COMMISSIONER INCOME TAX vs. HALLIBURTON OFFSHARE SERVICES.

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ITA/97/2000HC UttarakhandUKHC01025129200302 December 2005Bench: HON'BLE MR. JUSTICE P. C. VERMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the first question, concerning the taxability of salary paid for an off-period outside India under Section 9(1)(ii), was decided in favour of the assessee. This was based on the Hon'ble Apex Court's decision in Civil Appeal Nos. 351-355 of 2005, "Sedco Forex International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another". Regarding the second question, the Court held that interest under Section 234-B could not be charged without providing an opportunity for hearing and without assigning reasons. This finding was based on a Division Bench decision of the same High Court in "Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases" reported in (2003) 264 ITR 320. Consequently, the appeal filed by the Revenue was dismissed, with both questions being answered against the Revenue and in favour of the assessee.

What were the facts?

This appeal by the Commissioner of Income Tax and Assistant Commissioner of Income Tax (the Revenue) is against an order dated 29.09.1999 passed by the Income Tax Appellate Tribunal (Delhi Bench 'C') in ITA No. 4307 (Del) of 1993. The dispute pertains to Assessment Year 1991-92. The respondent is M/s Halliburton Offshore Services Inc., acting as an agent for Mr. Gruber F.P. The appeal was filed in the High Court of Uttaranchal at Nainital. The procedural history involves the Tribunal's order which is now under challenge before the High Court.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether, on the facts and in the circumstances, the salary paid to the assessee for an off-period outside India was chargeable to Indian Income Tax under Section 9(1)(ii) of the Income Tax Act, 1961. 2. Whether, on the facts and in the circumstances, interest could be charged under Section 234-B in view of the definition of 'assessed tax' provided by Explanation I to the Income Tax Act, 1961. The Revenue contended that the salary paid for the off-period outside India was taxable in India. For the second issue, the Revenue presumably argued for the charging of interest under Section 234-B. The judgment does not explicitly record the Revenue's arguments for the second issue, but implies it by the nature of the question. The assessee would have argued that the salary was not taxable in India and that interest under Section 234-B was not leviable. The judgment relies on Apex Court and High Court decisions for its findings.

Which sections of the Income-tax Act were involved?

Section 9(1)(ii),Section 234-B

AI-generated summary — verify with the full judgment below

COURT NO. 2

IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL

Income Tax Appeal No. 59 of 2001 (Old No. 97 of 2000)

1.

The Commissioner of Income Tax, Meerut 2. Assistant Commissioner of Income Tax, Special Circle, Dehradun

………Appellants

Versus

M/s Halliburton Offshore Services Inc. As agent of Mr. Gruber F.P. C/o Arthur Anderson & Co. Maker Towers, P.Cuffe Parade, Bombay

….…Respondent

Dated: December 02, 2005

Mr. S.K. Posti, Advocate for the appellants. Ms. Krishi Shukla, Advocate for the respondent.

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

This appeal is against the order-dated 29.09.1999, passed by the Income tax Appellate Tribunal, (Delhi Bench ‘C’ Delhi) in ITA No. 4307 (Del) of 1993. The dispute relates to the Assessment Year 1991-92.

2.

The substantial questions of law raised in the appeal are as follows:

(i)

Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct to hold that the salary paid to the assessee for the said off-period outside India was not chargeable to Indian Income tax Act in terms of Section 9(1)(ii) of the Income Tax Act, 1961?”

(ii)

Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct to hold that no interest can be charged u/s 234-B in view of the definition of the assessed tax given in by Explanation I of I.T. Act, 1961?”

The first question has 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.

So far as question No.2 is concerned, a Division Bench of this Court in the case of Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases reported in (2003) 264 ITR 320, has held that that the imposition of interest under Section 234-B was not justified without hearing and without reasons.

In view of the above, we dismiss the appeal. Both the questions in this appeal are answered against the Revenue and in favour of the assessee.

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

(P.C. Verma, J.) Shiv

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