Income Tax Appellate Tribunal - Delhi
G. Winpenny vs Income-Tax Officer on 20 May, 1994
Equivalent citations: [1994]50ITD501(DELHI)
ORDER
R.M. Mehta, Accountant Member
1. All these appeals are directed against separate orders passed by the Commissioner of Income-tax (Appeals) whereby he has upheld the action on the part of the Income-tax Officer in subjecting to tax the salary paid to the assessees by their employer for the 28 days off periods when they were physically off the rigs installed in Indian coastal waters.
2. To set out the brief facts of the case, the appellants are foreign technicians, who have been deputed by their foreign employer, namely, M/s. Atwood Oceanics International S.A., to work on the rigs situated off the Indian coast pursuant to the contract entered into between the said foreign employer and ONGC.
3. In the course of the assessment proceedings it was contended on behalf of the appellants that the salary for the off periods when they were off the rigs being physically outside India and the said salary having been paid outside India was not taxable in India. The aforesaid claim was rejected by the Income-tax Officer primarily on the ground that the 28 days off period was related to the period of 28 days when the appellants were working on the rigs in the Indian waters and the said off period was an outcome of the duties performed on the rigs. In other words, the view taken by the Income-tax Officer was that even if the appellants were outside India for sometime during the contract period and the said period outside India was utilised by the parent company for some other work outside India, the salary pertaining thereto would become taxable in India as the service contract between the appellants and the parent company related to the "Indian job". In the final analysis, the Income-tax Officer included in the assessments of each of the appellants the off period salary which had been claimed as exempt. On further appeals the Commissioner of Income-tax (Appeals) upheld the view taken by the Income-tax Officer on identical grounds and passed separate orders in this respect.
4. It is in the aforesaid circumstances that the present appeals have come up for hearing before the Tribunal. We have heard both the parties at considerable length in respect of the common ground raised in all these appeals. The learned Counsel for the appellants submitted that the issue stood covered by numerous decisions of the Tribunal in the case of various other employees/technicians of M/s. Atwood Oceanics Ltd. and there being no other distinguishing feature on the record vis-a-vis the present appeals the Tribunal be pleased to follow the earlier orders. It was further stated that there had been two decisions of the Tribunal which had taken a view to the contrary and these being the appeals of certain employees of Scan Drilling Co. in IT Appeal No. 5639 (Delhi) of 1990 dated 29-12-1992 and the other being the SMC decision in the case of one of the technicians of Halliburton Offshore Services Inc. in [IT Appeal No. 8051 (Delhi) of 1991, dated 10-6-1993]. The learned Counsel, however, hastened to add that the aforesaid decisions could not be applied to the facts of the present appeals as the terms of the contract were quite different. For this proposition, she invited our attention to the observation of the Tribunal recorded in para 5 of its order in respect of the technicians of Scan Drilling Co. (supra) and which referred to the order of the Tribunal in the case of one of the employees of M/s. Atwood Oceanics International, namely, G. Brian [IT Appeal No. 4465 (Delhi) of 1987, dated 30-3-1987]. According to her the observations of the Tribunal were to the effect that the facts in the case of the said Mr. G. Brian were different to those of the employees/technicians of Scan Drilling Company. It was stated that the aforesaid observation of the Tribunal had not been reversed although the final conclusion of the Tribunal in the case of Scan Drilling Co. (supra) went against the assessees.
5. At this stage the learned Counsel referred to the well-accepted convention of following earlier decisions especially when no new facts emerged from the record to justify a view to the contrary. According to her the Tribunal in the earliest order passed in the case of G. Brian (supra) being the employees /technicians of M/s. Atwood Oceanics International had occasion to consider identical submissions on identical facts and in the ultimate analysis arriving at the conclusion that the salary for the 28 days off period was not taxable in India. The learned Counsel took us through relevant portions of the said order appended on the compilation filed during the course of the hearing. Further attention was invited to the fact that the Tribunal had been consistently following the aforesaid order in all the subsequent appeals decided by it in respect of the employees/ technicians of Atwood Oceanics International and that being the situation, it was not at all necessary to re-decide or review the matter in the light of some decisions which had been passed by the Tribunal taking a view to the contrary, but with reference to the terms of the contract in those cases.
6. In support of the aforesaid arguments, the learned Counsel relied on the various decisions of the Tribunal appended by her on the paper-book. On the question of following the aforesaid orders without there being a change in the facts she placed reliance on the decision of the Hon'ble Madras High Court in the case of CIT v. L.G. Ramamurthi [1977] 110 ITR 453 and another decision of the Hon'ble Supreme Court in the case of Hari Singh v. State of Haryana [1993] (66) ELT 23.
