TMI Blog2004 (7) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... s justified in holding that interest under section 234B cannot be charged since the entire income of the assessee was subject to TDS whereas this interest is chargeable on assessed tax as defined by Explanation 1 below section 234B?" - We answer the first question in the negative, i.e., in favour of the Department and against the assessee, and the other two questions are answered in the affirmative, i.e., in favour of the assessee and against the Department. - - - - - Dated:- 20-7-2004 - Judge(s) : P. C. VERMA., P. C. PANT. JUDGMENT This is an appeal under section 260A of the Income-tax Act, 1961, filed by the Revenue against the judgment and order dated April 27, 2000, passed by the Income-tax Appellate Tribunal, New Delhi, in I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be charged since the entire income of the assessee was subject to TDS whereas this interest is chargeable on assessed tax as defined by Explanation 1 below section 234B?" Heard learned counsel for the parties and perused the record. As this court has discussed in Income-tax Appeal No. 57 of 2002-CIT v. Sedco Forex International Drilling Co. Ltd. [2003] 264 ITR 320, decided on October 9, 2003, the reasoning regarding question No. 1 is given in the following paragraphs: Section 4 of the Act is a charging section. It imposes tax on the total income of the previous year of every person. Under section 4(2), tax is deducted at source or paid in advance, where it is so deductible or payable. Section 5(2), on the other hand, restricts the sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, both the periods form an integral part of the contract. It is not possible to give separate tax treatments to on period and off period salaries. It is argued that the period following on period was not a rest period. We do not find any merit. After 35/28 days of hard work, the technician had to go back to the country of his residence. The off period followed the on period. They both formed part of an integral scheme. That even under the Finance Act of 1999, the new Explanation uses the term "rest period/leave period". For the above reasons we find merit in the arguments of the Revenue. Further, even assuming that the period following the on period was a standby arrangement and not a rest period, we find that the assessee had to undergo t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period as alleged by the assessee and that payment was for stand by, we are of the view that training abroad during this period was directly connected with the work on the rigs in India. It made the assessee mentally and physically fit. Therefore, the payment of salary for off period was income earned in India, i.e., for services rendered in India under section 9(1)(ii). We would like to point out that in this case the assessment records show that from the income of the Indian operations, the salary in its entirety (including salary for the off period) has been paid by the employer company. This conduct shows the intention of the contracting parties. Hence, the entire salary for both the periods was taxable in India under section 9(1)(ii). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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