S.H. Kapadia, C.J.
1. On February 27, 1997, the Commissioner of Income-tax, Meerut, moved an application under Section 256(1) of the Income-tax 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 dated June 20, 1990, in Income-tax Appeal No. 3407/Delhi of 1988 be referred for our opinion. This application dated February 27, 1997, was rejected by the Tribunal vide order dated February 23, 1998. Hence, the Department has moved this court seeking the direction to the Income-tax Appellate 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 Section 256(2) of the Income-tax 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 dated March 31, 1983, issued 'under Section 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 non-resident company was only a contractor of ONGC and therefore the assessee was not entitled to exemption under the said notification dated March 31, 1983. Consequently, the Income-tax Officer added the payment of surtax by the ONGC to the income of the assessee as benefit/perquisite under Section 28(iv) of the Income-tax Act. The order of the Assessing Officer was overruled by the Income-tax Appellate Tribunal and therefore the matter has come before us under Section 256(2) of the Income-tax Act by which the Department seeks a direction from this court to the Income-tax Appellate 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 dated March 31, 1983, under Section 24AA of the Companies (Profits) Surtax Act, 1964 ?
(ii) Whether the Income-tax Officer was right in adding the payment of surtax by the ONGC as perquisite/benefit in terms of Section 28(iv) of the Income-tax 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 Income-tax Appellate Tribunal to draw up a statement of case and refer the above two questions of law to this court under Section 256(1) of the Income-tax Act.
Accordingly, Income-tax Application No. 415 of 2001 stands disposed of. No order as to costs.