T.V. Rajagopala Rao, President -
(1.) THE second batch of appeals consisting of ITA Nos. 6663, 6664, 6672, 6673, 6675, 6685 and 6689 (Del.) of 1989 were first heard on 8-9-1994 partly and they were completed hearing on 15-9-1994. THE first batch of appeals consisting of ITA Nos. 6621, 6629 & 6632 (Del.) of 1989 were heard fully on 15-9-1994. Since the point involved is common in both these batches of appeals they are disposed of by a common order.
(2.) These are assessees' appeals relating to the assessment years 1985-86 and 1986-87 and they all arise out of similar but separate orders passed by the Commissioner (Appeals), Dehradun, dated 12-7-1989. The assessees are all foreign technicians engaged by a foreign company M/s Atwood Oceanics International ('AOI' for short). The AOI entered into a contract of operation services and maintenance with regard to two rigs operating offshore in the territorial waters of India with Oil and Natural Gas Commission. With a view to fulfil its contractual obligations AOI had entered into service contracts with its own technician employees. The proforma of such service contract dated 17-1-1984 contain the following:
Each of these assessees as per contractual terms mentioned above is entitled to 28 days off the rig after every 28 days stay on the rig in India. The salary for the purpose of 28 days when the assessee was off the rig had not been shown as taxable by these assessees on the ground that such salary does not relate to services rendered in India.
It is contended that each of the assessees were physically outside India and the salary was also paid outside India for those off days and so the same cannot be considered as taxable in India. On that ground their salary for the off days was not included as part of the salary in India by each of these assessees. The contention of these assessees was not accepted by the Income-tax Officer while framing the assessments against each of them for assessment years 1985-86 and 1986-87 for which the previous year ended on 31-3-1985 and 31-3-1986. The Assessing Officer held that 28 days off period is also related to the work on the rig. The 28 days off period is an outcome of the 28 days duty period on the rig due to the arduous and rigorous nature of the work. Further each of these assessees were given approval under Section 10(6)(viia) of the Income-tax Act, the salary income which is of the nature of remuneration, that is referred to in that clause payable for services rendered in India shall be regarded as income earned in India. Thus, the Income-tax Officer held that the whole salary for the total period both spent in and out of India should be assessed in India.
2. Aggrieved against the assessment of the salary for the off period, the assessees went in appeal before the first appellate authority. On behalf of the assessees, the following submissions were made:
(A) Each of the assessees worked on rig offshore India for 28 days at a stretch and thereafter was laid of for a period of 28 days out of India. Even though each of these assessees left India during the laid off period, each of them continued to be the employees of the Head Office outside India. During the off period of 28 days, each of these assessees were required to remain available to the Head Office to undertake the following duties:
(a) Undergoing training by attending classes at such places as may be specified.
(b) On the spot demonstration to update the knowledge in the latest technique.
(c) To attend to the offshore drilling, work on any of the projects of the company in any part of the World at the shortest notice of 24 hours.
(B) It was also stated that during the 28 days off period outside India the technicians are always "on call" to be available to replace an injured, sick, negligent or inefficient crew member of a drilling rig in India or any other drilling rig elsewhere in the World.
(C) Thus an attempt was made to show that during the lay-off period out of India, the technicians cannot be stated to have received remuneration for the services rendered in India because he was not in India during the off period.
On behalf of the revenue, the following contentions were raised:
(1) The caption of the agreement between the AOI and the foreign technicians read as "Terms of employment of work offshore India". Thus the terms of employment between AOI and its technicians were only with reference to the offshore work in India and there is no other stipulation that the technicians will be called for any other employment during the tenure of the agreement.
(2) In clause 6 of the agreement the location was shown to be offshore India. The power of attorney which was executed by each of these technicians specifies that these technicians along with others were employed by AOI in respect of drilling operations offshore India. There was no occasion for the assessees to have worked for anybody else other than their deployment in offshore India and there was no occasion for having received remuneration from any one else during the lay-off period.
(3) Clauses 9 and 11 of the Terms of Employment point out that the contract provided for transportation of the technicians from the location of work to the nearest point of origin only. There was no other occasion where the technicians have to be taken by the employer non-resident company, AOI. The suggested activities of (a) to (e) in clause 5 have never been acted upon as there was no evidence laid by the AOI or its technicians.
