COMMISSIONER INCOME TAX vs. HALLIBURTON OF SHORE SERVICES

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ITA/91/2000HC UttarakhandUKHC01015039200415 May 2004Author: OTHER2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court, by referring to its own prior decision dated 9th October 2003 in Income Tax Appeal No. 57 of 2002 (Commissioner of Income Tax, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd.), held that the salary paid for the 'off period' was income earned in India for services rendered in India, thus taxable under Section 9(1)(ii) of the Income Tax Act, 1961. The Court noted that the employer company paid the entire salary, including for the off period, from the income of Indian operations, which indicated the intention of the contracting parties. Therefore, the entire salary for both periods was held to be taxable in India. The question was answered in the negative, in favour of the department and against the assessee.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Meerut, and another against Halliburton Offshore Services Inc., acting as the agent of Mr. Dietzen C., for the assessment year 1990-91. The case concerns the taxability of salary paid to the assessee for an 'off period' outside India. The High Court was to decide if the Income Tax Appellate Tribunal (ITAT) was legally correct in holding that this salary was not chargeable to Indian Income Tax under Section 9(1)(ii) of the Income Tax Act, 1961. The procedural history indicates the matter was decided based on a prior ruling of the same High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT was legally correct to hold that the salary paid to the assessee for the 'off period' outside India was not chargeable to Indian Income Tax in terms of Section 9(1)(ii) of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific arguments made by the assessee. The ITAT had held that the salary paid for the off period outside India was not chargeable to Indian Income Tax. Revenue's Contention: The revenue contended that the salary paid for the 'off period' outside India was indeed chargeable to Indian Income Tax under Section 9(1)(ii). The revenue relied on the High Court's decision in the case of Commissioner of Income Tax, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii)

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. 54 of 2001

(Old No. 91 of 2000)

The Commissioner of Income Tax, Meerut & another ……. Appellants Versus Halliburton Offshore Services Inc. As agent of Mr. Dietzen C., Bombay ……….. Respondent

Hon. P.C. Verma, A.C.J. Hon. Rajesh Tandon, J.

Mr. P.C.Maulekhi, learned counsel for Income Tax Department

The matter is squarely covered by our decision dated 9th October, 2003 in Income Tax Appeal No. 57 of 2002; The Commissioner of Income Tax, Dehradun & another V/s SEDCO Forex Internation Drilling Co. Ltd. The question raised before us is follows:

“Whether on the facts and in the circumstances of the case, Ld. ITAT was legally correct to hold that the salary paid to the assessee for the said off period outside India was not chargeable to Indian Income Tax Act in terms of section 9(1)(ii) of the Income Tax Act, 1961?” In our decision dated 9th October 2003 in Income Tax Act Appeal No. 57 of 2002; The Commissioner of Income Tax, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd., it has been held as under: “Therefore the payment of salary for OFF period was income earned in India i.e. for services rendered in India u/s 9(1)(ii). Lastly, we would like to point out that in this case the assessment records show that from the income of the Indian operations the salary in its entirety (including salary for the off period) has been paid by the employer Company. This conduct

shows the intention of the contracting parties. Hence the entire salary for both the periods was taxable in India u/s 9(1)(ii).”

For the reasons aforesaid, we answer the first question in the negative i.e. in favour of the department and against the assessee. Appeal is disposed of. No order as to costs.

(Rajesh Tandon, J.) (P.C. Verma, A.C.J.)

Dt. 15.05.2004 G

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