COMMISSIONER INCOME TAX vs. HALLIBURTON OFFSHORES SERVICE

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ITA/123/2000HC UttarakhandUKHC01025153200311 May 2004Author: OTHER2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the salary paid to the assessee for the 'off period' outside India was chargeable to Indian Income Tax under section 9(1)(ii) of the Income Tax Act, 1961. The Court's reasoning was based on its prior decision in the case of Commissioner of Income Tax, Dehradun & another V/s SEDCO Forex International Drilling Co. Ltd. In that case, it was held that payment of salary for the 'off period' constituted income earned in India for services rendered in India. The Court further noted that the assessment records showed the entire salary, including for the 'off period', was paid from the income of Indian operations, indicating the intention of the contracting parties. Therefore, the entire salary for both periods was taxable in India. The question was answered in the negative, in favour of the department and against the assessee.

What were the facts?

This case involves an appeal by the Commissioner of Income Tax (Revenue) against an order of the Income Tax Appellate Tribunal (ITAT) concerning Assessment Year 1989-90. The assessee is Halliburton Offshore Services Inc., acting as agent for Mr. Grinnel F.G. The dispute centers on whether salary paid to the assessee for an 'off period' outside India was chargeable to Indian Income Tax. The High Court of Uttaranchal at Nainital is hearing the appeal. The procedural history indicates a prior decision by the High Court on a similar matter.

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 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? Assessee's Contention: The judgment does not record any specific arguments made by the assessee. Revenue's Contention: The Revenue argues that the salary paid for the 'off period' outside India was indeed chargeable to Indian Income Tax under section 9(1)(ii) of the Income Tax Act, 1961. The Revenue relies on the High Court's prior 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 1989-90

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

I.T.A. No. 120 of 2001 (Old No. 123/2000)

The Commissioner of Income Tax, Meerut & another

………. Appellants

Versus

Halliburton Offshore Services Inc. As agent of Mr. Grinnel F.G.

………. Respondent

Mr. S.K. Posti, learned counsel for Income Tax Department.

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

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 Vs SEDCO Forex International Drilling Co. Ltd.

The question raised before us is an 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 reason aforesaid, we answer the above question in the negative i.e. in favour of the department and against the assessee. Appeal disposed of. No order as to costs.

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

Dt. 11.05.2004. G

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