THE COMMISSIONER OF INCOME TAX V. HUGHES SERVICE PVT. LTD.

ITA/318/2000

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against M/s Hughes Services (FE) Pvt. Ltd., concerning the taxability of certain income and the imposition of interest under the Income Tax Act, 1961. The primary issues revolved around whether the salary paid to the assessee for off-periods outside India was chargeable to tax in India, whether free boarding on a rig constituted a perquisite, and the applicability of interest under Section 234-B when the income was subject to TDS. The High Court of Uttaranchal at Nainital dismissed the appeal, referencing decisions from the Supreme Court and previous judgments which supported the assessee's position.

• Counselvise Citation: [2006] 140 COUNSELVISE.COM (IT) 719292 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 07-03-2006
• Assessment Year: misc
• Other Referred Cases: Sedco Forex 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
• Department Lawyers: AMBRISH CHATERJI
• Assessee Lawyers: PITAMBER MAULEKHI
• Keywords: Assessment Year 1990-91; Income Tax; Interest Chargeability; Perquisite; Salary Taxability
• 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. 456 of 2001 (Old No. 318/2000) 1. Commissioner of Income Tax, Meerut 2. Assistant Commissioner of Income Tax, Special Circle, Dehradun … Appellants Versus M/s Hughes Services (FE) Pvt. Ltd. as agent of Mr. Olsan Peter, Bombay … Respondent Dated: March 7, 2006 Mr. Pitamber Maulekhi, Advocate for the appellants. Mr. Ambrish Chaterji, Advocate for the respondent Coram: Hon. P.C. Verma, J. Hon. B.C. Kandpal, J. This appeal is against the order dated 27.04.2000, passed by the Income Tax Appellate Tribunal, (Delhi Bench ‘B’ New Delhi) in ITA No. 1705/(Del) of 1994. The dispute relates to the Assessment Year 1990-91. 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 and in ITA No.411/D/93 that off period salary is taxable in India?” (ii) Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally correct 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 circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in holding that interest under Section 234-B of the I.T. Act cannot be charged since the entire income of the assessee was subject to TDS whereas this interest is chargeable on assessed tax as defined by Explanation 1 below Section 234-B?” 3. 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. 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. All the questions in this appeal are answered against the appellants and in favour of the assessee. (B.C. Kandpal, J.) (P.C. Verma, J.) Rajeev Dang "