M/S B.J.SERVICE COAS AGENT OF MR JUMAID UNING vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/50/2004HC UttarakhandUKHC01003820200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own Division Bench judgment in Commissioner of Income Tax vs. Sedco Forex International Drilling Co. Ltd. and connected cases (2003) 264 ITR 320. In that precedent, the Court had held that payment of salary for an 'off period' constituted income earned in India, taxable under Section 9(1)(ii) of the Income Tax Act, 1961, for services rendered in India. The High Court found that the present case was on similar facts and circumstances, thus applying the ratio decidendi of the Sedco Forex case. The operative direction was the dismissal of the appeal.

What were the facts?

The appeal was filed by M/s B J Services Co. Middle East, acting as an agent for Mr. Junaid Uning, against an order dated January 29, 2004, passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench 'D'. The dispute pertains to the Assessment Year 1998-99. The assessee is challenging the ITAT's decision to treat an amount paid for an 'off period' as income earned in India. The procedural history indicates that the matter reached the High Court after the ITAT's order.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal is legally justified in treating the amount paid for the 'off period' as income earned in India in view of the explanation to Section 9(1)(ii) of the Income Tax Act, 1961, when no service was rendered during the 'off period' in India? 2. Whether the subsequent amendment to the explanation to Section 9(1)(ii) with effect from April 1, 2000, which regards 'off period' or leave period payments as income accrued in India only from that date, supports the assessee's contention? Assessee's Contention: The assessee argued that no services were rendered in India during the 'off period', and the subsequent amendment to Section 9(1)(ii) with effect from April 1, 2000, clarifies that such payments are taxable as income accrued in India only from that date. Revenue's Contention: The judgment does not record specific arguments made by the revenue.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 50 of 2004

M/s B J Services Co. Middle East as agent of Mr. Junaid Uning, Vikas Centre, 2nd Floor, S.V. Road, Santacruz (W) Mumbai.

……Appellant

Versus

1.

Income Tax Appellate Tribunal

Delhi Bench ‘D’ New Delhi.

2.

Commissioner of Income Tax (Appeals)

Dehradun.

3.

Assistant Commissioner of Income Tax,

Special Circle, Dehradun …Respondents

Mr. V.K. Bist, Senior Advocate/ Mr. A. Chatterjee, Advocate for the appellant. Mr. S.K.Posti, Advocate for the respondents.

Coram: Hon. Cyriac Joseph, C.J. Hon. J.C.S. Rawat, J.

JUDGMENT

CYRIAC JOSEPH, C.J. (Oral)

1.

This appeal is filed against the order dated 29.01.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’, New Delhi in I.T.A. No. 23/ Del/ 2000. The appellant is the assessee. The dispute relates to the Assessment Year 1998-99.

2.

The substantial question of law raised in the appeal is as follows:

“Whether on the facts and in the circumstances of the case, Tribunal is legally justified in treating the amount paid for the “off period” as the income earned in India in view of the explanation to section 9(1)(ii) while admittedly no service has been rendered during off period in India and inasmuch as, the subsequent amendment made in the explanation w.e.f. 01.04.2000 shows that the amount paid for “off period” or leave period is regarded as the income accrued in India only w. e. f. 01.04.2000?”

3.

In Commissioner of Income Tax- and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320, a Division Bench of this Court held that the payment of salary for “off period” was income earned in India, i.e., for services rendered in India under Section 9(1)(ii) and that “off period salary” was taxable under section 9(1)(ii) of the Income Tax Act, 1961.

4.

Following the above mentioned judgment of a Division Bench of this Court, this appeal is dismissed.

(J.C.S. Rawat, J.) (Cyriac Joseph, C.J.)

15.09.2005 15.09.2005 A

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