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

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ITA/49/2004HC UttarakhandUKHC01003819200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own prior Division Bench 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, 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 the present case to be on similar footing and applied the ratio decidendi of the Sedco Forex case. The operative direction was to dismiss the appeal.

What were the facts?

The appeal was filed by M/s B J Services Co. Middle East, acting as the agent of Mr. Harati S.M., 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 assessee is challenging the Tribunal's decision to treat an amount paid for an "off period" as income earned in India. The procedural history involves the assessee filing an appeal against the Tribunal's order, which was heard by the High Court of Uttaranchal at Nainital.

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) of the Income Tax Act, 1961, when no services were rendered in India during the off period? Assessee's Contention: The assessee argued that the amount paid for the "off period" should not be treated as income earned in India. They relied on the fact that no services were rendered in India during this period. Furthermore, they pointed to the subsequent amendment to the explanation of Section 9(1)(ii) effective from 01.04.2000, which clarifies that amounts paid for "off period" or leave period are regarded as income accrued in India only from that date onwards, implying it was not the case for the assessment year in question. 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.49 of 2004 M/s B J Services Co. Middle East as agent of Mr. Harati S.M. 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 03.02.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’, New Delhi in I.T.A. No. 50 to 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.

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.)

14.09.

2005

14.09.

2005 A

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