THE COMMISSIONER OF INCOME TAX DEHRADUN and ORS vs. READING and BATES EXPLORATION CO.

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ITA/533/2001HC UttarakhandUKHC01006294200303 November 2003Bench: OTHER2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court, in view of its prior decision in Commissioner of Income Tax, Meerut & another V/s SEDCO Forex International Drilling Co. Ltd., answered the questions as follows. For question 1, concerning the taxability of 'off period salary' under Section 9(1)(ii), the High Court answered in the negative, favoring the Department and against the assessee. This implies the High Court found the 'off period salary' to be taxable. For question 2, regarding free food, beverage, and boarding on the rig as a perquisite under Section 17(2)(iii), the High Court answered in the affirmative, favoring the assessee and against the Department. This means the High Court agreed with the Tribunal that these were not taxable perquisites. For question 3, concerning the deletion of interest under Section 234B, the High Court also answered in the affirmative, favoring the assessee and against the Department, upholding the Tribunal's deletion of interest. The appeal was disposed of accordingly.

What were the facts?

This case involves an appeal by the Commissioner of Income Tax, Dehradun, and the Income Tax Officer, Special Ward, Dehradun (the Revenue) against an order of the Income Tax Appellate Tribunal (ITAT). The respondent is M/s Reading & Bates Exploration Co., acting as an agent for Mr. S. Shankanun. The assessment year(s) are not explicitly stated. The appeal challenges the ITAT's decision on the taxability of 'off period salary', free food, beverage, and boarding, and the deletion of interest levied under Section 234B. The High Court noted that the matter was covered by its previous decision in a similar case, Commissioner of Income Tax, Meerut & another V/s SEDCO Forex International Drilling Co. Ltd., dated October 9, 2003. The respondent did not appear before the High Court.

What were the issues?

The Tribunal had to decide three questions of law: 1. Whether the Tribunal was correct in holding that 'off period salary' was not taxable under Section 9(1)(ii) as it stood at the relevant time. 2. Whether the Tribunal was correct in holding that free food, beverage, and boarding provided on the rig did not constitute a perquisite under Section 17(2)(iii). 3. Whether the Tribunal was justified in deleting the interest levied on the assessee under Section 234B. The Revenue's contentions were not explicitly recorded in the judgment. The assessee's contentions were also not recorded. The judgment relies on a previous decision of the High Court in Commissioner of Income Tax, Meerut & another V/s SEDCO Forex International Drilling Co. Ltd. dated October 9, 2003, to dispose of the appeal.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii),Section 17(2)(iii),Section 234B

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 533 of 2001

1.

The Commissioner of Income Tax, Dehradun. 2. The Income Tax Officer, Special Ward, Dehradun.

………. Appellants Vers M/s Reading & Bates Exploration Co. As agent of Mr. S. Shankanun, S.V. Road, Viley Parely, Bombay.

………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 9th October 2003 in Income Tax Act Appeal No. 57 of 2002; The Commissioner of Income Tax, Meerut & another V/s SEDCO Forex International Drilling Co. Ltd. The questions raised before us are as follows:-

QUESTIONS:

(1) “Whether, the Tribunal was right in holding that “ OFF Period Salary” was not taxable u/s 9(1)(ii) read with the Explanation as it stood at the relevant time?”

(2) “Whether, the Tribunal was right in holding that free food, beverage and boarding on the rig was not a perquisite u/s 17(2)(iii)?”

(3) “Whether the Tribunal was justified in deleting interest levied on the assessee u/s 234B?” ANSWER:

In view of our above judgment, we answer the first question in the negative that is in favour of the Department & against the assessee

and the other two questions in the affirmative that is in favour of the assessee & 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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