1997 (3) TMI 164 - AT - Income Tax

Tribunal partially upholds appeal, confirms 'resident but not ordinarily resident' status, orders AO to credit demand drafts.

LATE S. AYYAKANNU BY LR. Versus ASSISTANT COMMISSIONER OF INCOME TAX.

The Tribunal partly allowed the appeal, upholding the assessee's status as 'resident but not ordinarily resident' but directing the AO to credit demand ... - Issues Involved:1. Status of the assessee as 'non-resident' or 'resident but not ordinarily resident'.2. Credit for foreign remittances by way of demand drafts.3. Income from house property.4. Credit for tax deducted at source and advance tax paid.Detailed Analysis:1. Status of the Assessee:The assessee claimed his status as 'non-resident' for the block assessment. He provided various documents to support his claim, including a certificate from Rama & Co., certified Public Accountants, and an extract from Singapore taxation laws. However, the AO did not accept this status due to the lack of documentary evidence such as passport, air ticket, and visa. Consequently, the AO treated the assessee as 'resident but not ordinarily resident' from the assessment year 1993-94 onwards. The Tribunal upheld the AO's determination of the assessee's status.2. Credit for Foreign Remittances by Way of Demand Drafts:The main grievance was the non-giving credit for demand drafts sent from Singapore. The AO disregarded these remittances due to the lack of direct evidence explaining the source of these drafts. The AO treated these remittances as unexplained investments and deposits under sections 69, 69A, and 69B of the IT Act, 1961. The Tribunal found this approach incorrect, stating that the remittances were capital receipts and not income received in India. The Tribunal emphasized that the demand drafts were purchased in Singapore and thus sections 69, 69A, and 69B were not applicable. The Tribunal also noted the double taxation avoidance agreement between India and Singapore, which should be considered. Consequently, the Tribunal directed the AO to give credit for the demand drafts amounting to Rs. 1,22,15,500.3. Income from House Property:The assessee did not offer any income from property at 14, Gemini Person Complex, Madras, on the ground that it was vacant. However, the AO assessed an income of Rs. 13,548 for each of the assessment years 1993-94, 1994-95, and 1995-96. Similarly, for the property at 94, Radhakrishna Road, Madras, the AO assessed an estimated income of Rs. 12,000 each for the assessment years 1993-94, 1994-95, and 1995-96, as the assessee had already claimed allowance for self-occupation for another property.4. Credit for Tax Deducted at Source and Advance Tax Paid:The assessee contended that the AO erred in not giving credit for tax deducted at source from income from lottery and advance tax paid. The Tribunal directed the AO to look into these issues and decide them according to law after affording the assessee a reasonable opportunity of being heard.Conclusion:The appeal was partly allowed. The Tribunal upheld the AO's determination of the assessee's status but directed the AO to give credit for the demand drafts amounting to Rs. 1,22,15,500. The Tribunal also directed the AO to address the issues related to tax deducted at source and advance tax paid.