2005 (7) TMI 68

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....Reading and Bates Drilling Company employed technicians to work in offshore oil rigs in India. Mr. Daniel Gates was such a technician employed by the appellant-company during the relevant previous year to work in the offshore oil rigs in India. The question raised before us is as follows: "Whether, on the facts and circumstances of the case, the Tribunal erred in law in holding that the 'off-period' salary paid to the petitioner was liable to tax in India?" Heard learned counsel for the parties and perused the record. As this court has discussed in Income-tax Appeal No. 57 of 2002, CIT v. Sedco Forex International Drilling Co. Ltd. [2003] 264 ITR 320, the reasoning regarding this question is given in the following paragraphs. Section 4....

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....ncluding the conduct of the parties. In this case the contract provides for on period and off periods. The contract is for two years. It refers to alternating time schedule. It covers both the periods. The off period follows the on periods. Therefore, both the periods form an integral part of the contract. It is not possible to give separate tax treatments to on period and off period salaries. It is argued that the period following the on period was not a rest period. We do not find any merit. After 35/28 days of hard work, the technician had to go back to the country of his residence. The off period followed the on period. They both formed part of an integral scheme. That even under the Finance Act of 1999 the new Explanation uses the term....