M/S B J SERVICES CO. AGENT STEPAN VUJEC vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

PDF · subscribers
ITA/74/2005HC UttarakhandUKHC01001728200505 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 reported in (2003) 264 ITR 320. In that earlier decision, 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 found that the present appeal was squarely covered by this precedent. Consequently, the Tribunal's order treating the amount paid for the "off period" as income earned in India for the Assessment Year 1999-2000 was upheld. No issue was expressly left undecided.

What were the facts?

The appeal is filed by M/s B. J. Services Co. Middle East, acting as the agent of Mr. Stjepan Vujec, against the 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 assessee is challenging the Tribunal's decision to treat an amount paid for an "off period" as income earned in India. The assessee contends that no services were rendered in India during this off period and that a subsequent amendment to the explanation of Section 9(1)(ii) of the Income Tax Act, 1961, effective from 01.04.2000, clarifies that such payments are only regarded as income accrued in India from that date onwards.

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 admittedly no service has been rendered during the off period in India? 2. Inasmuch as the subsequent amendment made in the explanation to Section 9(1)(ii) w.e.f. 01.04.2000 shows that the amount paid for "off period" or leave period is regarded as income accrued in India only w.e.f. 01.04.2000, is the Tribunal's decision legally justified for the Assessment Year 1999-2000? Assessee's Contentions: The assessee argued that no services were rendered in India during the "off period." They also highlighted that a subsequent amendment to the explanation of Section 9(1)(ii) of the Income Tax Act, 1961, effective from 01.04.2000, specifically treats payments for "off period" or leave as income accrued in India only from that date, implying it was not the case for the Assessment Year 1999-2000. Revenue's Contentions: The judgment does not record specific contentions made by the revenue. However, the revenue would have supported the Tribunal's order treating the payment as income earned in India.

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. 74 of 2005 M/s B. J. Services Co. Middle East, as agent of Mr. Stjepan Vujec, 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 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. 3366/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

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 →