M/S B J SERVICES CO. AGENT SALIM LUBIS vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/73/2005HC UttarakhandUKHC01001727200505 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal. It held that the payment of salary for the 'off period' was income earned in India, taxable under Section 9(1)(ii) of the Income Tax Act, 1961, for services rendered in India. This decision was based on a prior judgment of a Division Bench of the same High Court in the case of Commissioner of Income Tax and another Vs. SEDCO Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320. The ratio decidendi is that 'off period salary' is taxable under Section 9(1)(ii) irrespective of whether services were rendered in India during that specific 'off period', as it relates to services rendered in India. No issue was left undecided.

What were the facts?

The assessee, M/s B. J. Services Co. Middle East, acting as an agent for Mr. Salim Lubis, 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 procedural history leading to this appeal involved the Tribunal's decision which is now under challenge by the assessee.

What were the issues?

The substantial 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 under the explanation to section 9(1)(ii), despite no services being rendered in India during that period? The assessee argued that the subsequent amendment to the explanation, effective from 01.04.2000, which regards 'off period' or leave period payments as income accrued in India, indicates that such treatment should only apply from that date onwards. The revenue's contentions are 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. 73 of 2005 M/s B. J. Services Co. Middle East, as agent of Mr. Salim Lubis, 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 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. 3365/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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