2008 (12) TMI 755 - HC - Income Tax

Summary

Issues involved:
The judgment pertains to assessment years 1994-95 and 1995-96, addressing the question of taxation on payments made to a non-resident contractor for work done outside India under a composite contract.

Issue 1 - Taxability of payments to non-resident contractor:
The main issue in the case was whether payments made to a non-resident contractor for work done outside India under a composite contract are liable to be taxed in India. The Hon'ble ITAT had previously held that no portion of such payments is taxable in India. The matter had also been considered by the Supreme Court in a related case involving the same parties for previous assessment years. The Supreme Court observed that substantial questions of law did arise in the case and remitted the matter back to the ITAT for fresh consideration in light of the law laid down in the previous judgment. Consequently, the orders passed by the Income Tax Appellate Tribunal for the relevant assessment years were set aside, and the present Income Tax Appeals were allowed.

Conclusion:
The High Court ruled in favor of the appellant, allowing the Income Tax Appeals and setting aside the orders of the Income Tax Appellate Tribunal for the assessment years 1994-95 and 1995-96.