FERA residence test governs Gift-tax exemption where incorporated definition must be read from the source statute itself.

Exemption under section 5(1)(iib) of the Gift-tax Act depended on whether the assessee qualified as a "person resident outside India" under section 2(q) of FERA. The applicable residence test had to be taken from FERA itself, not from section 6 of the Income-tax Act, because the incorporated definition was to be applied according to its source statute unless the incorporating provision required otherwise. On the facts, the assessee's stay in India from 6-6-1997 satisfied the FERA residency test based on intention to stay for an uncertain period, so the Income-tax Act day-counting rule and any special gift-date cut-off were rejected. The exemption was therefore unavailable.

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Issues: Whether the assessee was entitled to exemption under section 5(1)(iib) of the Gift-tax Act on the footing that he was a person resident outside India within the meaning of section 2(q) of the Foreign Exchange Regulation Act, 1973, and whether his residential status had to be determined by reference to the Income-tax Act, 1961.

Analysis: The exemption under section 5(1)(iib) of the Gift-tax Act depended on whether the assessee fell within the expression "person resident outside India" as defined in section 2(q) of the Foreign Exchange Regulation Act, 1973. That definition, in turn, had to be read with the residency provisions of FERA itself, and there was no warrant for importing the definition of residence from section 6 of the Income-tax Act, 1961. The provision in section 2(p)(iii)(c) of FERA covered a person who had come to or stayed in India for carrying on business or vocation or for other purposes indicating an intention to stay in India for an uncertain period. On the facts, the assessee had been staying in India from 6-6-1997 and his stay attracted the FERA residency test. The argument based on counting days under section 6 of the Income-tax Act, 1961 was rejected, as was the contention that the date of gift was a special cut-off for determining residence.

Conclusion: The assessee was a person resident in India under FERA, not a person resident outside India, and was therefore not entitled to exemption under section 5(1)(iib) of the Gift-tax Act.

Ratio Decidendi: Where a statute incorporates a defined expression from another enactment, the incorporated definition must be applied according to the source enactment itself unless the incorporating provision expressly requires resort to some other statute.

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