PRIDE FORAMER S.A. vs. COMMISSIONER OF INCOME TAX

C.A. No.-004395-004397 - 2010Supreme Court2025 INSC 124717 October 2025Bench: HON'BLE THE CHIEF JUSTICE13 pages
For Petitioner: GEETANJALI MOHANFor Respondent: B. V. BALARAM DAS
AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that a temporary lull in business does not amount to cessation of business, and continuous correspondence and bidding efforts demonstrate an intention to carry on business. The High Court's restrictive interpretation was set aside.

What were the facts?

A non-resident French company engaged in oil drilling had a lull in business between 1993 and 1998, during which it maintained correspondence with ONGC and submitted a bid. The company claimed business expenditure and set-off of unabsorbed depreciation.

What were the issues?

Whether a temporary lull in business activities constitutes cessation of business for a non-resident company, and if business correspondence and bidding efforts from abroad constitute carrying on business in India.

Which sections of the Income-tax Act were involved?

Section 37,Section 32(2),Section 71,Section 4,Section 5(2),Section 9(1)(i),Section 28

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Cause title — parties, addresses and appearances
2025 INSC 1247 Page 1 of 13 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 4395-4397/2010 Pride Foramer S.A. Appellant(s) VERSUS Commissioner of Income Tax & Anr. Respondent(s)

J U D G M E N T

Joymalya Bagchi, J.

1.

These appeals are directed against common judgment and order dated 12.06.2009 passed by the High Court of Uttarakhand in Income Tax Appeal Nos. 49 of 2005, 91 & 98 of 2006 (Assessment Years 1997-98, 1996-97 and 1999-2000, respectively) whereby the High Court set aside the orders passed by the ITAT1 and affirmed the orders passed by CIT (Appeals) whereby the CIT (Appeals) had disallowed the deduction of business expenditure under Section 37 of the Income Tax Act 19612, as well as carrying

1 Income Tax Appellate Tribunal, New Delhi. 2 Hereinafter, ‘the Act’. forward of unabsorbed depreciation under Section 32(2) of the Act for the Assessment Years 1996-1997, 1997-1998 and 1999-2000. FACTS:

2.

Relevant facts for adjudication of the appeals

The order continues below.

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