JUDGEMENT
Ram Rattan, Accountant Member -
(1.)THIS bunch of 28 appeals by the assessee i.e., M/s Oil & Natural Gas Commission, being the representative assessee of various technicians, numbering 28, is directed against identical orders passed by the Commissioner of Income-tax Under Section 263 of the Income-tax Act, holding the orders passed by the Income-tax Officer Under Section 143(3) of the I.T. Act, in respect of the above technicians to be erroneous so as to be prejudicial to the interests of the revenue and setting aside the same with the direction to pass the assessment orders de novo after disallowing the exemption of the income-tax paid by the Oil & Natural Gas Commission and to assess the same under the head "Other sources".
(2.)Since identical issues are involved in these 28 appeals, these were heard together and as such we are disposing of these appeals by a common order. It was a common ground between the parties that facts in these appeals are identical, the submissions of the parties were also the same. It was further agreed that the facts as in the case of Mr. Jacob J. Sulzbach, one of the technicians may be considered and adjudicated upon and the conclusions arrived at therein may be applied in all the remaining 27 cases. In the circumstances, we shall discuss the facts in relation to Mr. Jacob J. Sulzbach.
M/s Gilley & Associates Incorporated, USA with its head office at 1666, General Mounton Ave., P.O. Box 52568, Lafayette Louisiana 70505, USA, a foreign company (hereinafter referred to as Gilley & A.I.) entered into an agreement with Oil & Natural Gas Commission, Dehradun, a body corporate and established under Oil & Natural Gas Act, 1959 (hereinafter referred to as the 'Commission') on 27th June, 1984. The Commission had invited tenders for back up consultancy and technical services in respect of off-shore, deep drilling etc. in India. M/s Gilley & A.I. represented that they were capable of providing and have been actively engaged for such consultancy services for off-shore and on-shore drilling of Deep High Pressured Wells by preparing the design of the wells, list of materials required to drill these wells and estimated cost to drill these wells, personnel required on-site supervisors to monitor the drilling operations during the drilling of the designed well programs as well as to provide drilling fluid technicians or engineers and other supervisory personnel such as Tool Pushers and Drillers, prepare recommendations for the Oil & Gas Operators to include summary reports, and to prepare completion prognosis and schedules as well as provide necessary personnel as in the drilling stage of the well to test procedure and supervise the testing etc. etc. M/s Gilley & A.I. agreed to sell the back-up consultancy and technical services and to pass on latest technical information/data relating to such services for use, application and exploitation in any manner and to impart training to the personnel of the Commission by conducting Seminars etc. Under the agreement M/s Gilley & A.I. thus, inter alia, agreed to provide field technical services including technical personnel to the Commission. Technical services as per Article 1.10 of the Agreement, meant services of field supervisory personnel provided by 'Gilley & A.I.'. Mr. Jacob J. Sulzbach is one of such technicians. He claimed the remuneration received by him as exempt Under Section 10(6)(viia) of the Act, to the extent of Rs. 4,000 per month. Remunerations in excess of Rs. 4,000 p.m. chargeable to tax under the head 'Salaries' were not exempt under these provisions. On the excess income of the assessee, income-tax was required to be paid. As per agreement, the income-tax on income in excess of Rs. 4,000 p.m. was the liability of the Commission. The total income of the assessee for the asst. year 1985-86 was computed by the ITO at Rs. 9,11,450. Income chargeable to tax under the head 'Salaries' to the extent of Rs. 48,000 only was exempt Under Section 10(6)(viia). Income-tax on such income, in excess of Rs. 48,000 was paid by the Commission. The ITO did not include in the total income of the assessee, the income-tax paid at Rs. 3,12,986 by the Commission. The Commissioner of Income-tax was of the view that since Commission was not the employer of the assessee, the income-tax paid could not be considered as salary being the perquisite or profit in lieu thereof as referred to in Section 17(1)(iv) and Sub-section (2) thereof. According to him, this was income of the assessee, taxable under the head 'Other sources'. Since the ITO had not done so, the CIT held the order passed by the former to be erroneous and prejudicial to the interest of the revenue and set aside the order passed by him with the direction to pass a fresh assessment order by including in the total income the taxes paid at Rs. 3,12,986 as income under the head "Income from Other Sources". Similar are the additions directed to be made by the CIT in respect of the remaining 27 assessees. All the 28 assessees aggrieved by the orders of the CIT are in appeals before the Appellate Tribunal.
(3.)SHRI R.S. Singhvi, the Ld. Counsel for the assessees vehemently argued that the technician assessees were the employees of the Commission and, therefore, the income-tax paid by the Commission was salary and, therefore, the same was exempt Under Section 10(6)(viia) of the Act. The learned Sr. D.R., on the other hand contended that these technicians were the employees of M/s Gilley & A.I. and not of the Commission. According to her, master-servant relationship did not exist between the Commission and the technicians. It was also contended by her that they were not the employees of the Commission and since the income-tax paid by the Commission, nor being an employer, the same could not be termed as perk Under Section 17(1)(iv) and Sub-section (2) thereof, so as to be considered as salary and, therefore, the same was not exempt and the Commissioner had rightly invoked the jurisdiction Under Section 263. Both sides have relied upon a number of authorities in support of their claims. They have also referred to various articles of the Agreement between M/s Gilley & A.I. and the Commission in support of their claims.