THE COMMISSIONER OF INCOME TAX and ANOTHER vs. ATWOOD OCEUICS INTERNATIONAL AS AGENT OF MR. E

ITA/106/1999HC UttarakhandUKHC01025132200303 November 2003Bench: OTHER2 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that both questions raised in the appeal should be answered in the affirmative, in favour of the assessee and against the Department. The Court's decision was based on its prior judgment dated October 16, 2003, in Income Tax Appeal No. 438 of 2001, which dealt with a similar case involving Atwood Oceanics International S.A. The ratio decidendi is that for the purposes of the Income Tax Act, 1961, the Continental Shelf and the exclusive economic zone were not considered part of India prior to April 1, 1983. Consequently, salary income earned for services rendered on a rig in offshore areas outside India's territorial waters before that date was not taxable in India for the assessment year 1983-84. The appeal was disposed of accordingly, with no order as to costs.

What were the facts?

This is an appeal by the Commissioner of Income Tax, Meerut, and the Income Tax Officer, Special Ward-1, Dehradun (the Revenue) against an order of the Income Tax Appellate Tribunal (ITAT). The respondent is Atwood Oceanics International S.A., acting as an agent for Mr. E. Comeaux. The assessment year in question is 1983-84. The appeal challenges the ITAT's decision regarding the taxability of salary income earned by an employee for services rendered on a rig in offshore areas outside India's territorial waters prior to April 1, 1983. The High Court of Uttaranchal at Nainital is hearing this appeal.

What were the issues?

The High Court had to decide two questions of law: 1. Whether the Tribunal was correct in holding that the Continental Shelf, forming part of the exclusive economic zone, was not considered part of India for the purposes of the Income Tax Act, 1961, prior to April 1, 1983. 2. Whether the Tribunal was correct in holding that salary income earned by an employee for services rendered on a rig before April 1, 1983, in offshore areas outside the Territorial Waters of India was not chargeable to tax under the Income Tax Act, 1961, for the assessment year 1983-84. The Revenue argued that the Tribunal's findings were incorrect. The judgment does not record specific arguments made by the Revenue or the assessee, but it states that the matter is squarely covered by a previous decision of the Court in a similar appeal involving Atwood Oceanics International S.A. and Mr. Gene Little.

Which sections of the Income-tax Act were involved?

Income Tax Act, 1961

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 440 of 2001 Old No. 106 of 1999

The Commissioner of Income Tax, Meerut. 2. The Income Tax Officer, Special Ward-1,

Dehradun.

………. Appellants

Versus

Atwood Oceanics International S.A., As agent of Mr. E. Comeaux.

……… Respondent

Mr. S.K. Posti, Advocate for appellants. None for the respondent.

Coram: Hon’ble S.H. Kapadia, C.J. Hon’ble M.M. Ghildiyal, J.

Date: 03.11.2003

PC:-

Affidavit proving service taken on record. The matter is squarely covered by our decision dated 16th October 2003 in Income Tax Act Appeal No. 438 of 2001; The Commissioner of Income Tax, Meerut & another V/s Atwood Oceanics International S.A. as agent of Mr. Gene Little.

The questions raised before us are as follows:- QUESTIONS: (1) “Whether, the Tribunal was right in holding that the Continental Shelf to the exclusive economic zone did not form part of India prior to 1.4.1983 for the purposes of Income Tax Act, 1961?”

(2) “Whether, the Tribunal was right in holding that salary income earned by the employee for services rendered on the rig before 1.4.1983 in the off shore areas outside the Territorial Waters of India was not chargeable to tax under Income Tax Act, 1961 for the assessment year 1983-84?”

ANSWER:

For reasons given in our above judgment, we answer both the questions in the affirmative that is in favour of the assessee and against the Department.

Appeal disposed of. No order as to costs.

(M.M. Ghildiyal, J.) (S.H. Kapadia, C.J.)

Gur

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