2003 (10) TMI 44

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....ne Little who was employed during the accounting year ending March 31, 1983, relevant to the assessment year 1983-84, on off shore drilling rig operating in Bombay High for oil exploration in the Continental Shelf of India for ONGC. The return of income was filed on April 17, 1986. Original assessment was done on April 19, 1986, under section 143(3) of the Income-tax Act, 1961, on the total income of Rs. 1,34,729. In the assessment proceedings, the assessee contended that the income of the employee was earned beyond 12 nautical miles of territorial waters during the year ending March 31, 1983, and was therefore not taxable in the assessment year 1983-84 and therefore no tax perquisite could be added to the income of the assessee. This ar....

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....essee (employee) before April 1, 1983, working on the rig located beyond 12 nautical miles was taxable during the assessment year 1983-84. He relied upon various judgments of the Supreme Court and the High Courts in support of his contention. None appeared for the assessee-respondent though served. Issues: In this appeal we are required to answer two questions of law. They are as follows: Questions: "(1) Whether the Tribunal was right in holding that the continental shelf did not form part of India prior to April 1, 1983, for the purposes of the Income-tax Act, 1961 ? (2) Whether the Tribunal was right in holding that salary earned by the employee for services rendered on the rig before April 1, 1983, in the off shore area....

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....1983, when the territory in which it accrued was not the taxable territory to which the Income-tax Act applied. To levy the tax, the income must accrue in the territory to which the Income-tax Act applies. In this case article 297 of the Constitution is not relevant. For the purposes of deciding this matter the only relevant issue is whether the income earned by a non-resident accrued in a taxable territory prior to April 1, 1983. On facts it is clear that the foreign technician had earned salary income before April 1, 1983, by working on the oil rigs, located beyond 12 nautical miles and therefore he was not taxable for the assessment year 1983-84. Our view is supported by the judgment of the Madras High Court in the case of CIT v. Ronald ....