Residency for spouse-based stay under foreign exchange law requires permanence, preserving income-tax exemption for non-residents.

For section 2(p)(iii)(c) of the Foreign Exchange Regulation Act, 1973, "staying with his or her spouse" requires a stay of some permanence and does not cover a brief or casual presence. A non-citizen who lived in India with a spouse who was a person resident in India only temporarily remained a person resident outside India under section 2(q) of that Act, so the exemption under section 10(4A) of the Income-tax Act, 1961 remained available. The interpretation preserves the scheme governing Non-resident (External) Accounts and prevents it from being defeated by temporary cohabitation.

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Issues: Whether a non-citizen who stayed in India with his or her spouse, being a person resident in India, for a temporary or casual period could be treated as a "person resident in India" so as to deny exemption under section 10(4A) of the Income-tax Act, 1961.

Analysis: Section 10(4A) exempts interest on moneys credited to a Non-resident (External) Account of a person resident outside India, and the Explanation refers to the meaning in section 2(q) of the Foreign Exchange Regulation Act, 1973. That expression depends on section 2(p) of the Foreign Exchange Regulation Act, 1973. Reading section 2(p)(iii)(c) in context, the phrase "staying with his or her spouse" contemplates a stay of some permanence, akin to residing with the spouse, and not a brief or casual stay. If temporary presence with a spouse were enough, the statutory scheme relating to Non-resident (External) Accounts would be defeated.

Conclusion: The appellant was not a person resident in India during the relevant period and was a person resident outside India within the meaning of section 2(q) of the Foreign Exchange Regulation Act, 1973. The exemption under section 10(4A) of the Income-tax Act, 1961 was therefore available to the assessee.

Final Conclusion: The appeals succeeded and the High Court's view denying the exemption was set aside.

Ratio Decidendi: For section 2(p)(iii)(c) of the Foreign Exchange Regulation Act, 1973, "staying with his or her spouse" requires a stay of some permanence and does not include a mere temporary or casual stay; accordingly, the assessee remains a person resident outside India for section 10(4A) of the Income-tax Act, 1961.

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