B.J.SERVICE CO. AS AGENT OF MR PET GAZDEK vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/51/2004HC UttarakhandUKHC01003821200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal. The decision was based on a prior judgment of a Division Bench of the same Court 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, i.e., for services rendered in India, under Section 9(1)(ii) of the Income Tax Act, 1961, and was therefore taxable. The High Court followed this binding precedent to dismiss the present appeal. No issues were left undecided.

What were the facts?

The appeal was filed by M/s B J Services Co. Middle East, acting as agent for Mr. Peter Gazdek, against an order dated January 29, 2004, passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’. The dispute pertains to the Assessment Year 1998-99. The appellant is the assessee, and the respondents are the Income Tax Appellate Tribunal, Commissioner of Income Tax (Appeals), and Assistant Commissioner of Income Tax. The procedural history involves the Tribunal's order which is now under challenge before the High Court.

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, despite no services being rendered in India during the "off period"? This issue turns on the interpretation of Section 9(1)(ii) and its explanation. The appellant's contention is that the amount paid for the "off period" should not be treated as income earned in India, especially since the subsequent amendment to the explanation, effective from April 1, 2000, specifically regards such payments as income accrued in India only from that date. 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. 51 of 2004 M/s B J Services Co. Middle East as agent of Mr. Peter Gazdek, 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/ 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 29.01.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’, New Delhi in I.T.A. No. 40/ Del/ 2000. The appellant is the assessee. The dispute relates to the Assessment Year 1998-99. 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.)

15.09.

2005 15.09.2005 A

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