THE COMMISSIONER OF INCOME TAX vs. ATWOOD OCEANIES INTERNATIONAL

ITA/131/1999HC UttarakhandUKHC01025160200315 July 2004Author: OTHER2 pages

AI SummaryAllowed

What did the High Court hold?

The High Court decided both questions of law in favour of the assessee and against the Department. The Court's decision was based on its previous judgment in Commissioner of Income Tax and another v. Atwood Oceanics International S.A., dated October 16, 2003. By applying the ratio of that earlier decision, the Court held that the continental shelf within the exclusive economic zone was not considered part of India prior to April 1, 1983, for income tax purposes. Consequently, salary income earned by employees for services rendered offshore before that date was not taxable under the Income Tax Act, 1961. The appeal was disposed of in terms of the cited precedent, with no order as to costs.

What were the facts?

The Commissioner of Income Tax (CIT) and another are the appellants, and Atwood Oceanics International S.A., as agent for Mr. P. Carter, is the respondent. The assessment year in question is 1983-84. The appeal challenges an order passed by the Income Tax Appellate Tribunal (ITAT). The core of the dispute concerns whether the continental shelf within the exclusive economic zone constituted part of India prior to April 1, 1983, for income tax purposes, and consequently, whether salary income earned by respondent employees for services rendered offshore before that date was taxable under the Income Tax Act, 1961. The procedural history involves an appeal filed by the Revenue against the ITAT's decision.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the learned Income Tax Appellate Tribunal was legally correct in treating the continental shelf to the exclusive economic zone as not forming part of India prior to April 1, 1983, for the purposes of the Income Tax Act, 1961. 2. Whether the learned Appellate Tribunal was justified in holding that the salary income earned by the respondent-employees for services rendered prior to April 1, 1983, in a rig located 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 appellant (Revenue) contended that the controversy was squarely covered by a previous decision of a Division Bench of the same High Court in Commissioner of Income Tax and another v. Atwood Oceanics International S.A., decided on October 16, 2003. The respondent (assessee) did not present any arguments.

Which sections of the Income-tax Act were involved?

Section 1961

AI-generated summary — verify with the full judgment below

Assessment Year 1983-84

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 369 of 2001 (Old No. 131/1999)

The Commissioner of Income Tax Meerut, And another

… Appellants

Vs.

Atwood Oceanics International S.A. As agent of Mr. P. Carter

… Respondent

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

Hon’ble M.M. Ghildiyal, J. Hon’ble B.S. Verma, J.

Heard learned counsel for the appellants.

By means of this appeal following questions of law are raised for consideration of this Court:- 1- Whether the learned Income Tax Appellate Tribunal was legally correct to treat the continental shelf to the exclusive economic zone as not forming part of India prior to 1.4.1983 for the purposes of Income Tax Act, 1961? 2- Whether the learned Appellate Tribunal was justified in holding that the salary Income earned by the respondent- employees for services rendered prior to 1.4.1983 in a rig located in the off-shore areas outside the territorial waters of India, was not chargeable to Tax under the Income Tax Act, 1961, for the Assessment year 1983-84?

Counsel for the appellant has submitted that the controversy raised in this appeal is squarely covered by the decision of the Division Bench of this Court in Commissioner of Income Tax and another v. Atwood Oceanics International S.A. decided on Oct. 16, 2003, reported in ITA Vol. 264 page 761 and the appeal may be decided in terms of the of aforesaid decision of the Division Bench of this Court.

Keeping in view of the aforesaid facts, the appeal is decided in terms of the decision of the Division Bench of this Court in Commissioner of Income Tax and another v. Atwood Oceanics

International S.A. decided on Oct. 16, 2003, reported in ITA Vol. 264 page 761. Accordingly, both the questions of law raised through this appeal are decided in favour of the assessee and against the Department. No order as to costs.

(Brahma Singh Verma, J.) (M.M. Ghildiyal, J.)

July 15, 2004: NCM:

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