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

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ITA/89/2005HC UttarakhandUKHC01001743200505 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own earlier 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, a Division Bench of the Court had held that payment of salary for the '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 that 'off period' salary was taxable under Section 9(1)(ii). The High Court found this precedent directly applicable to the present case. Therefore, the Tribunal's decision to treat the amount paid for the 'off period' as income earned in India was upheld. The operative direction was the dismissal of the appeal.

What were the facts?

The appellant, M/s B. J. Services Co. Middle East, acting as an agent for Mr. Igmedia Tumanda, 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 were the Income Tax Appellate Tribunal, the Commissioner of Income Tax (Appeals), and the Assistant Commissioner of Income Tax. The appellant was represented by Mr. V.K Bist, Senior Advocate, and Mr. A. Chatterji, Advocate, while the respondents were represented by Mr. S.K. Posti, Advocate.

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, and considering that the subsequent amendment to the explanation effective from 01.04.2000 regarded 'off period' or leave period payments as income accrued in India only from that date? The appellant 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 period. They also pointed to the amendment to the explanation of Section 9(1)(ii) effective from 01.04.2000, which specifically included payments for 'off period' or leave period as income accrued in India only from that date, implying it was not the case for the assessment year in question. The revenue's contentions were 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. 89 of 2005 M/s B. J. Services Co. Middle East, as agent of Mr. Igmedia Tumanda, 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. 3350/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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