TaxTMI 
TaxTMI 
2017 (5) TMI 774
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.... the correct status of the asses see was that of a 'resident'. 2. On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) erred in law in holding that if the assessees case was covered by exception provided under Explanation (b) to section 6(1) of the Income-tax Act whereas the same was not applicable in facts of the case. 3. On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) erred in law in observing that the Assessing Officer would lose jurisdiction by virtue of status being determined in the assessment proceedings whereas matter of status can be determined in assessment proceedings and does not affect assumption of jurisdiction on the basis of status returned by the assessee. 4. On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 10,21,66,137 made by the Assessing Officer." 2. The main issue in dispute in the above appeals pertains to determination of the tax residency status of Shri Sudhir Choudharie, Shri Dhruv Choudhrie and Shri Bhanu Choudharie. In his order of assessment dated Decembe....
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....1164044 BBMEAEAD Trf. to own account Sudhir Choudhrie TT US$10000 deposited 4,32,789 13/Jan/05 178126405 HSBC Dubai Trf. to own account Sudhir Choudhrie TT US$250000 1,09,05,000 19/Jan/05 TTAEN409025CSN HSBC Bank, Middle East Ltd. Sh. Appl. Money Primeland Real Estate TT US$200000 86,64,600 03/Feb/05 TTAEN419218CSN HSBC Bank, Middle East Ltd. Sh. Appl. Money Primeland Real Estate TT US$10000 deposited 4,33,786 15/Feb/05 178136505 HSBC Middle East Dubai Trf. to own account Sudhir Choudhrie TT US$36570 15,89,429 08/Mar/05 TTAEN451754CSN HSBC Bank, Middle East Ltd. Sh. Appl. Money Primeland Real Estate TT US$10000 deposited 4,31,593 15/Mar/05 178148405 HSBC Dubai Trf. to own account Sudhir Choudhrie TT US$350000 1,52,70,500 28/Mar/05 TTAEN471277CSN HSBC Bank, Middle East Ltd. Sh. Appl. Money Skyline Buildtech Total Rs. 10,21,66,137 2.1 During the course of assessment, it was claimed by the assessee that since his tax residency status is that o....
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....her strengthens the view of this office. * The assessee has been tax resident of India in the past, * Along with properties owned in India, the assessee's address in India is '45-46, Sunder Nagar, New Delhi 110 016' * Therefore the gravity of his personal presence and legal presence lies in India. The assessee was not 'being outside India'. * Gravity of economic presence of the assessee should be outside India : * In the present case the assessee is director in 2 publicly listed India companies, 19 private limited companies in India * The assessee is partner in two partnership firms in India * The assessee is a karta of an Indian HUF * The assessee is earning rental income in India * The assessee is having following assets as per the wealth-tax records * Shalimar Gardens Plot (1/3) * E-18, NDSE, New Delhi (1/4) * Cars (Mercedes Benz) * Gold (Rs. 59,46,359) * Silver (Rs. 6,77,412) * Cars owned by Eureka Sales Corporation * As per the details of immovable properties owned in India the assessee is also the owner of 11, Bana....
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....ndia. * The assessee is only travelling to other countries, as normal India citizens and resident travel. * His presence in all the years has been substantial presence in India. To prove of 'Being outside India', the assessee is required to prove that how he has been outside India and in which country his center of vital interest, including personal and economical lies. No factual details related with the family and relationships like his and his family members, in-laws etc. are on file. The assessee has stated that his family is relocated first to Dubai and then to the UK. This claim of the assessee is unsupported by documentary evidence. In a contrast, surprisingly the assessee is spending the most of his days of year in India. The assessee is an Indian national whose personal, legal and economic presence lies in India. It can be assumed that his social presence is also in India. As put on record the assessee is not a resident of any country coupled with the fact that assessee has been in India for more than five months in India, coupled with the nature of assignments and involvement of lot of travel and further coupled with his economi....
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.... was submitted by the learned Commissioner of Income-tax (Departmental representative) that under certain circumstances number of days cannot be the sole criteria to determine the tax residency status. It was submitted by the learned Commissioner of Income-tax (Departmental representative) that on facts of the instant case, the learned Assessing Officer was correct in drawing a conclusion that the assessee was not on a visit to India but was instead in India on a return from visit to foreign countries. 4. Refuting the above arguments, the learned authorised representative placed support on the reasoning given by the learned Commissioner of Income-tax (Appeals) in the impugned order. It was further submitted by the learned authorised representative that during the course of assessment, a detailed factual note was submitted by the assessee substantiating his claim of "being outside India". It was submitted by the learned authorised representative that post his medical treatment, the assessee had decided to relocate his entire family outside India in the year 2000 and since then they have been staying in the UAE and the UK on a residency visa/highly skilled visa. The learned author....
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....v. Suresh Nanda [2013] 352 ITR 611 (Delhi). The learned authorised representative also relied upon the decision of co-ordinate Bench in the case of K. Sambasiva Rao v. ITO reported in [2014] 62 SOT 167 (Hyd). About the decisions relied upon by the learned Commissioner of Income-tax (Departmental representative) it was submitted that these cases were distinguishable on facts and per contrary support the case of the assessee. 5. In rejoinder, the learned Commissioner of Income-tax (Departmental representative) submitted that the decision of Suresh Nanda (supra) is factually distinguishable. As regards the status of the assessee being assessed as a "non-resident" in earlier years by the Tax Department it was submitted by the learned Commissioner of Income-tax (Departmental representative) that the principles of res judicata are not applicable to Income-tax proceedings. 6. We have carefully considered the rival submissions and have also perused the material available on record. Since we are called upon to determine the tax residency status of the above assessees, it would be relevant, first, to note the provisions of section 6, which are as under : "6. For the purposes o....
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.... the taxable territories in that year for a period amounting in all to one hundred and eighty-two days or more ; or (ii) maintains or has maintained for him a dwelling place in the taxable territories for a period or periods amounting in all to one hundred and eighty-two days or more in that year, and is in the taxable territories for any time in that year ; or (iii) having within the four years preceding that year been in the taxable territories for a period of, or for periods amounting in all to three hundred and sixty-five days or more is in the taxable territories for any time in that year otherwise than on an occasional or casual visit ; or (iv) is in the taxable territories for any time in that year and the Income-tax Officer (now Assessing Officer) is satisfied that such individual having arrived in the taxable territories during that year is likely to remain in the taxable territories for not less than three years from the date of his arrival ;" 6.2 Criteria of judging residential status on basis of a dwelling house in India was also retained in 1961 Act. In this regard clause (b) of section 6(1) provided for as under : "(b) maintains ....
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....the Finance Act, 1990 and the Finance Act, 1994 where in the period of 90 days was increased to 150 days and then from 150 days to 182 days. The legislative intention behind this is provided for by CBDT Circular No. 684 dated June 10, 1994 reported in [1994] 208 ITR (St.) 8, 21 as under : "Extending the period of stay in India in the case of non-resident Indians without their losing the non-resident status 19. Under the provisions of clause (1) of section 6 of the Income- tax Act, an individual is said to be resident in India in any previous year, if he has been in India during that year,- (i) For a period or periods amounting to one hundred and eighty- two days or more, or (ii) For a period or periods amounting to sixty days or more and has also been in India within the preceding four years for a period or periods amounting to three hundred and sixty-five days or more. However, the period of sixty days was increased to one hundred and fifty days in the case of a non-resident Indian, i.e., a citizen of India or a person of Indian origin within the meaning of the Explanation to clause (e) of section 115C of the Act, who, being outside Ind....
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....a. Therefore, he was not eligible for relaxation provided by Explanation (b) as he was not a person who being outside India comes on a visit to India. (b) According to the Assessing Officer 'being outside India' connotes some permanence abroad. It is for the benefit of the person who stays abroad and comes on a visit to India. The Assessee has been staying in India for approximately half of the year during the last ten-fifteen years. (c) The Assessing Officer referred to assessees profound social ties maintained in India with his son, wife and other relations and to keep control over Indian companies which were sufficient to hold that the assessee was inside India and a resident in India for all practical purposes. (d) The Assessing Officer made reference to the renovation carried by the assessee at his farm house in India to show that the assessee was to be treated as "inside India". 6.6.1 While concluding upon this issue the co-ordinate Bench in its decision has held as under : "We have heard the rival contentions and perused the material available on record. The first question which requires determination is whether the ass....
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....ssessee can take any vocation in any of the countries. (j) During these years the assessee had for more greater business engagements abroad as compared to India. Therefore it cannot be assumed that he did not come from outside of India. (k) The Explanation (b) to section 6, the explanatory notes for this amendment as clarified by the CBDT in this behalf also make the number of days provision very clear and unambiguous and leaves no room for interpretation. (l) Even for the sake of arguments we accept the Assessing Officers interpretation it leads to absurd result by making practically every non-resident as a resident in India. This does not seem to be the legislative intent behind this amendment as the mischief sought to be redressed by this amendment to reduce the hardship and not to increase the hardship by unsettling what is settled. When the law mandates that an Indian citizen can go abroad for the purpose of seeking employment or business, there is no room to misconstruction to assume that assessees larger presence/business investment/family ties are in India than abroad. This amounts to a guess work contrary to settled propositions. Therefo....
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....his behalf are allowed." 6.7 The above decision of co-ordinate Bench has also been upheld by the hon'ble jurisdictional High Court where the court has held as under (page 615 of 352 ITR) : "The learned counsel for the appellant sought to argue that the respondent-assessee would fall within section 6(1)(c) read with Explanation (b). However, we fail to see as to how that provision would come to aid of the appellant. Section 6(1)(c) applies to citizens of India as well as to persons of Indian origin. It also applies to foreigners. In so far as foreigners are concerned section 6(1)(c) has the stipulation of stay in India for a period or periods amounting in all to 60 days or more in the year in question. However, this is in addition to the condition of total stay in the preceding four years amounting in all to 365 days or more. But, in the case of citizens of India, the length of stay in India in a particular year has been extended to 182 days as compared to 60 days for foreigners. This period of 182 days was earlier 150 days and by virtue of the Finance Act, 1994, with effect from April 1, 1995, the word 'fifty' has been substituted by 'eighty- two'. I....
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....ome time ; did not want to come back to India and wished to settle overseas. Due to all these factors I decided to relocate our whole family to UAE in 2000. Since then we have been living overseas. I was issued residence visa in UAE, copy of which is attached and was living in Dubai with the family. Our address was 7th Floor, Mai Plaza, Zaribat Dhoe, Bur Dubai, Dubai, UAE. In April, 2004, I was issued a highly skilled visa under the migrant program of the United Kingdom and I have been in the UK since then. In the UK I stay at the address given in this letter. Initially I took up a job as an executive in a corporate entity to look after its strategic plans after that I have been working on retainer-cum-incentive basis and exploiting other global opportunities. During this period I have been visiting India from time to time to look after my various properties, review investment opportunities for my family as also for various funds with whom I have relationships, look after the affairs of our old business entities which are in winding down mode as also to attend board meetings of various professionally managed entities in which I have investments in India. Since I shifted my base out....
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....of Income-tax (Departmental representative). The Assessing Officer has also not doubted the submissions made by the asses see that it has not rendered any services in India with regard to its overseas assignments during visits to India and further that no business activity is being carried on by assessee in India. 6.12 We also find substantial merit in submissions made by the learned authorised representative that the basic document which would show intention of assessee is his passport. In the instant case copies of visa's issued by the UAE and the UK have been placed on record of the Assessing Officer. The Assessing Officer has noted in his order that "in the present case, the assessee is a citizen of India. Assessee is on Indian pass port. For Dubai or the UK he might be having some special visa" however after noting as such undue importance has thereafter been given by the Assessing Officer to the economic/legal presence of the assessee in India. Relevance of visa issued has been acknowledged by the co-ordinate Bench of the Income-tax Appellate Tribunal in the case of K. Sambasiva Rao (supra) by observing as under : "As can be seen from the above, going abroad f....
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....ial visit only that too for 30 days. Again in the visit pass issued on January 8, 2008, an endorsement was specifically made to the effect that he was not permitted to work or engage in any business, profession or occupation without a valid work pass. Similarly, such entry was noted in the visit pass issued on July 5, 2008. Therefore, going by the entries found in the passport it is revealed that the respondent was visiting Singapore from India and it was therefore quite apparent that the statutory documents viz., the pass port which can be relied upon as against any other claim made on behalf of the respondent, whatever be the period of stay in the foreign countries, the respondent's stay therein was only as a visitor. In other words, being an Indian resident, he was permitted by those foreign countries to visit those countries viz., Singapore and Malaysia and that on expiry of such visit pass, the respondent came back to India being an Indian citizen." 6.14 Similarly in the case of Smita Anand (supra) relied upon by the learned Commissioner of Income-tax (Departmental representative) the factual finding of the Authority for Advance Rulings is as under (pa....
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....s of the case we hold that Explanation (b) to section 6(1)(c) of the Act is also not applicable in the applicant's case." 6.15 For the reasons stated above, we do not find any reason to interfere with the finding recorded by the learned Commissioner of Income-tax (Appeals) directing the Assessing Officer to assess the assessee as a "non- resident". Ground Nos. 1 and 2 are therefore dismissed. 6.16 In ground Nos. 3 and 4, the Revenue is aggrieved by the action of learned Commissioner of Income-tax (Appeals) in deleting the addition of Rs. 10,21,66,137. Once the residential status of the assessee is held to be that of a "non-resident" then as per the provisions of section 5 only that income which accrues or arises or is received by the non-resident in India is taxable. Global income of the non-resident is not taxable as per the pro visions of the Act. Support in this regard can be drawn from the order passed by a co-ordinate Bench of the Income-tax Appellate Tribunal in the case of Deputy CIT v. Finlay Corporation Ltd. reported in [2003] 86 ITD 626 (Delhi). Conclusions recorded by the learned Commissioner of Income-tax (Appeals) directing the deletion of addition made by th....