SEDCO FOREX INTERNATIONAL DRILLING INC. vs. THE COMMISSIONER OF INCOME TAX AND ANR.

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ITA/120/2005HC UttarakhandUKHC01003006200501 December 2005Bench: HON'BLE MR. JUSTICE P. C. VERMA2 pages
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What did the High Court hold?

The High Court decided the two questions of law as follows: 1. Regarding the first question, the Court noted that this issue had already been decided by a Division Bench of the same High Court in the case of "Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another" on July 22, 2005. In that judgment, the question was answered in favour of the Revenue. Therefore, the High Court followed this precedent and answered the first question in favour of the Revenue. 2. Regarding the second question, the Court observed that the Hon'ble Apex Court had already decided this matter in Civil Appeal Nos. 351-355 of 2005, "Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another". In view of the Apex Court's decision, this question was answered in favour of the assessee. Consequently, the appeal was disposed of in accordance with these decisions.

What were the facts?

The appeal was filed by Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. Benoit Verniere, against the Commissioner of Income Tax, Dehradun and the Deputy Commissioner of Income-Tax, Special Range, Dehradun. The assessment year in question is 1997-98. The appeal challenges a consolidated order dated January 28, 2005, passed by the Income Tax Appellate Tribunal, Bench 'E', New Delhi. The parties agreed that only two specific questions of law needed determination, and the rest were not pressed. The High Court was to decide these two questions based on previous judgments.

What were the issues?

The High Court was to decide two questions of law: 1. Whether the learned I.T.A.T. erred in law in holding that the appellant failed to satisfy the condition that 'the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State' (Section 9(1)(ii) of the Income Tax Act, 1961, read with Explanation as it stood at the relevant time)? - Assessee's contention: Not recorded. - Revenue's contention: Not recorded. 2. Whether the Tribunal was right in holding that off-period salary was not taxable under section 9(1)(ii) read with the Explanation as it stood at the relevant time? - Assessee's contention: Not recorded. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii)

AI-generated summary — verify with the full judgment below

COURT NO.2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Appeal No.120 of 2005

Sedco Forex International Drilling Inc. as agent of its employee Mr. Benoit Verniere a company incorporated in the Republic of Panama having its registered office at No.8 Acquitino de la Guardia Street, City of Panama, Republic of Panama, Present Address C/o A.F. Ferguson & Co. Maker Towers, Cuffe Parade, Mumbai

……….. Appellant

Versus

1.

The Commissioner of Income Tax, Dehradun

having office at Subhash Road, Dehradun-248001 2. The Deputy Commissioner of Income-Tax,

Special Range, Dehradun having office

at Subhash Road, Dehradun-248001

………….… Respondents

Ms. Menka Tripathi, Advocate for the appellant. Mr. S.K. Posti, Advocate for the respondents.

Dated: December 01, 2005

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

Both the parties are ready to argue the matter today.

This appeal has been preferred against the consolidated order dated 28.01.2005 for the assessment year 1997-98, passed by the Income Tax Appellate Tribunal, (Bench ‘E’ New Delhi).

The learned counsel for the parties agree that the following only two questions of law arise in this appeal for the

determination. They do not press the rest of the questions framed in the appeal:- 1. Whether the learned I.T.A.T. has erred in law in holding that the appellant has failed to satisfy the condition that ‘the remuneration is not deductible in computing the profits of an enterprise chargeable to tax in that other State’? 2. Whether the Tribunal was right in holding that off period salary was not taxable under section 9(1)(ii) read with the Explanation as it stood at the relevant time?

So far as the question No.1 is concerned, this question has already been decided by Division Bench of this Court {in which one of us (P.C. Verma,J.) was a member} in case of “Sedco Forex International Inc. Vs. The Commissioner of Income Tax and another”, which was decided on 22.07.2005 in Income Tax Appeal No.165 of 2001. In the said judgment, the question framed in the said appeal was answered in favour of the Revenue.

The second question has also been decided by the Hon’ble Apex Court in Civil Appeal Nos.351-355 of 2005 “Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another, JT 2005(9) SC 639”. In view of the aforesaid decision of the Hon’ble Apex Court, this question is answered in favour of the assessee.

In view of the above, we dispose of the appeal accordingly.

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

Rajeev Dang

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