DCIT, Dehradun v. M/s. Sedco Forex Intl. Drilling Inc. as agent of Mr. Van Russel Robert AT., Mumbai

ITA 2995/DEL/2010 | 2007-2008
Pronouncement Date: 20-08-2010 | Result: Dismissed

Appeal Details

RSA Number 299520114 RSA 2010
Assessee PAN AACCS9208D
Bench Delhi
Appeal Number ITA 2995/DEL/2010
Duration Of Justice 2 month(s) 5 day(s)
Appellant DCIT, Dehradun
Respondent M/s. Sedco Forex Intl. Drilling Inc. as agent of Mr. Van Russel Robert AT., Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 20-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 20-08-2010
Assessment Year 2007-2008
Appeal Filed On 14-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NO. 2994/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. BROWING III JOHN R. 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 2995/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. VAN RUSSEL ROBERT AT. 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) 2 ITA NOS. 2994 TO 3006/DEL/2010 ITA NO. 2996/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. VERGS JEAN GUY 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 2997/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. ZIVKOVIC NENAND 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 2998/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. R. REUBEN LEE 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D 3 ITA NOS. 2994 TO 3006/DEL/2010 (APPELLANT) (RESPONDENT) ITA NO. 2999/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. MALLET SERGE JEAN 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 3000/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. SCHMIDT MICHAEL JOSE 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 3001/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. PROVOST GUY 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D 4 ITA NOS. 2994 TO 3006/DEL/2010 (APPELLANT) (RESPONDENT) ITA NO. 3002/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. ERASMUS WILLIAM PETRU 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 3003/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. ANDREY ANDREEV 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 3004/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. LALYCAN SYLVAIN 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D 5 ITA NOS. 2994 TO 3006/DEL/2010 (APPELLANT) (RESPONDENT) ITA NO. 3005/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. BOUE DIDIER 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) ITA NO. 3006/DEL/2010 ASSESSMENT YEAR: 2007-08 DCIT INTERNATIONAL TAXATION 13-A SUBHASH ROAD AAYAKAR BHAWAN DEHRADUN. VS. SEDCO FOREX INTL. DRILLING INC. AS AGENT OF MR. DEVILA ZDRA VKO 1 ST FLOOR SPECTRA HIGH STREET TRANSOCEAN HOUSE BOULEVARD ROAD HIRANANDANI BUSINESS PART POWAI MUMBAI. AACCS9208D (APPELLANT) (RESPONDENT) APPELLANT BY : Y.K. KAKKAR. SR. DR RESPONDENT BY : NEERAJ SHARMA O R D E R PER BENCH ALL THESE APPEALS ARE FILED BY THE REVENUE. THEY ARE DIRECTED AGAINST CONSOLIDATED ORDER OF CIT(A) DATED 8.2.10 FOR A.Y. 2007-08. GROUNDS OF APPEAL IN ALL THESE CASES IS IDENTICAL AND READ AS UNDER: - 6 ITA NOS. 2994 TO 3006/DEL/2010 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN ALLOWING EXEMPTION U/S 10(10CC) OF THE ACT IN UTTE R DISREGARD OF THE FACT THAT TAX PAID ON BEHALF OF THE ASSESSEE BY ITS EMPLOYER COMPANY WAS A PERQUISITE PROVIDED BY WAY OF MONETARY PAYMENT. 2. THE ISSUE RAISED BY THE REVENUE IS WHETHER THE T AX PAID BY THE EMPLOYER ON BEHALF OF EMPLOYEE IS A PERQUISITE NOT PROVIDED BY WAY OF MONETARY PAYMENT FOR THE PURPOSE OF ALLOWING EXEMPTION U/S 10(10CC) OF THE INCOME TAX ACT 1961 (ACT). IN ALL THESE CASES THE ASSESSES HAVE C LAIMED IN THE RETURN OF INCOME THAT THE TAX PAID BY THE EMPLOYER ON BEHALF OF THEM IS PERQUISITE NOT PROVIDED BY WAY OF MONETARY PAYMENT THEREFORE THE Y ARE NOT INCLUDED IN TO THE SALARY INCOME CHARGEABLE TO TAX UNDER THE ACT IN AS MUCH AS ACCORDING TO THE PROVISIONS OF SEC. 10(10CC) OF THE ACT THE PERQUISI TE NOT PROVIDED BY WAY OF MONETARY PAYMENT ARE EXEMPTED FROM TAX. THE AO DID NOT ACCEPT SUCH CONTENTION AND HAS HELD THAT THE TAX PAID FOR AND O N BEHALF OF EMPLOYEE IS A PERQUISITE WHICH IS TO BE ADDED TO THE INCOME OF T HE ASSESSEE ON MULTIPLE STAGE GROSSING UP. LD. CIT(A) HAS DELETED SUCH ADD ITION FOLLOWING THE DECISION OF SPL. BENCH IN THE CASE OF RBF RIG CORPORATION LL C VS. ACIT REPORTED IN 109 ITD 141 (DEL.) (SB). THE DEPARTMENT IS AGGRIEVED HENCE IN APPEAL. 