The first appellate authority held that Clauses (a) to (e) of clause 5 of the agreement dated 17-1-1984 discloses that high expertise and proper skill was required for execution of the contract and the AOI by those terms appear to have made some arrangement to train its personnel during the lay-off period. However, those terms by no way influenced the salary paid to the technicians during their tenure of services. There is no evidence on record to show that AOI had ever availed off any opportunity of having trained its technicians on call. In the absence of any such evidence coming out from the record, it is not possible to accept the argument based upon clause 5 in the terms of employment. The first appellate authority had also gone into and extracted clauses 2.1 and 2.2 of the "Operating Services and Maintenance Contract" between the ONGC and AOI, which are as follows:
2.1 Beginning with the commencement date and continuing for a period of one year thereafter Contractor agreed to provide those personnel designated in Exhibit 'A' during operation of the unit for a consideration of U.S. $ 7,280.00 (U.S. $ 3,640.00 per rig) per day (Fees). Except as they may be adjusted in accordance with terms thereof, these rates shall remain firm during the term of the contract. This contract may be extended by Owner at the same fees, terms and conditions as mentioned hereunder for two successive periods of six (6) months each by giving thirty (30) days advance written notice to contractor.
2.2 In the event a member of the crew as listed in Exhibit 'A' is not deployed on duty, an amount as stated in Exhibit 'B' shall be deducted from the fee for each day of such short-deployment.
According to the first appellate authority if the above extracted terms are read with the terms of employment and also the powers of attorney executed by the technicians in favour of AOI, they go to prove that the technicians though they were employees of the AOI were to work only for the contract executed with the ONGC for the work offshore India. Off period of 28 days was nothing but to provide rest to the crews, who had worked vigorously for continuous 28 days with 12 hours per day work on the rig and this lay-off period is not for the purpose of any gainful job or to earn any other remuneration during the period of rest. The first appellate authority held that it is not borne out that the salary received by the technicians during the lay-off period of 28 days is not for the gain or for the services rendered in India. It was contended on behalf of the technicians that the AOI had claimed deduction for the salary payment made to the technicians for the period they were physically present in India and not for the period when they were outside India. This would disclose and connote that the salary paid to the technicians was paid not on account of services rendered in India. It was also contended on behalf of the technicians that the salary paid relating to off period was not liable to tax under the Income-tax Act since it was accrued, paid and was received only abroad and none of them took place in India. However, the learned first appellate authority held that if any income is payable for the services rendered in India under the provisions of Section 9(1)(ii) of the Income-tax Act, it will be regarded as income earned in India. It is enough if it is payable with regard to the services rendered in India, then it will be regarded as income earned in India and it comes under the purview of the said explanation. The learned first appellate authority ultimately having rejected the argument advanced on behalf of technicians and having accepted the arguments advanced on behalf of the revenue, dismissed the appeals filed by the technicians, by their impugned orders which were all dated 12-7-1989. Having lost their case before the first appellate authority, each of these technicians come before the Tribunal and thus the matters stand for our consideration.
(3.) WE have heard Miss Preeti Bansal, learned Advocate for the assessee and Mrs. Anuja Sarangi, learned Departmental Representative for the department. The learned counsel for the assessee brought to our notice that the main point involved in these appeals was already covered in favour of the assessees by several decisions rendered by this Tribunal. For instance, for assessment year 1984-85, which is the immediately preceding assessment year for the one under consideration, the case of Mr. W. Fontenot was considered by this Tribunal in favour of the assessee in IT No. 5638 (Del.) of 1989, which was disposed of along with some other appeals by the order of this Tribunal dated 30-3-1988, a copy of which is filed at pages 1 to 12 of the paper book filed before us. So also the case of Mr. C. Noden for assessment years 1982-83 and 1983-84 were disposed of by this Tribunal in ITA Nos. 4459 & 4460 (Del.) of 1987, which were disposed of along with other batch of similar appeals by the order of this Tribunal dated 27-8-1990, which was furnished at pages 21 to 25 of the paper book filed before us. So also the case of Mr. G. Me. Intosh for assessment year 1984-85 was covered by the order of this Tribunal dated 20-5-1994 in ITA No. 5480 (Del.) of 1989, a copy of which is filed from pages 41 to 69 of the paper book filed before this Tribunal. It was disposed of by this Tribunal along with a batch of other appeals.
