M/S BJS.CO.M.EAST AS AGENTOF MR.ORLANDO G. DAWID vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/199/2004HC UttarakhandUKHC01003873200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the payment for the "off period" is income earned in India, taxable under Section 9(1)(ii) of the Income Tax Act, 1961. This decision was based on a prior judgment by 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. In that precedent, it was held that "off period salary" is income earned in India for services rendered in India under Section 9(1)(ii). Consequently, following this binding precedent, the High Court dismissed the appeal. No issue was expressly left undecided.

What were the facts?

The assessee, M/s B J Services Co. Middle East, acting as an agent for Mr. Orlando G. David, filed an appeal against an order dated 28.07.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi. The appeal pertains to the Assessment Year 1994-95. The dispute centers on whether the amount paid for an "off period" should be treated as income earned in India. The procedural history involves the Tribunal's order, which is now under challenge before the High Court. The amount in dispute is not explicitly stated.

What were the issues?

The Tribunal had to decide one substantial question of law: Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in treating the amount paid for the "off period" as income earned in India under the explanation to Section 9(1)(ii), given that no services were rendered in India during the "off period" and that the subsequent amendment to the explanation, effective from 01.04.2000, regards "off period" or leave period payments as income accrued in India only from that date onwards. The assessee's contention is that since no services were rendered in India during the "off period," the payment for this period should not be treated as income earned in India. They highlight that the amendment to Section 9(1)(ii) making such payments taxable in India was effective only from 01.04.2000, implying it should not apply retrospectively to the assessment year in question. The revenue's arguments 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. 199 of 2004 M/s B J Services Co. Middle East as agent of Mr. Orlando G. David, Vikas Centre, 2nd Floor, S.V. Road, Santacruz (W) Mumbai. ……Appellant Versus 1. Income Tax Appellate Tribunal Delhi Bench ‘F’ 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/ Mr. A. Chatterjee, 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 28.07.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi in I.T.A. No. 4112/Del / 1998. The appellant is the assessee. The dispute relates to the Assessment Year 1994-95. 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 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.)

17.09.

2005 17.09.2005 A

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