7. The learned Departmental Representative, on the other hand, supported the action of the tax authorities in rejecting the claim made by the appellant in the course of the proceedings before the said authorities. According to her the 28 days off period was intimately connected with the 28 days that the appellants were required to spend on the rigs in the coastal waters of India and the salary paid for the said off period was taxable in India as it related to the contracts between the parent company and the technicians for actual work to be carried out in India. The further submission on the part of the learned Departmental Representative was that there was no basic difference between the contracts vis-a-vis the technicians of Atwood Oceanics International and the technicians of the other two companies whose appeals had been decided by the Tribunal in favour of Revenue. In this connection she heavily relied on the two decisions of the Tribunal which had taken a view to the contrary and which have been mentioned by us while dealing with the arguments of the learned Counsel appearing on behalf of the appellants. The Departmental Representative also placed reliance on a decision of the Hon'ble Calcutta High Court in the case of Grindlays Bank Ltd. v. CIT [1992] 193 ITR 457 contending in the process that the Tribunal could take a different view in the light of the aforesaid decision.
8. In her reply the learned Counsel referred to the same very decision of the Hon'ble Calcutta High Court to distinguish it on the ground that the facts were entirely different as the subject of dispute was the 'furlough pay' to which the expatriate workers of the bank who were working in India would become entitled to on completion of a specific period of service in India. Attention was also invited to the fact that the 'furlough pay' was disbursed in pound-sterling in U.K. It was stated that a 'furlough pay' could not be equated with the payment being made to the present appellants in respect of the 28 days off period since the latter was not in the nature of leave or vacation as according to the terms, of the contract the services of the employees were placed at the disposal of the parent company to be utilised in the manner stipulated in the contract. In concluding her reply the learned Counsel urged that the earlier orders of the Tribunal accepting the view-point canvassed on behalf of the appellants be followed.
9. We have examined the rival submissions and have also perused the material on record to which our attention was invited during the course of the hearing. The decisions cited at the bar have also been duly considered. At the outset, we would refer to the decision of the Hon'ble Calcutta High Court in the case of Grindlays Batik Ltd. (supra) relied upon by the learned Departmental Representative in support of the argument that the salary paid for the "off period" spent by the employees technicians outside India was subject to tax under the tax laws of India and further to canvass that the Tribunal should depart from the view taken by it in the earlier decisions pertaining to the technicians of Atwood Oceanics International. After perusing at length the aforesaid decision of the Hon'ble Calcutta High Court, we are of the view that the same is not applicable to the facts of the assessee's case. The question involved in that case was whether the "furlough pay" to which the expatriate office workers of the bank in India were entitled to in pound-sterling in U.K. after working for the bank in India for a specified period was liable for T.D.S. in India on the ground that the same accrued or arose in India. The term "furlough" as defined in Webster's Third New International Dictionary means "leave of absence" whereas we in the present appeals are dealing with the period of 28 days which the assessees/technicians have spent outside India after working for a similar period on the rigs in Indian waters. As per the terms of the contract between the parent company and the technicians their services were placed at the disposal of the former for being utilised for various jobs stipulated in the "terms of employment". In the case of Grindlays Bank Ltd. [supra) the situation was entirely different since the workers of the bank were on leave in U.K. for which purpose they were given "furlough pay". The only similarity which can be stated to be there is the entitlement to the 28 days off period in the present appeals and the entitlement to furlough pay in the case of Grindlays Bank Ltd. (supra) as both of these became available after working in India for a specified period of time. The similarity, however, ends there since in the case of the present assessees the service continues not in India, but abroad subject to the discretion of the head-office of the parent company whereas in the case of the bank it is a case of leave from official duties altogether. The decision of the Hon'ble Calcutta High Court accordingly does not advance the case of the Revenue.
10. We now take up for consideration the two decisions relied upon by the learned Counsel for the assessees dealing with the question of judicial discipline. This is what Their Lordships of the Hon'ble Supreme Court observed in the case of Hari Singh (supra) :
It is true that the system of the justice which is being administered by the Courts, one of the basic principles which has to be kept in view, is that Courts of co-ordinate jurisdiction, should have consistent opinions in respect of an identical set of facts or on question of law. If Courts express different opinions on the identical sets of facts or question of law while exercising the same jurisdiction, then instead of achieving harmony in the judicial system, it will lead to judicial anarchy.
11. Their Lordships of the Hon'ble Madras High Court in the case of L.G. Ramamurthi (supra) observed as follows :
No Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on the same fact. It may be that the members who constituted the Tribunal and decided on the earlier occasion were different from the members who decided the case on the present occasion. But what is relevant is not the personality of the officers presiding over the Tribunal or participating in the hearing by the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the courts or the Tribunals and not reached objectively on the basis of the facts placed before the authorities.
If a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself.
