THE COMMISSIONER OF INCOME TAX vs. SAIPEM SPA AS AGENT OF MR. ELEUTRIO SABATINO

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ITA/322/2000HC UttarakhandUKHC01015096200424 June 2004Author: OTHER2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided both questions of law in favour of the assessee and against the Department. The Court's decision was based on the submission by the Revenue's counsel that the appeal was covered by the Division Bench judgment in Commissioner of Income Tax and Another v. Sedco Forex International Drilling Co.Ltd. (ITA Vol. 264 page 321). Consequently, the ITAT's findings that free boarding and lodging on a rig at sea do not constitute a perquisite, and that interest under Section 234-B is not chargeable when the entire income is subject to TDS, were upheld. The ratio decidendi is that if a matter is squarely covered by a precedent of the same High Court, the appeal should be decided in accordance with that precedent. No order as to costs was made.

What were the facts?

This appeal concerns Assessment Year 1990-91. The Commissioner of Income Tax (the Revenue) appealed against an order of the Income Tax Appellate Tribunal (ITAT). The assessee is Saipem SPA, represented by Arthur Andersen & Company. The appeal was filed in the High Court of Uttaranchal. The core of the dispute involves whether free boarding and lodging provided to an employee on a rig in high seas constitutes a perquisite, and whether interest under Section 234-B of the Income Tax Act is chargeable when the entire income was subject to Tax Deducted at Source (TDS). The Revenue's counsel submitted that the matter was covered by a previous decision of the same High Court in CIT vs. Sedco Forex International Drilling Co. Ltd.

What were the issues?

The High Court was asked to decide the following questions of law: 1. Whether, on the facts and circumstances, the ITAT was legally justified in holding that free boarding and lodging facilities provided by the employer on board a rig in high seas cannot be construed as a perquisite, as per the relevant provisions of the Income Tax Act. 2. Whether, on the facts and circumstances, the ITAT was legally justified in holding that interest under Section 234-B of the Income Tax Act cannot be charged since the entire income of the assessee was subject to TDS, despite the explanation below Section 234-B defining assessed tax. Contentions: Assessee: No specific contentions are recorded for the assessee in the judgment. Revenue: The Revenue contended that the controversy was squarely covered by the Division Bench decision of the High Court in Commissioner of Income Tax and Another v. Sedco Forex International Drilling Co.Ltd., decided on October 9, 2003.

Which sections of the Income-tax Act were involved?

Section 234-B

AI-generated summary — verify with the full judgment below

Assessment Year 1990-91

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

I.T.A No. 452 of 2001 Old No. 322/2000

The Commissioner of Income Tax Meerut & another

… Appellants Versus Saipem SPA as agent of Mr. Eleuterio Sabatino, Arthur Andersen & Company, Bombay.

… Respondent

Mr. S.K. Posti, learned counsel for theTax Deptt. Mr. J.P. Joshi, learned counsel for the respondent.

Hon’ble M.M. Ghildiyal, J. Hon’ble Rajesh Tandon, J.

Heard learned counsel for the appellants. By means of this appeal following questions of law are raised for consideration of this Court:- 1- Whether on the facts and circumstances of the case, the Ld. ITAT was legally justified in holding that free boarding and lodging facilities provided by the employer on board to rig in high seas cannot be construed to be perquisite? 2- Whether on the facts and circumstances of the case, the Ld. ITAT was legally justified in holding that interest u/s 234-B of the I.T. Act cannot be charged since the entire income of the assessee was subject to T.D.S. whereas this interest is chargeable on assessed tax as defined by Explanation I below section 234-B? Counsel for the appellant has submitted that the controversy raised in this appeal is squarely covered by the decision of the Division Bench of this Court in Commissioner of Income Tax and Another v. Sedco Forex International Drilling Co.Ltd. decided on Oct. 9, 2003, reported in ITA Vol. 264 page 321 and the appeal may be decided in terms of the aforesaid decision of the Division Bench of this Court. Keeping in view of the aforesaid facts, the appeal is decided in terms of the decision of the Division Bench of this Court in Commissioner of Income Tax and Another v. Sedco Forex

International Drlling Co.Ltd. decided on Oct. 9 2003, reported in ITA Vol. 264 page 321. Accordingly, both the questions of law raised through this appeal are decided in favour of the asseessee and against the Department. No. Order as to costs.

(Rajesh Tandon, J.) (M.M. Ghildiyal, J.)

June 24, 2004. N.C.M.

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