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Cit Meerut v. Halliburton Offshore Service - INCOME TAX REFERENCE No. 83 of 1997 [2005] RD-AH 1133 (26 April 2005)


This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).




Commissioner of Income-tax, Meerut. ....Applicant


Halliburton Offshore Services Inc. as

Agent of Mr.Chyaka T.S. ....Respondent


Hon'ble R.K. Agrawal, J.

Hon'ble Rajes Kumar, J.

The Income Tax Appellate Tribunal, New Delhi has referred to following questions of law under section 256 (1) of the Income Tax Act, 1961,(hereinafter referred to as  "the Act") for opinion of this Court.

"1. Whether on the facts and in the circumstances of the case the ITAT was legally correct to hold that the salary paid to he assessee for the laid 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?"

2. Whether on the facts and in the circumstances of the case the ITAT was legally correct to hold the order of the lower authorities as erroneous and unjustified ?"

The present Reference relates to the Assessment Year 1988-89.

We have heard Sri A.N.Mahajan, learned Standing Counsel for the Revenue. No body has appeared on behalf of the respondent assessee.

Briefly stated the facts giving rise to the present Reference are as follows:

Returns in all these cases were filed showing income from salary paid for the period of actual working by the assessee or rig. It was contended that the salary for the 28 days period spent by the assessee outside India after period of 28 days working on the rig was not taxable. This contention of the assessee was not accepted by Income-tax Officer because the 28 days off was an outcome of 28 days duty on the rig due to orduous nature of work. From the contract between the ONGC and the non-resident company it could be seen that the daily payment rates were fixed by the ONGC taking into account the fact that the employees would be laid off after every 28 days of rotation. Further the contract with the Foreign Company is normally approved for a fixed period for the employees in respect of services rendered for drilling operation in India. Hence even if they were out of India for some time during the contract period, the contract remained in operation and the employees were under service/contract for the Indian job.

In view of the aforesaid facts, it was held by the ITO that off-period was also connected with the services rendered by the Technicians in India and the whole salary was liable to tax in India and was well within the purview of section 9 (1) (ii) of the I.T.Act, 1961 which reads as under:-

"Income which falls under the head ''salary' if it is earned in India."

(Explanation: For the removal of doubt it is hereby declared that the income of the nature referred to in this clause payable for services rendered in India shall be regarded as income earned in India.)"

Thus the whole salary  for the total period both spent in an out of India was assessed to tax and income computed accordingly.

In final appeal the learned Commissioner of income-tax (Appeals) upheld the order of Income-tax Officer and dismissed the assessee's appeal on this point. On a second appeal filed by the assessee, the Tribunal following the earlier decisions given by different benches of the Income-tax Appellate Tribunal and also placed reliance on its earlier order in ITA Nos.1852 (Del)91 dated 21.12.1995, 254 (Del) 91 dated 3.3.1992, 271 (Del) 91 dated 3.3.1992, 4729 (Del) 91 dated 13.1.93, 5465 (Del) 89 dated 20.5.1994 & 6621 (Del) 89 dated 29.9.1999 have held that the salary paid to the assessee during off-period cannot be said to be earned in India and hence it could not be charged to Indian income-tax.

We find that this Court in I.T.R. No.98 of 1992 CIT Vs.decided on 11.04.2005 have answered similar question in favour of assessee and against the Revenue.

Respectfully following the aforesaid decision, we answer the question referred to us in affirmative, i.e. in favour of the assessee and against the Revenue. However, there shall be no order as to costs.




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