TMI Blog2009 (5) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration was filed by it on 29-8-2003 declaring a total income of Rs. 20,97,500. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee-company has made payment in cash in excess of Rs. 20,000 towards service charges to crew members aggregating to Rs. 97,76,259. The assessee-company, however, had not offered 20 per cent of such payments as addition to its total income on the ground that the said payments were covered by the exceptions prescribed under rule 6DD( j ). In support of this claim, the following submissions were made on behalf of the assessee-company before the Assessing Officer during the course of assessment proceedings: "( a )The assessee-company has entered into contracts with companies engaged in the business of exploration of oil and gas. Typically these customers own drilling rigs which they move from one place to other for drilling in the sea in search of oil for their end clients. ( b )As per contract, the assessee-company provides crew, technical and non-technical, who spend 28 days on such drilling units. It is the standard practice of this industry that crew spends 28 days on the rig and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made on behalf of the assessee-company in support of its stand that the payments in question made in cash were covered within the purview of exceptions provided in rule 6DD( j ). On such consideration, he held that the concerned employees, i.e., crew members of the assessee-company were not temporarily posted for a continuous period of 15 days or more either in a place other than their normal place of duty or on a ship. According to him, the assessee was a contractor for supply of manpower to oil exploration companies and as such the persons employed by the assessee-company did not fall under the criteria that they were posted at a place other than the normal place of duty. He held that the normal place of work in the case of the said employees would be the Rigs of the client companies and it was thus not a case that the regular employees of the assessee-company were temporarily at a place other than the normal place of duty. He also held that the Rigs of the client company could not fall under the definition of Ship as contended on behalf of the assessee-company. As regards the other contention raised on behalf of the assessee-company that the payment of salary was required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their wages disbursed by cheques; ( d )that the assessee-company has complied with the conditions mentioned in rule 6DD( j ) viz., ( i ) payment of salary to its employees is made after deducing income-tax from such salary ( ii ) such employee is posted on a ship; or, ( iii ) employee is posted at a place other than his normal place of duty, and ( iv ) does not maintain any account in any bank at such place or ship. Ship has been defined in Income-tax Rules to include dredgers, barges, tugs etc.; ( e )that tax has been deducted by the company on the salaries and wages paid to the employees and therefore, there cannot be any loss of revenue to the Government and that there cannot be any loss in the hands of the employees as necessary Form No. 16 has been issued to all such employees; ( f )that the Hon ble Delhi Tribunal in the case of Sedco Forex International Drilling Inc. v. Asstt. CIT [ 58 ITD 177 ] has clearly held that oil rigs are ships and that while arriving at the above conclusion, the Hon ble Tribunal has relied on the decision of the Hon ble Bombay High Court in the case of Amar Shipping Management (P.) Ltd. (Writ Petition No. 520 of 1994 other)." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment is made by an assessee by way of salary to his employee after deducting the income-tax from salary in accordance with the provisions of section 192 of the Income-tax Act, 1961 and when such employee.... (A)is temporarily posted for a continuous period of fifteen days or more in a place other than his normal place of duty or on a ship; and (B)does not maintain any account in any bank at such place or ship;" 9. The conditions to be satisfied for application of rule 6DD( j ) thus are as under : ( i )the payment in cash by way of salary to its employees should be made by an assessee after deducting income-tax from salary in accordance with the provisions of section 192; ( ii )such employee should be temporarily posted for a continuous period of 15 days or more at a place other than his normal place of duty or on a ship; ( iii )such employee does not maintain any account in any bank at such place or ship. 10. In the present case, the payments in question were made by the assessee-company to its employees by way of salary undisputedly after deducting Income-tax at source in accordance with the provisions of section 192. Further, having regard to the nature of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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