4(a). In this batch of appeals the department filed a paper book containing 48 pages apart from filing written submissions, in which the main point urged was that the point in question involved in these appeals is covered by the ratio of the Calcutta High Court decision in Grindlays Bank Ltd. v. CIT  193 ITR 457. WE went through the decision and we are of the opinion that it is quite distinguishable on facts. The point involved in that case was whether the assessee was chargeable to interest under Section 201 (1 A) of the Income-tax Act. That was a case where there was a direct service contract between Grindlay's Bank on one hand and its expatriate officers on the other. The expatriate officers were paid furlough pay, which was disbursed in pound sterling in U.K. These officers were entitled to proceed on furlough on completion of a specific period of service in India and while on furlough, they were entitled to furlough pay being disbursed outside India. However, in our case there is no privity of contract between the ONGC on one hand and the foreign technicians, who are the assessees before us on the other. ONGC and AOI entered into a contract for maintenance of two rigs for which the ONGC is obliged to pay the contractual amount. ONGC has no direct control over the foreign technicians. In fact, the ONGC was not paying the salaries of foreign technicians at all. Apart from paying the contractual amount to the AOI, the ONGC has no other obligation. The AOI on the other hand is not obliged to do any other thing than to provide services of the technicians on the two rigs established in the territorial waters of India. The foreign technicians recruited by AOI do not work under the direct supervision of the ONGC but only worked under the AOI. Therefore, the Calcutta High Court decision in Grindlays Bank Ltd. 's case (supra) which was rendered on different set of facts and does not apply to the facts of the present case. Further in the present case before us the technicians are bound to go anywhere they are posted throughout the World wherever the AOI had got offshore contracts even during the 28 days off period. However, no such right was given to Grindlay's Bank when the officers were enjoying furlough in U.K. This is also one of the main distinctions between the case on hand and Grindlay's Bank case. The Departmental Representative relied upon three decisions. The first is a 'C' Bench decision of the Income-tax Appellate Tribunal, New Delhi dated 25-3-1992 passed in MA. Nos. 234 to 241/DEL./1991. The second is the Delhi Bench 'D' decision dated 29-12-1992 in IT Appeal No. 5639/Del. of 1990 and others in the case of Scan Drilling Co. as the agent of Mr. Trevor Garside, Dehradun. The third order relied upon was the Single Member decision rendered by 'E' Bench of this Tribunal in IT Appeal No. 8051 (Del.)/91 in the case of Halliburton Offshore Services Inc. as agent of Mr. Vaithalingam, Bombay dated 10-6-1993. WE went through these decisions. Suffice it to say that they are distinguishable on facts. Even the service conditions of the contracts under which the foreign technicians were working in those cases were quite different from the contracts entered into by the foreign technicians in our case. In the first of the orders relied upon by the learned Departmental Representative, the learned Tribunal in paragraph 4 specifically recorded the following:
It is not denied that the assessees were entitled to salary for the lay off period also because they have worked continuously for 28 days in the oil rigs.
In the present case this point is hotly contested and it is the main point which has to be decided between the parties. In the second of the orders in paragraph 6, the case of Mr. G. Brian, Bombay, an employee of AOI, whose appeal was decided in ITA No. 4465 (Del) of 1987, which was filed before the Tribunal in support of the assessee's claim in that case, was distinguished with the case of the assessee before the learned Members of the Tribunal in that case, as follows:
Moreover the claim of the assessee has been rejected for want of evidence relating to the remuneration for the off period salary having been paid for services rendered outside India and that the salary for the off period had no nexus with the services rendered in India and that the assessee continued to be in the employment of the foreign company even after leaving India and continued to be available to it at its disposal and that the services were performed by the technicians outside India and salary paid relates to these services.
In this case the foreign technicians do not admit that the salary was paid for the lay off period having due regard to their services rendered in India for the 28 days of duty period. This is the hot bed of contention and therefore unless the contention is substantiated by the revenue, this order cannot be applied to the facts before us. Even the third order on which reliance was placed by the learned Departmental Representative was not applicable to the facts of the present case before us. It can be seen that the copy of the agreement between the technicians and the foreign company was never submitted to the Tribunal. Even the agreement between the ONGC and the assessee-company in that case, namely, Halliburton Offshore Services Inc. was not filed and it was adversely commented upon. It would appear that for not furnishing the copies of the agreements between the ONGC and the foreign company, the assessee-company in that case was made to fail. WE do not know how that order is in any way relevant to the facts of the present case. Suffice it to say that none of the orders relied upon by the learned Departmental Representative apply to the facts of the present case. Thus we reject the arguments advanced by the learned Departmental Representative.
4(b). In CIT v. L.G. Ramamurthi  110 ITR 453 in the head note of the decision, the Hon'ble Madras High Court held 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 facts. 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 but 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.
The above would clearly show that we are bound by the earlier decisions 'of this very Tribunal stated above in the three cases.;