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

PDF · subscribers
ITA/20/2004HC UttarakhandUKHC01003789200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own previous 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, a Division Bench of the High 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's reasoning in the present case was that the principle laid down in the SEDCO Forex case was directly applicable. The ratio decidendi is that "off period" salary is taxable under Section 9(1)(ii) as income earned in India, irrespective of whether services were rendered in India during that specific period, if the employment contract or understanding implies services rendered in India. 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. Gordon Rushinko, 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 whether an amount paid for an "off period" should be treated as income earned in India. 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) effective from 01.04.2000, which specifically regards amounts paid for "off period" or leave as income accrued in India only from that date onwards.

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), given that no service was rendered in India during the off period? 2. Whether the subsequent amendment to the explanation of Section 9(1)(ii) effective from 01.04.2000, which regards amounts paid for "off period" or leave as income accrued in India only from that date, impacts the taxability for the Assessment Year 1997-98? Assessee's Contention: 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. The assessee also argued that the subsequent amendment to Section 9(1)(ii) effective from 01.04.2000, which specifically addresses "off period" payments, indicates that such payments were not considered income accrued in India prior to that amendment. Revenue's Contention: The judgment does not record specific contentions from 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. 20 of 2004 M/s B. J. Services Co. Middle East, as agent of Mr. Gordon Rushinko, 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. 50-81/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

More judgments on Section 9(1)(ii)

All 123 judgments and leading authorities on Section 9(1)(ii) →

Recent GST High Court judgments

Search GST case law →