12. The learned Counsel for the assessees relied upon the aforesaid two decisions for the proposition that since earlier Benches of the Tribunal had interpreted the terms of employment between the parent company and the technicians, setting out relevant facts of the case which were absolutely identical in the present set of appeals once again pertaining to the employees of the same parent company, namely, Atwood Oceanics International, there was no good ground to depart from the view already taken by various Benches of the Tribunal especially when no new facts had emerged from the record. We are in agreement with the aforesaid submissions made by the learned Counsel as in fact no distinguishing features have been referred to by the learned Departmental Representative in the course of her arguments.
13. It may not be out of place to mention that as far back as 1988 the Tribunal had occasion to examine the terms of the contract between the parent company viz., Atwood Oceanics International Ltd. and some of its employees, namely, G. Brian [supra). After doing so, it came to the conclusion that the salary for the off period was not taxable in India. It would be worth-while reproducing certain relevant observations recorded by the Tribunal in the aforesaid decision as follows :
** ** ** They normally worked on Rigs off-shore India, for 28 days at a stretch and, thereafter, were outside India. Even after they left the Rigs on which they were working, they continued to be the employee of the Head Office, situated at Houston, USA and continued to be available to it at its disposal. It is an accepted position that they were paid remuneration, by the employer company outside India.
[Emphasis supplied]
** ** **
** ** **
In the assessments of the AOI, deduction was claimed for the salary payment to the assesseesfor the period that they were physically present in India and for the period they were outside India, payments were not treated as expenses of the Indian operations by AOI. On the same footing they should not have treated as the income of the representative assessees. To my mind, the above position is a clincher.
Each of the assessees was required as a part of the principal responsibility to attend to the training classes outside India specified by the AOI to maintain professional certifications and standards. The assessees were periodically required to attend on the spot demonstrations of the latest drilling techniques at the AOI facilities in Houston or at AOI drilling rigs in the Gulf of Mexico or elsewhere.
[Emphasis supplied]
14. On subsequent occasions various Division Benches of the Tribunal took a similar view and to mention few such decisions :
(i) R. Macweigh v. ITO [IT Appeal No. 5261 (Delhi) of 1989],
(ii) T. Landreth v. ITO [IT Appeal No. 5634 (Delhi) of 1989],
(iii) M. Knight v. ITO [IT Appeal No. 5253 (Delhi) of 1989], and
(iv) K. Repper v. ITO [IT Appeal No. 5251 (Delhi) of 1989].
15. We would also like to mention that the Department has placed reliance on the S.M.C. decision of, one of the technicians of Halliburton Offshore Services Inc. (supra) and which, according to them, has taken a view in favour of the Revenue. In our opinion, the aforesaid decision would not advance the Revenue's case in the present set of appeals as the technicians are those of a different company, namely M/s. Atwood Oceanics International and whose terms of contract have already been interpreted by the Tribunal in earlier decisions particulars of which we have given in the preceding paras. We are not inclined to review our decision in the absence of change of facts and more so in the light of an order of the Tribunal in a different case whose facts are entirely different. As already stated while referring to the arguments advanced by the learned Counsel appearing on behalf of the assessee, the Tribunal while deciding the appeals of the technicians of Scan Drilling Co. (supra) in favour of the Department categorically stated that the facts of the case were not at all identical to those of G. Brian (supra), who was an employee of Atwood Oceanics International (see para 5 of the said order of the Tribunal). We would also like to mention that there are decisions of Division Benches of the Tribunal in respect of the technicians of Halliburton Offshore Services Inc. (supra) taking a view against the Revenue and one such decision is that of JR. Hoover in [IT Appeal No. 254 (Delhi) of 1991, dated 3-3-1992] (SMC).
16. In the final analysis, we following the earlier orders of the Tribunal (supra) in respect of the technicians/employees of Atwood Oceanics International delete the addition made by the Income-tax Officer in respect of the present appeals pertaining to the 28 days off periods which were spent outside India at the disposal of the parent company.
17. In the present appeals, arguments had been advanced by both the parties vis-avis evidence to be brought on record by the assessees to show as to how they had spent the period outside India. In our opinion, this issue does not survive and in the view that we have taken to delete the addition; not at all relevant. As already discussed in the order of G. Brian (supra) the Tribunal did specify the type of work which the technicians had done on behalf of the parent company and it cannot be that in the present appeals it was in any way different. The crucial point to be considered is that for the period in question the services of the employees/technicians were placed at the disposal of the parent office to be utilised in any of the ways stipulated in the terms of employment. In other words, the employees were on "call" at any point of time for official purposes outside India.
18. Before we part with these appeals, we would like to refer to the letters of defect sent to the appellants pointing out that the appeals were barred by limitation by a period of 16 days. The assessees in their reply have stated that there is no delay whatsoever as due to a typing mistake, the date of receipt of order of the Commissioner of Income-tax (Appeals) had been mentioned as 10th June, 1989 whereas the correct date was 29th June, 1989. After considering the submissions of the appellants, we hold that the appeals are within time and there is no delay.
19. In the result, all the appeals are allowed.