M/S B.J.SERVICES CO. AS AGENT OF MR. RABAH BEKRI vs. INCOME TAX APPELLATE TRIBUNAL and ORS.

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ITA/71/2004HC UttarakhandUKHC01003841200405 September 20052 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, following its own earlier judgment in Commissioner of Income Tax vs. Sedco Forex International Drilling Co. Ltd. (2003) 264 ITR 320. In that precedent, a Division Bench of the High Court had held that payment of salary for an "off period" constituted income earned in India, i.e., for services rendered in India, under Section 9(1)(ii) of the Income Tax Act, 1961, and was thus taxable. The High Court found this precedent directly applicable to the present case. Therefore, the Tribunal was legally justified in treating the amount paid for the "off period" as income earned in India. No issue was expressly left undecided.

What were the facts?

The appeal was filed by M/s B J Services Co. Middle East, acting as the agent of Mr. Rabah Bekri, against an order dated 29.01.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘D’. The dispute pertains to the Assessment Year 1998-99. The assessee is challenging the Tribunal'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 Tribunal'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, despite no services being rendered in India during the "off period"? Assessee's Contention: The assessee argued that the amount paid for the "off period" should not be treated as income earned in India because no services were rendered in India during that period. They further contended that the subsequent amendment to the explanation to section 9(1)(ii) effective from 01.04.2000, which regards payments for "off period" or leave period as income accrued in India, only applies prospectively from that date. Revenue's Contention: The judgment does not record any specific contentions 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. 71 of 2004

M/s B J Services Co. Middle East as agent of Mr. Rabah Bekri, 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. 21(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.)

16.09.2005 16.09.2005 A

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