THE COMMISSIONER OF INCOME TAX vs. O.N.G.C.

ITA/75/1999HC UttarakhandUKHC01015027200421 May 2004Bench: OTHER1 pages

AI SummaryAllowed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was legally correct in directing the application of single-stage grossing up of tax perquisites paid by ONGC on behalf of the assessee, as opposed to the multi-stage grossing up applied by the Assessing Officer under Section 195-A of the Income Tax Act, 1961. The Court's decision was based on its prior judgment dated September 30, 2003, in Income Tax Appeal No. 470 of 2001, which dealt with identical facts and the same legal question. The principle established is that for tax perquisites paid by an employer on behalf of an employee, single-stage grossing up is the legally correct method. The appeal was disposed of in favour of the assessee.

What were the facts?

The appeal concerns Assessment Year 1990-91. The Commissioner of Income Tax (CIT) and another are the appellants, and ONGC, Dehradun, acting as agent for Mr. Dementjev Vladimir, is the respondent. The dispute revolves around the method of grossing up tax perquisites paid by ONGC on behalf of the assessee. The Assessing Officer applied a multi-stage grossing up, while the Income Tax Appellate Tribunal (ITAT) directed the application of a single-stage grossing up. The present appeal challenges the ITAT's decision. The High Court noted that the matter was squarely covered by its prior decision in a similar case.

What were the issues?

1. Whether, in the facts and circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct in directing to apply single-stage grossing up of the tax perquisites paid by ONGC on behalf of the assessee instead of multi-stage grossing up, applied by the Assessing Officer under section 195-A of the Income Tax Act, 1961? Assessee's Contention: The ITAT was correct in directing single-stage grossing up. (Implicit from the High Court's decision in favour of the assessee). Revenue's Contention: The Assessing Officer's application of multi-stage grossing up was correct. (Implicit from the appeal being filed by the Revenue). The judgment does not explicitly detail the arguments of each party beyond the core issue and the reliance on a previous High Court decision.

Which sections of the Income-tax Act were involved?

Section 195-A

AI-generated summary — verify with the full judgment below

Assessment Year 1990-91

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

I.T.A. No. 227 of 2001 Old No. 75 of 1999

The Commissioner of Income Tax, Meerut & another

……. Appellants

Versus

O.N.G.C., Dehradun As agent of Mr. Dementjev Vladimir …….. Respondent

Hon. P.C. Verma, A.C.J. Hon. Rajesh Tandon, J.

Mr. S.K. Posti, learned counsel for the Tax Deptt. Mr. J.P. Joshi, learned counsel for the respondent.

The matter is squarely covered by our decision dated 30th September, 2003 in Income Tax Appeal No. 470 of 2001; The Commissioner of Income Tax, Meerut & another Vs O.N.G.C., Dehradun.

The question raised before us is follows: “Whether in the facts and circumstances of the case the learned Income Tax Appellate Tribunal was legally correct in directing to apply single stage grossing up of the Tax perquisites paid by ONGC on behalf of the assessee instead of multi stage grossing up, applied by the Assessing Officer under section 195-A of the Income Tax Act, 1961?”

For the reasons recorded in the above judgment in Income Tax Appeal No. 470 of 2001 dated 30th September, 2003, we answer this question in the affirmative i.e. in favour of the assessee and against the Department.

Appeal is disposed of accordingly. No order as to costs.

(Rajesh Tandon, J.) (P.C. Verma, A.C.J.)

Dt. 21.05.2004 G

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