COMMISSIONER OF INCOME TAX vs. M/S HUGHES SERVICE AS AGENT GRINDRED LEE

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ITA/67/2002HC UttarakhandUKHC01007270200302 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, Meerut and another Vs. ONGC as agent of Cooper Engineering Services International Incorporated and connected cases, reported in (2003) 264 ITR 340. In that precedent, the Court had held that the Tribunal was correct in its view that multiple-stage grossing-up of income was not applicable to notional income computed under Section 44BB read with Section 195A of the Income Tax Act, 1961. Therefore, the High Court found no legal infirmity in the Tribunal's order upholding the CIT(A)'s decision that there was no scope for grossing-up the notional income determined under Section 44BB.

What were the facts?

The appeal concerns the Assessment Year 1991-92 and is filed by the Commissioner of Income-Tax, Dehradun and the Assistant Commissioner of Income-Tax, Special Range, Dehradun against an order dated June 8, 2001, passed by the Income Tax Appellate Tribunal, Delhi Bench ‘SMC-II’. The assessee is Mr. Grindrod Lee, represented by M/s Huges Services (F.E.) Pte. Ltd., acting as his agent. The core of the dispute revolves around the applicability of grossing-up provisions to income determined notionally under Section 44BB of the Income Tax Act, 1961.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally correct in upholding the order of the CIT(A) that there is no scope for grossing-up and that income determined on a notional basis in accordance with Section 44BB of the Income Tax Act, 1961, was not liable to be grossed up under Section 195A of the Income Tax Act? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the High Court's decision implies that the assessee's position, as upheld by the CIT(A) and the Tribunal, was that grossing-up was not applicable. Revenue's Contention: The revenue, as the appellant, argued that the Tribunal was legally incorrect in upholding the CIT(A)'s order regarding the non-applicability of grossing-up to notional income under Section 44BB read with Section 195A of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 44BB,Section 195A

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. 67 of 2002 1. The Commissioner of Income-Tax, Dehradun and 2. The Assistant C.I.T., Special Range, Dehradun. … Appellants Versus M/s Huges services (F.E.) Pte. Ltd., As agent of Mr. Grindrod Lee, 16-A, Poesv Garden, Madras. … Respondent Mr. S.K.Posti, Advocate for the appellants. Mr. V.K. Bist, Senior Advocate a/b Mr. A. Chatterji, Advocate for the respondent. Coram: Hon. Cyriac Joseph, C.J. Hon. J.C.S. Rawat, J.

JUDGMENT

CYRIAC JOSEPH, C.J. (Oral)

1.

This appeal is against the order dated 8th June 2001 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘SMC-II’, in I.T.A. No. 1540/Del of 1994. The dispute relates to the Assessment Year 1991-

92.

The assessee is Mr. Grindrod Lee, represented by M/s Huges Services (F.E.) Ltd.

2.

The substantial question of law raised in the appeal as follows:

“Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal was legally correct in upholding the order of CIT (A) that there is no scope of Grossing- Up and that the income determined on notional basis in accordance with Section 44BB of Income Tax Act, 1961 was not liable to be Grossed Up under Section 195 A of the Income Tax Act?

3.

A

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