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

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ITA/48/2004HC UttarakhandUKHC01003818200405 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 vs. Sedco Forex International Drilling Co. Ltd. (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 for services rendered in India under Section 9(1)(ii) of the Income Tax Act, 1961, and was therefore taxable. The High Court applied this ratio decidendi to the present case, finding the "off period" salary taxable under Section 9(1)(ii). No specific mention was made of the argument regarding the prospective nature of the amendment to the explanation.

What were the facts?

The appellant, M/s B J Services Co. Middle East, acting as an agent for Mr. Barry Doyle, filed an appeal against an order dated 03.02.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’. The appeal pertains to the Assessment Year 1998-99. The core of the dispute revolves around the taxability of amounts paid for an "off period" to the assessee. The assessee contended that no services were rendered in India during this off period. The procedural history involves the Tribunal's order, which is now under challenge before the High Court.

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) of the Income Tax Act, 1961, despite no services being rendered in India during that period? 2. Whether the amount paid for the "off period" is taxable in India, considering that the subsequent amendment to the explanation to Section 9(1)(ii) effective from 01.04.2000 specifically regards such payments as income accrued in India only from that date? Assessee's Contention: The assessee argued that no services were rendered in India during the "off period," and therefore, the payment for this period should not be treated as income earned in India. They also highlighted that the amendment to the explanation of Section 9(1)(ii) which taxes "off period" payments was effective only from 01.04.2000, implying it should not apply retrospectively to the assessment year in question. Revenue's Contention: The judgment does not record specific contentions from the revenue's side, other than implicitly supporting the Tribunal's order.

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. 48 of 2004 M/s B J Services Co. Middle East as agent of Mr. Barry Doyle, 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 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.) 14.09.2005

14.09.

2005

A

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