Person resident in India rule excludes those who leave for foreign employment; prior RBI permission required for property acquisition, else sanction follows.

The note addresses residency classification for immoveable property acquisition under FEMA and the 2000 Regulations: the 182-day residence test is determinative for the preceding financial year but excludes those who left India to take up employment abroad, so a person who resided over 182 days in that year but commenced foreign employment before the transaction does not qualify as resident and must obtain prior RBI permission for acquisition; absent permission, the acquisition contravenes Regulation 8 read with the pre-2015 Section 6(3), permitting penalty and confiscation under statutory enforcement provisions, and the authorities applied those provisions to invalidate the acquisition and impose sanctions.

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Issues: (i) Whether the appellant qualified as a "person resident in India" in the preceding financial year to the purchase and, if not, whether penalty and confiscation under the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Acquisition and Transfer of Immoveable Property in India) Regulations, 2000 were validly imposed.

Analysis: The definition of "person resident in India" requires residence in India for more than 182 days during the preceding financial year but excludes a person who has gone out of India for taking up employment outside India. The sale deed dated February 2004 makes the relevant preceding financial year 2002-2003. It is an admitted fact that the appellant resided in India for more than 182 days in 2002-2003 but took employment in England in March 2003 and remained employed there thereafter. The Regulations of 2000 prohibit transfer of immoveable property by a person resident outside India unless Reserve Bank of India permission is obtained; "transfer" includes purchase. Section 6(3) (as in force pre-2015) and Regulation 8 together required prior permission for acquisition by a non-resident. Section 13(1) authorises imposition of penalty and Section 13(2) authorises confiscation in respect of property involved in contravention. Given the employment outside India during the relevant preceding financial year, the appellant did not qualify as a person resident in India and thus required RBI permission which was not obtained. The adjudicating authorities applied the statutory and regulatory provisions to these facts and imposed a penalty and confiscation within the powers conferred by Sections 13(1) and 13(2).

Conclusion: The appellant did not qualify as a person resident in India for the relevant preceding financial year; the acquisition contravened Regulation 8 read with Section 6(3); imposition of penalty of Rs. 4,80,000 and confiscation of the immoveable property under Sections 13(1) and 13(2) of the Foreign Exchange Management Act, 1999 were valid. Appeal dismissed.

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