TaxTMI 
TaxTMI 
2006 (6) TMI 166
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....ling of return for assessment years 1995-96 to 1999-2000 and certificate of being out of India for the preceding years. The Assessing Officer noticed that assessee had not been in India as per certificate as under: --------------------------------------------------------- Previous year No. of days Residential status --------------------------------------------------------- 1. 2000-01 113 R (to be determined) --------------------------------------------------------- 2. 1999-2000 - R&OR --------------------------------------------------------- 3. 1998-99 214 NR -------------------------------------------------------- 4. 1997-98 64 ....
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....with section 6(6) of the Act. The ld. CIT(A), after considering the amendment brought in the Act by the Finance Act, 2003 in section 6(6), observed that the person will be 'not ordinarily resident' only when he is non-resident in at least 9 out of 10 previous years preceding the relevant year. He observed that this amendment is clarificatory in nature as per Explanatory Note in the Finance Act. He, accordingly, upheld the order of the Assessing Officer. 5. The ld. Counsel relied on various case laws and submitted that admittedly, the assessee was not resident in India in 9 out of 10 years. He was resident only for 5 years and therefore, the residential status of the assessee was 'resident but not ordinarily resident'. He has relied on the following cases: XYZ, In re [1997] 223 ITR 379 (AAR). Morgenstern Werner v. CIT[1998] 233 ITR 751 (All.). CIT v. Morgenstern Werner [2003] 259 ITR 486 (SC). Sedco Forex International Drill Inc. v. CIT [2005] 279 ITR 310 (SC). 6. In the case before the Authority for Advance Rulings, the facts were that the assessee had returned to India in 1995 after having left in 1970. It was held that she was resident but not ordinarily residen....
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....inarily resident" in India in any previous year if such person is - (a) an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more; or" 12. The residential status of a person is 'resident but not ordinarily resident' when he satisfies one of the basic conditions as contemplated under sub-section (1) of section 6 and either of the conditions as contemplated under sub-section (6) clause (a) is fulfilled. In the present case, it is not disputed that the assessee was in India for more than 730 days and therefore, one of the conditions laid down under clause (a) to sub-section (6) of section 6 is not satisfied. There is no dispute to this extent. 13. Now the dispute concentrates only with respect to the other part of clause (a) of sub-section (6) of section 6 viz. - an individual who has not been resident in India (non-resident as substituted by Finance Act, 2003) in nine out of the ten previous years preceding that year. The assessee's claim is that he fulfils this ....
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....ess; or is a Hindu undivided family whose manager has been non-resident in India in nine out of the ten previous years preceding that year, or has during the even previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty nine days or less. 6.3 The amendment is clarificatory in nature and will take effect from 1-4-2004." 15. Though in the notes on clauses it has been mentioned that the proposed amendment is clarificatory in nature, but the amendment has been made applicable in relation to the assessment year 2004-05 and subsequent years which is evident from Finance Bill, 2003 introducing this amendment [2003] 260 ITR 41 (St.). It is a substantive provision inasmuch as it determines the tax liability of a person and therefore, it cannot be said to be a procedural section. Moreover, the definition of resident is entirely different from non-resident. Therefore, once in the substituted section the concept of non-resident has been brought into in place of resident, it cannot be said that it is clarificatory in nature. The scope of total income of an assessee is decided with reference to residential status. Consequent....