COMMISSIONER OF INCOME TAX vs. ONGC

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ITA/161/1998HC UttarakhandUKHC01025189200301 August 2003Bench: OTHER2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Uttaranchal at Nainital, comprising Hon. S.J. Kapadia, C.J. and Hon. P.C. Verma, J., held 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 is a question of relevance and importance that needs to be answered by the Court. The Court acknowledged this as an important question of law. Therefore, the Court granted the applications under section 256(2) of the Income Tax Act, 1961, and directed the Income Tax Appellate Tribunal to refer the matter to the High Court at the earliest, along with a statement of facts, for the Court's opinion. The applications were disposed of accordingly, with no decision on the merits of the issue itself.

What were the facts?

These applications under section 256(2) of the Income Tax Act, 1961, were filed by the Commissioner of Income Tax, Meerut, against ONGC, acting as 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 revolves around 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? Assessee's contention: 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 considered as part of its total taxable income under the Income Tax Act. The assessee relies on its exemption under the Surtax Act. Revenue's contention: The judgment does not explicitly record the revenue's contentions regarding this specific issue. However, the revenue's application for reference implies a disagreement with the Tribunal's implicit finding or the assessee's position, seeking a judicial determination on the includability of the surtax.

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 Commissioner of Income Tax, Meerut

………

Applicant Vs. ONGC as agent of British Airways Helicopter, Dehradun ……….

Opp.party.

Income Tax Application No. 403/2001 Commissioner of Income Tax, Meerut

………

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

……….

Opp.party.

Income Tax Application No. 407/2001 Commissioner of Income Tax, Meerut

………

Applicant Vs. ONGC as agent of Sedco International S.A.Dehradun

……….

Opp.party.

Income Tax Application No. 408/2001 Commissioner of Income Tax, Meerut

………

Applicant Vs. ONGC as agent of Swaire Craneship Corporation, Dehradun

……….

Opp.party.

Income Tax Application No. 419/2001 Commissioner of Income Tax, Meerut

………

Applicant Vs. ONGC as agent of Schlumberger Far East Inc., Dehradun

……….

Opp.party.

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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