M/S B.J. SERVICE CO. AS AGENT MR. JAYA CHANDER vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/28/2004HC UttarakhandUKHC01003797200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own earlier Division Bench judgment in Commissioner of Income Tax and another Vs. SEDCO Forex International Drilling Co. Ltd. and connected cases reported in (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) of the Income Tax Act, 1961, and was therefore taxable. The High Court applied this ratio decidendi to the present case, finding the Tribunal legally justified in treating the amount paid for the "off period" as income earned in India. No specific issue was left undecided.

What were the facts?

The appellant, M/s B. J. Services Co. Middle East, acting as an agent for Mr. Jayachander, filed an appeal against an order dated 03.02.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’. The dispute pertains to the Assessment Year 1997-98. The core of the dispute involves the taxability of an amount paid for an "off period". The appellant contended that no services were rendered in India during this off period and highlighted a subsequent amendment to the explanation of Section 9(1)(ii) of the Income Tax Act, 1961, which clarified that such payments are taxable in India only from April 1, 2000.

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, in view of the explanation to Section 9(1)(ii) of the Income Tax Act, 1961? This question turns on Section 9(1)(ii). Assessee's Contention: The assessee argued that no services were rendered in India during the "off period". They further contended that a subsequent amendment to the explanation of Section 9(1)(ii) effective from April 1, 2000, indicates that amounts paid for "off period" or leave period are regarded as income accrued in India only from that date, implying it was not taxable in India for the Assessment Year 1997-98. Revenue's Contention: The judgment does not record specific arguments made by the revenue. However, the Tribunal's decision, which is being appealed, treated the amount 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. 28 of 2004 M/s B. J. Services Co. Middle East, as agent of Mr. Jayachander, Vikas Centre, 2nd Floor, S.V. Road, Santacruz (W) Mumbai. ……Appellant Versus 1. Income Tax Appellate Tribunal, Delhi Bench ‘D’ 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 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 03.02.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’, New Delhi in I.T.A. No. 50 to 81/Del/2000. The appellant is the assessee. The dispute relates to the Assessment Year 1997-98. 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.)

13.09.

2005 13.09.2005 G

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