1990 (4) TMI 81 - AT - Income Tax

Assessee's Indian Employment Deemed Resident for Tax Year 1983-84

The ITAT Bombay-A ruled that the assessee should be treated as a resident for the assessment year 1983-84. The Tribunal found that the assessee's trips ... Resident - non-resident - Explanation (a) to clause (c) of sub-section (1) of section 6 - leaves India for the purposes of employment outside India - employment in India versus employment outside IndiaResident - non-resident - Explanation (a) to clause (c) of sub-section (1) of section 6 - leaves India for the purposes of employment outside India - employment in India versus employment outside India - Whether the assessee is a resident or a non-resident for Assessment Year 1983-84 under clause (c) of sub-section (1) of section 6 read with Explanation (a). - HELD THAT: - The Tribunal held that the learned CIT(A) erred in treating the assessee as a non-resident. Although the assessee was abroad for a total of 218 days during the relevant previous year and undertook multiple foreign trips, it was an admitted fact that he remained employed by an employer in India and received salary in India. The Tribunal analysed the language and context of Explanation (a) to clause (c) of section 6(1) and concluded that 'leaving' India 'for the purposes of employment outside India' requires more than temporary or periodic stays abroad in connection with employment in India; it contemplates a physical departure accompanied by an intention to remain abroad on a permanent or semi-permanent posting (a posting outside India). Merely undertaking tours or temporary stays abroad in connection with an Indian employment, even if aggregating more than 182 days, does not convert the assessee into a person who has 'left India for the purposes of employment outside India'. The Tribunal relied on the reasoning in the Special Bench decision addressing 'period of employment outside India' to distinguish temporary tours from a posting outside India. Applying these principles to the facts, the Tribunal concluded that the assessee did not leave India for employment outside India and therefore was not covered by Explanation (a) so as to claim non-resident status. [Paras 5, 6]The assessee is to be treated as a resident for Assessment Year 1983-84; the CIT(A)'s direction treating him as a non-resident is set aside.Final Conclusion: The revenue's appeal is allowed; the CIT(A)'s order directing that the assessee be treated as a non-resident is set aside and the assessee is directed to be treated as a resident for Assessment Year 1983-84. Issues:Status of the assessee - resident or non-resident for assessment year 1983-84.Analysis:The appeal before the Appellate Tribunal ITAT Bombay-A concerned the status of the assessee for the assessment year 1983-84. The assessee claimed non-resident status as he had left India for employment outside the country for a significant period during the relevant previous year. The CIT(A) directed the Assessing Officer to treat the assessee as a non-resident based on clause (a) of the Explanation to section 6(1) of the Income Tax Act. However, the revenue challenged this decision, arguing that the assessee did not meet the criteria for non-resident status. The Tribunal analyzed the facts, noting that the assessee had undertaken multiple trips abroad during the year but was employed by an Indian employer and received salary in India. The Tribunal referred to a clarification by the Central Board of Direct Taxes and emphasized that the assessee did not leave India for the purpose of employment outside India, as required by the relevant provision. The Tribunal concluded that the assessee's trips abroad were in connection with his employment in India and did not constitute leaving India for employment outside the country. Citing a precedent, the Tribunal held that only a permanent or temporary posting outside India would qualify as employment outside India, not mere tours or stays abroad related to Indian employment. Therefore, the Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the assessee to be treated as a resident for the assessment year 1983-84.