COMMISSIONER OF INCOME TAX and ANR V. M/S DUAL DRILLING CO

ITA/112/2003

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against M/s Dual Drilling Co., concerning the taxability of certain incomes and the applicability of tax-related provisions under the Indian Income-Tax Act, 1961 for the Assessment Year 1993-94. The primary issues included the taxability of salary paid for off-periods outside India, the classification of free boarding facilities as perquisites, and the applicability of interest under section 234-B for incomes that are subject to deduction of tax at source. The High Court referenced decisions from the Supreme Court and previous rulings to affirm the Tribunal's decisions.

• Counselvise Citation: [2005] 140 COUNSELVISE.COM (IT) 682859 (HC-UTTARANCHAL)
• Appeal Type: Others
• Pronouncement Date: 07-12-2005
• Assessment Year: misc
• Other Referred Cases: Sedco Forest International Drill Inc. and Others Vs. Commissioner of Income Tax, Dehradun and Another, Commissioner of Income Tax and another Vs. Sedco Forex International Drilling Co. Ltd. and connected cases
• Laws Referred To: Indian Income-Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: S K POSTI
• Keywords: Assessment year 1993-94; Deduction of tax at source; Free boarding facility; Income Tax; Interest under Section 234-B; Off Period Salary; Perquisite; Taxable in India
• Section: 234 B; 9(1)(ii); 17(2)(iii)

Judgement Text

"COURT NO.2 IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Income Tax Appeal No. 112 of 2003 1. Commissioner of Income Tax, Dehradun 2. Assistant Commissioner of Income Tax, Special Circle, Dehradun … Appellants Versus M/s Dual Drilling Co., as agent of Mr. Barlow Daniel, Indage House, 82, A.B. Road, Worli, Bombay … Respondent Dated: December 07, 2005 Mr. S.K. Posti, Advocate for the appellants. Coram: Hon. P.C. Verma, J. Hon. J.C.S. Rawat, J. This appeal is against the order dated 24.12.2002, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘F’ New Delhi) in ITA No.6575(Del) of 1996. The dispute relates to the Assessment Year 1993-94. 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 off period outside India was not chargeable to Indian Income-Tax Act in terms of Section 9(1(ii) of the I.T. Act, 1961, whereas the Ld. ITAT has itself held, vide order dated 25.03.1992 in ITA No.5649/D/92, dated 28.07.1999 in ITA No. 1079/D/91, dated 24.01.2000 in ITA No.411/D/93 and dated 15.05.2000 in ITA No.1648/D/94 that off period salary is taxable in India and vide order dated 18.11.1996 in R.A. No.433 to 511/D/96 has referred question of law on this issue for esteemed opinion of this Court.” (ii) Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding that free boarding facility provided by the employer on board the rig in high seas cannot be construed to be perquisite?” (iii) Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in allowing the appeal of the assessee holding that interest under section 234-B of the I.T. Act was not leviable in respect of incomes which are subject to deduction of tax at source?” 3. The first question has been decided by the Hon’ble Apex Court in Civil Appeal Nos.351-355 of 2005 “Sedco Forest 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. 4. So far as the question Nos.2 and 3 are 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 the free boarding facility provided by the employer on the rig was not a perquisite under Section 17 (2)(iii) and that its value cannot be added to the income of the assessee. It has also been held that the imposition of interest under Section 234-B was not justified without hearing and without reasons. 5. In view of the above, we dismiss the appeal in limine. All the questions in this appeal are answered against the appellants and in favour of the assessee. (J.C.S. Rawat, J.) (P.C. Verma, J.) Rajeev Dang "