1994 (5) TMI 50 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of salary paid during the 28 days off period when the appellants were off the rigs and outside India.
2. Consistency in judicial decisions and adherence to precedent.
3. Distinction between the present case and other cases with different terms of employment contracts.
4. Evidence required to show how the period outside India was spent by the appellants.
5. Timeliness of the appeals.

Issue-wise Detailed Analysis:

1. Taxability of Salary Paid During the 28 Days Off Period:
The primary issue was whether the salary paid to foreign technicians during their 28 days off period, when they were physically outside India, was taxable in India. The Income-tax Officer (ITO) and the Commissioner of Income-tax (Appeals) had included this salary in the assessments, arguing that the off period was directly related to the duties performed on the rigs in Indian waters and was thus taxable in India. The Tribunal, however, disagreed with this view. It noted that the technicians continued to be employees of their foreign employer and were available for work outside India during the off period. The Tribunal followed earlier decisions where it was held that such salary was not taxable in India, as the services were placed at the disposal of the parent company outside India.

2. Consistency in Judicial Decisions and Adherence to Precedent:
The Tribunal emphasized the importance of judicial discipline and consistency in decisions. It referenced the Hon'ble Supreme Court's observation in the case of Hari Singh v. State of Haryana, which stressed that Courts of co-ordinate jurisdiction should have consistent opinions to avoid judicial anarchy. Similarly, the Hon'ble Madras High Court in CIT v. L.G. Ramamurthi held that no Tribunal has the right to come to a conclusion entirely contrary to an earlier decision on the same facts. The Tribunal noted that earlier Benches had consistently held that the salary for the off period was not taxable in India, and there was no reason to deviate from this established precedent.

3. Distinction Between the Present Case and Other Cases:
The Tribunal distinguished the present case from other cases cited by the Revenue, such as the technicians of Scan Drilling Co. and Halliburton Offshore Services Inc. It noted that the terms of the contracts in those cases were different. The Tribunal had previously observed that the facts in the case of Scan Drilling Co. were not identical to those of the employees of Atwood Oceanics International. Therefore, the decisions in those cases could not be applied to the present appeals.

4. Evidence Required to Show How the Period Outside India Was Spent:
The Tribunal addressed the argument regarding the need for evidence to show how the technicians spent their off period outside India. It concluded that this issue was not relevant to the decision. The crucial point was that the services of the employees were placed at the disposal of the parent company for various jobs stipulated in the terms of employment, and they were on "call" for official purposes outside India. This was sufficient to conclude that the salary for the off period was not taxable in India.

5. Timeliness of the Appeals:
The Tribunal also addressed the issue of whether the appeals were filed within the prescribed time limit. The appellants had received letters of defect indicating that the appeals were barred by limitation by 16 days. However, the appellants clarified that there was a typing mistake in the date of receipt of the order of the Commissioner of Income-tax (Appeals). The correct date was 29th June 1989, not 10th June 1989. After considering this explanation, the Tribunal held that the appeals were filed within the time limit and there was no delay.

Conclusion:
In conclusion, the Tribunal allowed all the appeals, holding that the salary for the 28 days off period was not taxable in India. It emphasized the importance of judicial consistency and adherence to precedent, distinguishing the present case from others with different contractual terms. The Tribunal also found that the appeals were timely filed.