High Court Of Uttaranchal
CIT vs. O.N.G.C. LTD.
Section 28(iv), 256(2), Surtax 24AA
S.H. Kapadia, C.J. & M.M. Ghildiyal, J.
IT Application No. 415 of 2001
24th October, 2003
Counsel Appeared :
S.K. Posti, for the Applicant : None appeared, for the Respondent
JUDGMENT
S.H. Kapadia, C.J. :
On 27th February, 1997, the CIT, Meerut, moved an application under s. 256(1) of the IT Act, 1961, before the Tribunal requesting the Tribunal that statement of case may be drawn up and the question of law arising from its order dt. 20th June, 1990 in IT Appeal No. 3407/Delhi/1988 be referred for our opinion. This application dt. 27th Feb., 1997, was rejected by the Tribunal vide order dt. 23rd Feb., 1998. Hence, the Department has moved this Court seeking the direction to the Tribunal to draw up a statement of case and refer the question of law to this Court. The present Application No. 415 of 2001 is moved under s. 256(2) of the IT Act. The matter has been transferred from the Allahabad High Court. Despite notice the assessee has remained absent. Facts : The assessee is a non-resident company. The assessee was engaged by the ONGC to execute the work of oil exploration and extraction of mineral oils. Under the contract between the assessee and the ONGC, the tax liability of the assessee was borne by the ONGC. Under the contract, the corporate tax liability of the non-resident company was undertaken by the ONGC. It included income-tax as also surtax. According to the assessee, during the assessment year in question, i.e., 1984-85, it was exempted from payment of surtax vide notification of the Central Government dt. 31st March, 1983, issued unders. 24AA of the Companies (Profits) Surtax Act, 1964. The Department rejected this contention. The Department took the view that the exemption was applicable to joint ventures and in the present case the nonresident company was only a contractor of ONGC and, therefore, the assessee was not entitled to exemption under the said notification dt. 31st March, 1983. Consequently, the ITO added the payment of surtax by the ONGC to the income of the assessee as benefit/perquisite under s. 28(iv) of the IT Act. The order of the AO was overruled by the Tribunal and, therefore, the matter has come before us under s. 256(2) of the IT Act by which the Department seeks a direction from this Court to the Tribunal directing it to draw up a statement of case and refer the questions of law to the High Court for opinion. Two questions of law arise in this application. They are as follows :
“(i) Whether the activities of the assessee were in the nature of works contract and, therefore, not covered by the notification of the Central Government dt. 31st March, 1983, under s. 24AA of the Companies (Profits) Surtax Act, 1964 ?
(ii) Whether the ITO was right in adding the payment of surtax by the ONGC as perquisite/benefit in terms of s. 28(iv) of the IT Act to the income of the assessee ?”
In our view the above two questions of law are required to be decided by us as they are substantial questions of law and the Tribunal was wrong in rejecting the application of the Department. Accordingly, we direct the Tribunal to draw up a statement of case and refer the above two questions of law to this Court under s. 256(1) of the IT Act. Accordingly, IT Application No. 415 of 2001 stands disposed of. No order as to costs.
[Citation : 265 ITR 129]
