THE COMMISSIONER OF INCOME TAX V. O.N.G.C. AGENT OF VIKING OFFSHORE DRILLING

ITA/184/1998

AI Insights

The case involves the Commissioner of Income Tax Meerut as the applicant and ONGC, acting as an agent for Viking Offshore Drilling Co., Dehradun, as the opposite party. The core issue revolves around the liability of ONGC for Surtax on behalf of a non-resident company under the Companies (Profits) Surtax Act 1964, specifically in light of Notification No.GSR-307-E dated 31.03.1983. The Income Tax Appellate Tribunal had previously declined to refer the question to the High Court, citing a lack of a referable question of law, and relied on a similar case (ITA No.8122(Del)/90) where the Revenue's appeal was dismissed. The Revenue Department challenged this decision, leading to the current application for a judicial review of the Tribunal's decision.

• Counselvise Citation: [2005] 140 COUNSELVISE.COM (IT) 744094 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 21-11-2005
• Assessment Year: misc
• Other Referred Cases: Income Tax Appeal No.8122(Del)/90
• Laws Referred To: Income Tax Act, Companies (Profit) Surtax Act 1964
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J P JOSHI
• Assessee Lawyers: S K POSTI
• Keywords: Income tax appellate tribunal; Non-Resident Company; Surtax; Referable question of law; Exemption from Surtax
• Section: 44BB; 24AA; 256(2)

Judgement Text

"COURT NO.2 IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL INCOME TAX APPLICATION NO.416 OF 2001 (Old No. 184 of 1998) Commissioner of Income Tax Meerut ……. Applicant Versus ONGC as agent of Viking Offshore Drilling Co. Dehradun ……. Opposite Party Shri S.K. Posti, learned counsel for the applicant. Sri J.P. Joshi, learned counsel for the opp. party. Dated: 21.11.2005 Coram: Hon’ble P.C. Verma, J. Hon’ble J.C.S. Rawat, J. This is an application under Section 256(2) of the Income Tax Act filed by the Revenue Department seeking direction from this Court to direct the Income Tax Appellate Tribunal to draw up a statement of case and refer the following question of law as framed in the application to this Court for its decision:- “Whether on facts and in the circumstances of the case, Ld. ITAT was legally correct in holding that ONGC in the capacity of an agent of non-resident company was not liable for Surtax perquisites to be assessed in its income, whereas the non-resident company was chargeable to Surtax in view of the Notification No.GSR-307-E dated 31.03.1983 issued u/s 24AA of Companies (Profit) Surtax Act 1964, which was confined to only those cases of non- resident company which had entered into an agreement only with Central Government?” The Income Tax Appellate Tribunal (hereinafter will be referred to as the Tribunal) vide its order dated 23.02.1998 came to the conclusion that in their opinion, there was no referable question of law arose in the facts and circumstances of the case and accordingly the learned Tribunal declined to refer the same to this Court after relying on the judgment in Income Tax Appeal No.8122(Del)/90 and others, whereby on the same facts and under the similar circumstances, the appeals of the Revenue against orders of the learned CIT (Appeals) was dismissed. The facts of this case are identical as in ITA No.8122(Del)/90, therefore, the learned Tribunal dismissed the appeals. The application was moved by the Department of Revenue giving the statement of fact for which the reference of question was to be decided by the High Court. According to the Revenue, the assessee is non-resident foreign company executing contract with O.N.G.C. The O.N.G.C. has born tax liability on behalf of the non-resident company and the surtax is also payable by O.N.G.C. on behalf of non-resident company. The Assessment Officer worked out the surtax perquisite toward total consideration while quantifying profits under Section 44BB under the I.T. Act. The assessee filed an appeal and relied on Notification No.GSR-307(E) dated 31.03.1983 issued by the Central Government under Section 24AA of Companies (Profits) Surtax Act 1964 and pleaded that the non-resident company was exempted from Surtax under the said notification. The First Appellate Authority also allowed the appeal of the assessee accepting the contention of the assessee that they are exempted in view of the judgment of the Tribunal. In this case, the second Appellate Tribunal also dismissed the appeal of the Revenue Department/applicant relying on the said judgment, which has been referred above. The sole question which ought to have been decided as to whether ‘there was any agreement between the Non-Resident Company and the Central Government’ and in case, there is an agreement, only then in view of clause (b), the company which had entered into agreement is exempted. The learned counsel for the Revenue Sri S.K. Posti submitted at Bar that the reference is pending on the same question of law against the judgment of Income Tax Tribunal No.8122(Del)/90, therefore, the application may be allowed and the statement of the case may be summoned from the Tribunal. We find force in the contention of the learned counsel for the Revenue. Since, the judgment of the Tribunal is subjudice in reference by this Court, therefore it would be just and proper and would be in the interest of justice to allow the application and to direct the Appellate Tribunal to draw a statement of facts and refer the question of law to this Court for its decision. Therefore, the application is allowed. The Appellate Tribunal is directed to draw a statement of facts and refer the question of law to this Court for its decision. (J.C.S. Rawat, J.) (P.C. Verma, J.) Rajeev Dang "