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TMI Blog1984 (11) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/s Montesatini Edison (now Technimont) of Italy-foreign company for short, for the supply of machineries and materials and the following personnel were sent on deputation for erection, commission and installation, etc., in the fertiliser projects in India. It was submitted that since the foreign technicians were on deputation, they were actually the employees of the foreign company who sent them on deputation. It was pointed out that as per the provisions of the agreement, certain amounts per dem basis had to be paid by the F. C. I. to the foreign company in connection with the services of each of the foreign technicians and such payments had to be made partly direct to the technicians in rupee in India and partly to the foreign company in Italian Lira. It was claimed before the ITO that all the foreign technicians were actually the employees of the foreign company and they should be assessed on the basis of the salary certificates issued by the foreign company. The ITO examined the points raised before him and considered the past records and other facts. He did not accede to the claim of the assessees as, according to him, it was crystal clear that the foreign technicians we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeded and computed the assessments of the assessees holding that the foreign company was not the employer of the assessees. He also referred to the decision of the CIT (A) in respect of the similar cases in which it was held that on the basis of the agreement and other connected materials, for foreign company was not the employer of the foreign technicians. 7. In course of the assessment proceedings, ITO considered the assesses' claim of exemption under s. 10(6)(vi)(viia) of the IT Act as the services of the assessees have been approved by the Government of India. It is indicated that the assessees rendered services in the F. C. I. and the F. C. I. was carrying on business in India. The ITO was of the view that exemption under s. 10(6)/(viia) would be allowed only if it was found that the assessees were the employees of the F. C. I. He noted that the foreign company did not carry on any business in India and even if the business was carried on in India, the foreign technicians did not render services in the employment of the foreign company. The claim of exemption as indicated above, was not allowed. He also referred to the Circular of the CBDT No. 1168 dt. 3rd May, 1978. The I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal took into account the decision of the Hon'ble High Court of Gujarat as cited earlier, and also the subsequent Explanation to s. 9(1)(ii) which was brought about by the Finance Act, 1983 in which it was provided that for the removal of doubts, it is declared that income of the nature referred to in that clause made for services rendered in India shall be regarded as income earned in India and that this Explanation comes into effect from 1st April, 1979. It is, however, pointed out on behalf of the revenue that the circular issued by the CBDT as reproduced in (1984) 146 ITR (St.) 9 at para 11 would have to be taken into account in which the decision in the case of S.G. Pgnatale, was taken into consideration and that the Explanation as inserted above was for the removal of doubts. It is submitted before us that although the amendment takes effect retrospectively from 1st April, 1979, it should be taken to reflect the true legislative intention in regard to the relevant provisions from the commencement of the IT Act, 1961. According to the ld. departmental representative that the significance and the effect of this circular should also be taken into consideration, which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered by the Hon'ble High Court in the case of S. G. Pgnatale. Thus, the appeals by the revenue in these earlier cases, were partly allowed by the Tribunal by its order dt. 31st Aug., 1983. 11. The assessee's ld. counsel submits before that the above decision of the Tribunal dt. 31st Aug., 1983 in the case of Luigi Cativalle & Ors., has not been accepted by the assessees concerned and reference is still pending before the Hon'ble High Court. It is argued at length that on the basis of the facts and on the basis of the agreement made by the assessees with their employer, the claim of the assessees should have been allowed in full and that the clarification as provided by the Explanation to s. 9(1)(ii) would not be applicable to assessment years prior to 1st April, 1979. It is urged that the appeals by the revenue in the present cases having no substance may be dismissed. 12. We have heard both sides and have perused the orders of the authorities below for our consideration. We have also gone through the order of the Tribunal dt. 31st Aug., 1983 copy of which has been placed before us. We find that the facts of the cases presently before us are similar to those of the cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Explanation. The reasoning of the Tribunal that this Explanation was only procedural in nature and equally applicable to assessments pending as on 11th Jan., 1979 although the assessment years involved were earlier was not correct. While there appears to have some force in this argument, I am of the opinion that ordinary a Bench of the Tribunal should not depart from the view already taken by the other Bench. Of course, if the mistake in the earlier order is so obvious, the issue could be referred to a larger Bench. But upon a consideration of all other circumstances of the case, I do not think it fit to do so in the present case. Even before the insertion of the Explanation several Benches of the Tribunal were treating the incomes of such assessees as taxable. For example, we may refer to the decision of the Tribunal in ITA Nos. 467 to 470 and 211 (Cal) of 1978-79, the decision of the 'B' Bench of the Tribunal in ITA No. 3298(Cal)/74-75 in the case of Mr. N. Scianara, the decision in ITA No. 5911 (Cal) of 1971-72 and a decision of the 'B' Bench of the Tribunal in ITA Nos. 2668 (Cal) of 1976-77 and 666 (Cal) of 1976-77. What I mean to say is that the interpretation placed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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