COMMISSIONER OF INCOME TAX vs. ONGC

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ITA/149/1998HC UttarakhandUKHC01025175200305 August 2003Author: OTHER2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court acknowledged that the question of whether the surtax, exempted for ONGC under the Companies (Profits) Surtax Act, 1964, is includable in the total income of the assessee under the Income Tax Act, 1961, is of relevance and importance. The Court found that this question needs to be answered by the High Court. Therefore, the Court formulated a specific question of law to be referred by the Income Tax Appellate Tribunal. The High Court directed the Tribunal to refer the matter to the Court at the earliest, along with a statement of facts. The applications were granted, and the Tribunal was instructed to forward the statement of case and refer the question for the Court's opinion. The operative direction is to refer the matter to the High Court for its opinion.

What were the facts?

These are applications filed by the Commissioner of Income Tax, Meerut, under Section 256(2) of the Income Tax Act, 1961. The applications pertain to multiple assessment years and involve ONGC acting as an agent for various foreign entities, including British Airways Helicopter, Dowell Schduumberger (W) S.A., Sedco International S.A., Swaire Craneship Corporation, and Schlumberger Far East Inc. The core issue is whether payments of surtax, made by ONGC under the Companies (Profits) Surtax Act, 1964, should be included in the total income of ONGC as the assessee. ONGC's primary contention is that it was exempted from the Companies (Profits) Surtax Act, 1964, and therefore, such payments cannot form part of its taxable income under the Income Tax Act.

What were the issues?

1. Whether the surtax, which is exempted for ONGC under the Companies (Profits) Surtax Act, 1964, is includable in the total income of the assessee? (Question of law, turning on the interpretation of the Income Tax Act, 1961 and the Companies (Profits) Surtax Act, 1964). Assessee's Contention (ONGC): ONGC argues that since it was exempted from the provisions of the Companies (Profits) Surtax Act, 1964, by virtue of a notification, the surtax paid by it cannot be included in its total income for the purposes of the Income Tax Act. No specific authorities or precedents were mentioned in the judgment for this contention. Revenue's Contention (Commissioner of Income Tax): The revenue seeks to include the surtax paid by ONGC in its total income. The judgment does not explicitly record the revenue's specific arguments or any authorities/precedents relied upon, other than implicitly seeking a reference on the question framed.

Which sections of the Income-tax Act were involved?

Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL I.T.A No. 401 of 2001 Old No. 149 of 1998

Income Tax Application No. 401/2001

ONGC as agent of British Airways Helicopter, Dehradun

Income Tax Application No. 403/2001

ONGC as agent of Dowell Schduumberger(W) S.A.Dehradun

Income Tax Application No. 407/2001

ONGC as agent of Sedco International S.A.Dehradun

Income Tax Application No. 408/2001

ONGC as agent of Swaire Craneship Corporation, Dehradun

Income Tax Application No. 419/2001

ONGC as agent of Schlumberger Far East Inc., Dehradun

Mr. S.K. Posti, Advocate for the applicant(s) Mr. J.P. Joshi, Advocate for the respondent(s)

Coram: Hon. S.H. Kapadia,C.J. Hon. P.C.Verma, J.

Date: 5.08.2003 PC:

A short question which arises for determination in these applications under section 256(2) of the Income Tax Act, 1961 is whether total income of Oil and Natural Gas Commission/assessee should include payment of surtax, which O. N. G. C. has paid under the Companies (Profits)Surtax Act, 1964.

The main objection of O.N.G.C. to these application is that O.N.G.C. was exempted under the provisions of the Companies (Profits) Surtax Act, 1964 and, therefore, it can not form part of the total taxable income under the Income Tax Act. This question is of some relevance and importance and in our view it needs to be answered by this Court under section 256(2) of the Income Tax Act, 1961. Therefore, we formulate the following question and direct the Income Tax Appellate Tribunal to refer the matter to this Court at the earliest alongwith statement of facts: Whether the surtax which stands exempted as far as O.N.G.C. is concerned by vide of notification from provisions of the Companies (Profits) Surtax Act, 1964 is includable in the total income of the assessee?

As stated above, this is a an important question of law. Therefore, the application is granted. The Tribunal shall forward the statement of case and also refer the question to this Court for our opinion.

Office is directed to list these matters immediately on receipt of papers from the Tribunal.

The applications are disposed of accordingly.

(P. C. Verma,J.) (S. H. Kapadia, C.J.)

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