M/S B J S.CO. M.EAST AGENT MACARIO A.C. vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/201/2004HC UttarakhandUKHC01003875200405 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 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 found that the present case was on similar facts and circumstances, leading to the dismissal of the appeal. The specific arguments regarding the retrospective application of the amendment to Section 9(1)(ii) were implicitly rejected by the reliance on the earlier judgment.

What were the facts?

The appeal is filed by the assessee, M/s B J Services Co. Middle East, as agent of Mr. Macario A.C., against the order dated 28.07.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi. The dispute pertains to the Assessment Year 1994-95. The core issue revolves around whether the amount paid for an "off period" should be treated as income earned in India. The assessee contends that no services were rendered in India during this "off period". The revenue's position, as reflected in the Tribunal's order, is that such payments constitute income accrued in India.

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, especially when no service was rendered during the "off period" in India? 2. Whether the subsequent amendment to the explanation to Section 9(1)(ii) of the Income Tax Act, 1961, effective from 01.04.2000, which regards amounts paid for "off period" or leave period as income accrued in India only from that date, supports the assessee's contention that such payments were not taxable in India for the Assessment Year 1994-95? Assessee's Contention: The assessee argued that no services were rendered in India during the "off period" and highlighted that the amendment to Section 9(1)(ii) treating "off period" payments as income accrued in India was effective only from 01.04.2000, implying it should not apply retrospectively to the Assessment Year 1994-95. Revenue's Contention: The revenue, through the Tribunal's order, treated the amount paid for the "off period" as income earned in India under Section 9(1)(ii). No specific arguments for the revenue are detailed in the provided text, but their stance is implicit in the Tribunal's decision.

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. 201 of 2004 M/s B J Services Co. Middle East as agent of Mr. Macario A.C., Vikas Centre, 2nd Floor, S.V. Road, Santacruz (W) Mumbai. ……Appellant Versus 1. Income Tax Appellate Tribunal Delhi Bench ‘F’ 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 28.07.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi in I.T.A. No. 4116/Del / 1998. The appellant is the assessee. The dispute relates to the Assessment Year 1994-95. 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.)

17.09.

2005 17.09.2005 A

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