3. AT THE OUTSET IT WAS SUBMITTED BY LD. AR THAT SI MILAR ISSUE CAME UP FOR CONSIDERATION BEFORE TRIBUNAL IN THE CASES OF OTHER EMPLOYEES OF SEDCO FOREX INTERNATIONAL DRILLING WHEREIN SIMILAR ADDITION WA S MADE BY THE AO IN THE CASES OF 29 EMPLOYEES AND THE ADDITION SO MADE WAS UPHELD BY CIT(A). THE ASSESSEE HAD FILED THE APPEALS IN RESPECT OF THOSE 29 EMPLOYEES WHICH WAS DECIDED BY THIS TRIBUNAL VIDE ORDER DATED 13 TH AUGUST 2009 IN ITA NOS. 2498 TO 7 ITA NOS. 2994 TO 3006/DEL/2010 2526/DEL/09 WHEREIN THE ORDER OF CIT(A) WAS REVERS ED AND IT WAS HELD THAT THE TAX BORNE BY THE EMPLOYER ON PERQUISITES OF THE EMP LOYEES WOULD CONSTITUTE NON-MONETARY BENEFIT AND AS SUCH THE SAME IS EXEMPT ED U/S 10(10CC) OF THE ACT AND IN THIS MANNER THE APPEALS FILED BY THOSE A SSESSEES WERE ALLOWED. HE IN THIS REGARD REFERRED TO THE COPY OF THE ORDER WH ICH IS PLACED AT PAGES 27 TO 40 OF THE PAPER BOOK. 4. LD. DR HOWEVER RELIED UPON THE ORDER OF AO. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND WE FOUND THAT THE ISSUE RAISED IN THE PRESENT APPEALS ARE SQUAREL Y COVERED BY THE AFOREMENTIONED ORDER OF THE TRIBUNAL (IN WHICH ONE OF US I.E. AM IS A PARTY) WHEREIN THE TRIBUNAL HAS OBSERVED THAT CIT(A) WAS W RONG IN NOT FOLLOWING THE DECISION OF SPL. BENCH. THE RELEVANT PORTION OF TH E ORDER OF THE TRIBUNAL AS CONTAINED IN PARA 11 TO 14 ARE REPRODUCED BELOW: 11. IN VIEW OF THE DECISION OF THE SPL. BENCH IN THE ABOVE REFERRED CASE WE HOLD THAT THE TAX BORNE BY THE EM PLOYER ON PERQUISITES OF THE EMPLOYEES WOULD CONSTITUTE NON-M ONETARY BENEFIT AND AS SUCH THE SAME IS EXEMPTED U/S 10(10C C) OF THE ACT. WE THEREFORE REVERSE THE ORDER OF THE A UTHORITIES BELOW ON THIS POINT AND ALLOW THE ASSESSEES CLAIM THAT THE TAX PAID BY THE EMPLOYER IN RESPECT OF SALARY PAID TO THE AFORESAID ASSESSES WOULD CONSTITUTE NON-MONETARY PERQUISITE ELIGIBLE FOR EXEMPTION U/S 10(10CC) OF T HE ACT. IN OTHER WORDS THE ASSESSEES CLAIM OF EXEMPTION U/S 10(10CC) OF THE ACT IN RESPECT OF TAX PAID BY THE E MPLOYER IN RESPECT OF SALARY PAID TO ITS EMPLOYEES OF THE ACT IS DIRECTED TO BE ALLOWED. THE AO SHALL MODIFY THE ASSESSMENT O RDERS OF ALL THESE ASSESSES ACCORDINGLY. 8 ITA NOS. 2994 TO 3006/DEL/2010 12. WE HAVE ALSO HEARD BOTH THE PARTIES ON THE ISS UE ABOUT AWARDING ANY COST TO THE ASSESSEE IN ALL THESE APPE ALS. 13. THERE IS NO QUARREL AS TO THE PROPOSITION THAT IN THE HIERACHAL SYSTEM OF THE COURT IT IS NECESSARY FOR THE LOWER TIER TO LOYALLY ACCEPT THE DECISION OF THE HIGHER T IER OTHERWISE JUDICIAL SYSTEM WOULD COLLAPSE. IT IS ALSO NOT IN DISPUTE THAT THE LD. CIT(A) IS SUBORDINATE TO TRIBUNAL IN JUDICI AL HIERARCHY. THEREFORE HE IS BOUND TO FOLLOW THE ORDER OF THE T RIBUNAL AND IN CASE THE REVENUE IS NOT SATISFIED WITH THE O RDER OF THE LD. CIT(A) IT IS OPEN TO THE REVENUE TO TAKE UP TH E MATTER BEFORE THE HIGHER APPELLATE AUTHORITY. IT IS ALSO EQUALLY TRUE THAT IN CASE THE LD. CIT(A) WOULD HAVE FOLLOWED THE ORDER OF THE SPL. BENCH OF THE TRIBUNAL THE UNNECESSARY AND UNWARRANTED APPEAL BY THE ASSESSEE COULD HAVE BEEN AVOIDED AND IN THAT CASE DEPARTMENT COULD HAVE FI LED APPEAL BEFORE THE TRIBUNAL PROVIDED THE DEPARTMENT WAS NOT INCLINED TO ACCEPT THE DECISION OF THE LD. CIT(A) WHICH IS BASED ON THE DECISION OF TRIBUNAL. HOWEVER IN THE PRESENT CASE WE DO NOT FINED ANY MATERIAL TO SAY THAT THE LD. CIT(A) HAS DISREGARDED THE ORDER OF THE SPL. BENCH OF THE TRIBUNAL WITH A VIEW TO HARASS THE ASSESSES AND TO CAUSE ANY MONETARY OR OTHER LOSS TO THE ASSESSEE IN FILING FU RTHER APPEAL BEFORE THE TRIBUNAL. WE THEREFORE RESTRAI N OURSELVES FROM AWARDING ANY COST OF APPEAL AGAINST THE REVENUE. 14. IN THE RESULT ALL THESE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 9 ITA NOS. 2994 TO 3006/DEL/2010 6. IN THIS VIEW OF THE SITUATION WE FIND NO MERIT IN THE AFOREMENTIONED APPEALS FILED BY THE REVENUE AND THE SAME ARE DISMI SSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20.8.2010 (B.C. MEENA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 20.8.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR