TaxTMI 
TaxTMI 
2008 (1) TMI 466
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....on which the status has the significance and another fact is that gift is made out of only NRE account where status has no relevance on the date of gift." 3. During the course of assessment proceedings, the assessee argued before the Assessing Officer as under: "(i) The assessee claimed NRI status in the return of gift, since he has an NRI on the date of making gifts. (ii) The date of assessee's arrival to India is 6-6-1997. (iii) A person will continue to NRI for a period of stay of 180 days. The assessee claimed to be NRI till 6-12-1997. (iv) The gifts were made on 25-11-1997 which clearly fell prior to 6-12-1997. (v) The gift is exempt under section 5(1)(iib) of the G.T. Act." However, the Assessing Officer rejected the claim by holding that the provisions of section 2(q) of Foreign Exchange Regulation Act, 1973 would be applicable to the case of the assessee and since the assessee is in India with effect from 6-6-1997 and remained in India for his personal reasons, his case would be covered within the meaning of section 2(p)(ii)(c). Accordingly, the Assessing Officer did not allow the exemption to the assessee. 4. Before the CGT(A) the assessee repeated ....
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....ent in India or not, one has to come back to section 6 of the Income-tax Act and find out whether the person is resident in India or not. Section 6(1)(a) of the Income-tax Act provides that a person will be resident in India only when he is in India for 182 days or more in that previous year. The assessee prior to giving gifts on 24-11-1997 was in India for less than 182 days as he had arrived in India on 6-6-1997. Accordingly, he is not a resident in India and, therefore, the assessee is a person resident outside India as per section 2(q) of FERA and as he is a person outside India, he is entitled to exemption under section 5(iib) of the G.T. Act. 7. On the other hand, the learned D.R. submitted that for the purpose of determining whether a person is a "resident in India" or "not resident in India" within the meaning of section 2(q) of FERA, one has to only look to FERA and need not come back to Income-tax Act for finding out the meaning of "resident" or "not resident". The concept of resident has been clearly defined in section 2(p) of the FERA which had been referred to by the learned Assessing Officer and confirmed by the learned CGT(A). The assessee, according to section 2(....
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....se- (a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (iii) a person, not being a citizen of India, who has come to, or stays in, India, in either case (a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for staying with his or her spouse, such spouse being a person resident in India, or (d) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (iv) a citizen of India, who, not having stayed in India at any time after 25-3-1947, comes to India for any of the purposes referred to in paragraphs (a), (b) and (c) of sub-clause (iii) or for the purpose and in the circumstances referred to in paragraph (d) of that sub-clause or having come to India stays in India for any such purpose and in such circumstances. Explanation.-A person, who has, by reason only of paragraph (a) or paragraph (b) or paragraph (d) of sub-clause (iii) been resident in India....
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....sual stay or stay for a short period, it would defeat the purpose of having Non Resident (External) Account. This being the position, the appellant cannot be treated as a person resident in India during the relevant period. Consequently, he will be a person resident outside India within the meaning of section 2(q) of the FERA entitled to exemption under section 10(4A) - CIT v. K. Rammullan [1997] 226 ITR 264 (Ker.) : TC S32.3077 reversed. Conclusion Assessee, a person of Indian origin, settled in Malaysia, who stayed with his wife in India for some period for undergoing medical treatment cannot be treated as a person resident in India during the relevant period; he is a person resident outside India within the meaning of section 2 (p)(iii)(c) "read with section 2(q) of FERA and is entitled to exemption under section 10(4A)." 10. It is clear from the above that Hon'ble Supreme Court had applied provisions of section 2(p) of FERA for determining whether a person is "resident in India" or not. Therefore, respectfully following above decision, we also hold that one has to look at the definition of "resident" only in the FERA and need not come back to the Income-tax Act unless ....