Assessee staying 176 days in India correctly classified as Non-Resident under section 6(1) explanation

ITAT Mumbai held that assessee who stayed in India for 176 days was correctly classified as Non-Resident. Revenue argued assessee went to Mauritius as investor, not employee, thus not entitled to extended 182-day period under section 6(1) explanation. ITAT relied on Kerala HC decision in CIT v O. Abdul Razak, interpreting "employment outside India" broadly to include business/profession activities. Since assessee's stay was below 182 days, Non-Resident status was upheld. Revenue's appeal dismissed.

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Issues Involved:

1. Interpretation of section 9A of the Immigration Act of Mauritius.
2. Deletion of income received in Mauritius and its tax implications.
3. Determination of the residential status of the assessee for the assessment year 2013-14.

Summary:

Issue 1: Interpretation of section 9A of the Immigration Act of Mauritius

The Revenue contended that the learned CIT(A) erred in interpreting section 9A of the Immigration Act of Mauritius relating to the Occupation permit, which allows the assessee to stay and work in Mauritius as an investor, not an employee. The Tribunal did not find any significant discussion on this specific legal interpretation in the judgment.

Issue 2: Deletion of income received in Mauritius and its tax implications

The Revenue argued that the learned CIT(A) erred in deleting the addition of income received in Mauritius amounting to USD 43,75,000, converted into INR 23,79,53,188/-, despite the fact that the assessee did not pay any taxes in Mauritius on this income. The Tribunal found that the assessee had filed returns with the Mauritius Revenue Authorities, declaring income and tax deductions, which supported the assessee's claim.

Issue 3: Determination of the residential status of the assessee

The primary dispute was whether the assessee was a "Non-Resident" or "Resident" for the assessment year 2013-14. The assessee claimed to be a "Non-Resident" based on Explanation 1(a) to section 6(1) of the Income Tax Act, which extends the period of stay in India to 182 days for those who leave India for employment. The Revenue argued that the assessee left India as an investor, not for employment, and thus the standard 60-day period should apply, making the assessee a "Resident."

The Tribunal referred to the assessee's appointment letter and other documents, which indicated that the assessee was employed as a Strategist - Global Investment with Firstland Holdings Ltd., Mauritius. The Tribunal also cited the Kerala High Court's decision in CIT v/s O. Abdul Razak, which interpreted "employment" to include self-employment like business or profession. Therefore, the Tribunal concluded that the assessee's stay in India for 176 days qualified him as a "Non-Resident" under Explanation 1(a) to section 6(1) of the Act.

Conclusion:

The Tribunal dismissed the Revenue's appeal, upholding the learned CIT(A)'s decision that the assessee was a "Non-Resident" for the assessment year 2013-14. Consequently, the cross-objection by the assessee was deemed academic and infructuous, and thus dismissed.

Order pronounced in the open Court on 08/01/2024.

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