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

PDF · subscribers
ITA/133/2005HC UttarakhandUKHC01003015200501 December 2005Bench: HON'BLE MR. JUSTICE P. C. VERMA3 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided both issues based on previous pronouncements. For the first issue, regarding the deductibility of remuneration, the Court held that the question 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. For the second issue, concerning the taxability of 'off period salary' under Section 9(1)(ii), the Court referred to a decision of the Hon'ble Apex Court in "Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another, JT 2005(9) SC 639". Following the Apex Court's decision, this question was answered in favour of the assessee. The appeal was disposed of in accordance with these decisions.

What were the facts?

The appellant, Sedco Forex International Drilling Inc., acting as an agent for its employee Mr. Benoti Verniere, filed an appeal against a consolidated order dated January 28, 2004, passed by the Income Tax Appellate Tribunal (ITAT), Bench 'E', New Delhi, for the assessment year 1998-99. The appeal was preferred against the Commissioner of Income Tax, Dehradun, and the Assistant Commissioner of Income-Tax, Special Range, Dehradun. The parties agreed to argue only two specific questions of law, abandoning the rest. The High Court of Uttaranchal at Nainital heard the appeal.

What were the issues?

The Tribunal had to decide two questions of law. 1. Whether the ITAT erred in law by 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'? This question concerns the deductibility of remuneration under relevant provisions of the Income Tax Act. The appellant argued that the Tribunal's finding was erroneous. The revenue's contentions are not explicitly recorded for this issue. 2. Whether the Tribunal was correct 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? This question pertains to the taxability of salary earned during periods when the employee was not actively working. The appellant argued in favour of non-taxability. The revenue's contentions are not explicitly recorded for this issue.

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.133 of 2005

Sedco Forex International Drilling Inc. as agent of its employee Mr. Benoti 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 Assistant Commissioner of Income-Tax,

Special Range, Dehradun having office

at Subhash Road, Dehradun-248001

………. Respondents

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

Dated: November 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 28.01.2004 for the assessment year 1998-99, 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.

5.

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

More judgments on Section 9(1)(ii)

All 123 judgments and leading authorities on Section 9(1)(ii) →

Recent GST High Court judgments

Search GST case law →