COMMISSIONER OF INCOME TAX vs. O.N.G.C. AS AGENT M/S HYUNDAI CORP.

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ITA/48/2002HC UttarakhandUKHC01009117200301 December 2005Bench: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, following its own prior judgment in Commissioner of Income Tax, Meerut and another Vs. ONGC as agent of Cooper Engineering Services International Incorporated and connected cases reported in (2003) 264 ITR 340, held that the Tribunal was legally correct in its decision. The principle established in the cited case was that multiple-stage grossing up of income was not applicable to notional income determined under Section 44BB read with Section 195A of the Income Tax Act, 1961. Consequently, the addition on account of tax perquisite after the determination of income under Section 44BB was also not justified. The appeal was dismissed based on this precedent.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Dehradun, and the Deputy Commissioner of Income Tax, Assessment Special Range-I, Dehradun, against an order dated March 30, 2001, passed by the Income Tax Appellate Tribunal (Delhi Bench 'A') in ITA No. 6707(Del) of 1992. The dispute pertains to the Assessment Year 1985-86. The respondent is ONGC, acting as an agent for M/s Hundai Corporation and Hundai Heavy Ind. Co. Ltd. The core of the dispute revolves around the determination of income and subsequent tax implications under specific sections of the Income Tax Act, 1961.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the income determined on a notional basis under Section 44BB of the Income Tax Act, 1961, was liable to be grossed up under Section 195A of the Income Tax Act, 1961. 2. Whether, after determining income under Section 44BB, a further addition on account of tax perquisite was justified. The appellants (Revenue) contended that the income determined notionally under Section 44BB should be grossed up under Section 195A. They also argued for the addition of tax perquisite. The respondent (assessee) likely argued against grossing up and the addition of tax perquisite, relying on the notional income determination under Section 44BB. The judgment does not explicitly detail the arguments of each side beyond what is implied by the questions of law.

Which sections of the Income-tax Act were involved?

Section 44BB,Section 195A

AI-generated summary — verify with the full judgment below

COURT NO.2 IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Appeal No.48 of 2002

1.

The Commissioner of Income Tax, Dehradun. 2. The Deputy C.I.T. Assessment Special Range-I Dehradun. …..Appellants Versus

ONGC as Agent of M/s Hundai Corporation & Hundai Heavy Ind. Co. Ltd., Tel Bhawan, Dehradun …Respondent

Dated: December 01, 2005

Mr. S.K. Posti, Advocate for the appellants. Mr. J.P. Joshi, Advocate for the respondent.

Coram: Hon. P.C. Verma, J. Hon. J.C.S. Rawat, J.

This appeal is against the order dated 30.03.2001, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘A’ New Delhi) in ITA No.6707(Del) of 1992. The dispute relates to the Assessment Year 1985-86.

2.

The substantial question of law raised in the appeal is as follows:

“Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct in holding hat the income determined on notional basis in accordance with Section 44BB of I.T.Act, 1961 was not liable to be grossed up under Section 195 A of the Income Tax Act, 1961?”

“Whether on the facts and in the circumstances of the case, the learned Income tax Appellate Tribunal was legally justified in confirming the order of the CIT(A) who held that after determination of appellants under Section 44BB of the Income Tax Act, 1961, further addition on account of tax perquisite was not justified?”

This Court in the case of Commissioner of Income Tax, Meerut and another Vs. ONGC as agent of Cooper Engineering Services International Incorporated and connected cases, which was reported in (2003) 264 ITR 340, held that the Tribunal was right in holding that Multiple Stage Grossing Up of income was not applicable to notional income under section 44BB read with section 195A of the Income Tax Act, 1961.

Following the above-mentioned judgment of a Division Bench of this Court, we dismiss this appeal.

(J.C.S. Rawat, J.)

(P.C. Verma, J.) Rajeev Dang

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