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

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ITA/75/2004HC UttarakhandUKHC01003845200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own Division Bench judgment in Commissioner of Income Tax and another 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 found this precedent directly applicable to the present case, leading to the dismissal of the appeal. The specific reasoning for the applicability of Section 9(1)(ii) to "off period" salary was established in the cited case. No issues were expressly left undecided.

What were the facts?

The appeal was filed by M/s B J Services Co. Middle East, acting as an agent for Mr. Mourad Fahim, 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, the Commissioner of Income Tax (Appeals), and the Assistant Commissioner of Income Tax. The core of the dispute revolves around the taxability of an amount paid for an "off period".

What were the issues?

1. 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 in view of the explanation to section 9(1)(ii), when no service was rendered in India during the "off period"? 2. Whether the subsequent amendment to the explanation, effective from April 1, 2000, which regards amounts paid for "off period" or leave period as income accrued in India only from April 1, 2000, supports the assessee's position? Assessee's Contention: The assessee 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 April 1, 2000, which specifically makes "off period" payments taxable from that date, implying it was not taxable prior to that amendment. Revenue's Contention: The judgment does not record any specific contentions made by the revenue.

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. 75 of 2004 M/s B J Services Co. Middle East as agent of Mr. Mourad Fahim, 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. 38 (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.)

16.09.

2005 16.09.2005 A

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