rendered in India during that period, and considering that a subsequent amendment effective from 01.04.2000 regards "off period" or leave period payments as income accrued in India only from that date? Assessee's Contention: The assessee argued that the amount paid for the "off period" should not be treated as income earned in India because no services were rendered in India during that time. They also highlighted that the explanation to section 9(1)(ii) was amended with effect from 01.04.2000, specifically to treat payments for "off period" or leave as income accrued in India only from that prospective date. Revenue's Contention: The judgment does not record any specific contentions made by the revenue.

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. 91 of 2005 M/s B. J. Services Co. Middle East, as agent of Mr. Petar Gazdek, Vikas Centre, 2nd Floor, S.V. Road, Santacruz (W), Mumbai. …Appellant Versus 1. Income Tax Appellate Tribunal Delhi Bench ‘C’ New Delhi. 2. Commissioner of Income Tax (Appeals), Dehradun. 3. Assistant Commissioner of Income Tax, Special Circle, Dehradun ….Respondents Mr. V.K Bist, Senior Advocate a/b Mr. A. Chatterji, 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 27.10.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘C’, New Delhi in I.T.A. No. 3371/Del/2001. The appellant is the assessee. The dispute relates to the Assessment Year 1999-2000. 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.

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.) 19.09.2005

19.09.

2005 A

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