TaxTMI 
TaxTMI 
2002 (5) TMI 46
X X X X Extracts X X X X
X X X X Extracts X X X X
....revious years for the number of days shown below: ---------------------------------------------------------------------------- Sl. No. Financial year Stay in India ---------------------------------------------------------------------------- (1) 1980-81 91 (2) 1979-80 62 (3) 1978-79 &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the last seven previous years. It was noted that, during the last nine previous years, the assessee was non-resident for only three years and during the last seven previous years, he had stayed in India for a period of 1,402 days. It was, therefore, held that the status claimed by the assessee of "not ordinarily resident" was not acceptable. During the previous year under consideration, the assessee stayed in India for a period of 196 days, i.e., more than 182 days, and therefore, his status was as a resident in India under section 6(1)(a) of the said Act. It was, therefore, held that the income earned outside India by the assessee in that previous year was includible in his total income. In the appeal preferred by the assessee before the Commissioner of Income-tax (Appeals)-IV, Ahmedabad, the Commissioner of Income-tax (Appeals) by his order dated August 13, 1985, came to a finding that since the assessee who was a citizen of India rendering service outside India was in India for less than ninety days during the financial years 1979-80 and 1976-77, he was not resident in India in nine years out of ten years and, therefore, his status was correctly taken by the Income-tax Of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... preceding years. Since the assessee was not a resident in India in nine out of ten years but only eight out of ten years, he, according to learned counsel, fell in the category of "not ordinarily resident" in India. In support of his contentions, learned counsel referred to the following decisions: (a) The decision of the Patna High Court in C.N. Townsend v. CIT [1974] 97 ITR 185 was cited for the proposition that, if any of the conditions mentioned in clauses (a), (b) or (c) of section 6(1) of the said Act is fulfilled, the assessee will be a "resident" within the meaning of the Act and if he comes within the mischief of either of the two conditions mentioned in section 6(6)(a), he will be treated as 'not ordinarily resident". In that case, the assessee came to India in April, 1964, and continued to stay in India till the end of March, 1965, and therefore, it was held that he clearly fulfilled the conditions laid down in section 6(1)(a) of the said Act and as such, was a "resident in India" during the previous year in question. It was held that the assessee, however, could not be treated as "ordinarily resident" in India as he fell within the first condition in section 6(6)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rily resident, namely, (i) the condition that he must have been resident in nine out of ten years preceding that year, and (ii) the condition that he must have been here for periods of more than two years during the seven years preceding that year. It was held that a person is "not ordinarily resident" in India in the previous year if he has not been "resident" in nine out of the ten years preceding that year; he need not establish that he was "not resident" in nine out of the ten years. It was observed that "not resident" and "not ordinarily resident" are not positive concepts but only the converse of "resident" and " ordinarily resident" and a category of persons "not resident and not ordinarily resident" is impossible to imagine and unknown to the Act. Learned counsel also relied upon the following observations from Kanga and Palkhivala's The Law and Practice of Income Tax, seventh edition, Volume 1, p. 192: "In order to claim the status of being 'not ordinarily resident' under the first part of this clause, residence in India for less than nine years out of the preceding ten years is sufficient. (The learned author here refers in a footnote the decision of S. Marimuthu Pi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....: "6. (6) A person is said to be 'not ordinarily resident' in India in any previous year if such person is (a) an individual who has not been 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 ((b)...." Section 6(1) of the said Act provided at the relevant time three separate grounds in clauses (a), (b) and (c), on any one of which, an individual could be said to be resident in India. An individual who is in India in any previous year for a total period of one hundred and eighty-two days or more during the relevant previous year will be considered to be resident in India in that previous year for the purposes of the said Act, as provided by section 6(1)(a) of the Act. Clause (b) of section 6(1) provided a twin condition of maintaining a dwelling house for one hundred and eighty-two days or more days and being in India for thirty days or more in the relevant previous year. This clause which was in force during the assessment year under consideration, was deleted with effect from A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all warranted by the provisions of section 6(6)(a) of the Act. Section 6(6) does not define "ordinarily resident in India" but describes "not ordinarily resident" in India. It resorts to the concept of "resident in India" for which the criteria are laid down in section 6(1) of the Act. On its plain construction clause (a) of section 6(6) would mean that if an individual has in all the nine out of ten previous years preceding the relevant previous year not been resident in India as contemplated by section 6(1), he is a person who is "not ordinarily resident" in India. To say that an individual who has been resident in India for eight years out of ten preceding years should be treated as "not ordinarily resident" in India, does not stand to reason and such contention flies in the face of the clear provision of clause (a) of section 6(6) which contemplates the period of nine years out of ten preceding years of not being a resident in India before an individual could be said to be "not ordinarily resident" in India, which position will entitle such person to claim exemption under 5(1)(c) of the Act in respect of his foreign income. An individual who has not been resident in India, with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ious year (as may be varied by the Explanation to clause (c) in cases where it applies). Under the second part of clause (a) of sub-section (6) of section 6, during the seven preceding years, if any individual has not for seven hundred and thirty or more days been in India, he would qualify for being treated as "not ordinarily resident" in India in the relevant previous year. It would, therefore, be strange to treat a person who has been resident in India in eight years out of ten preceding years as an individual who is "not ordinarily resident" in India. This misconception that has also crept in the commentaries of some learned authors on which reliance was placed, arises, because, one tries to search for a definition of "ordinarily resident" in India in section 6(6)(a), which as observed above, only lays down the condition of not being resident in India for nine out of ten preceding years for being treated as "not ordinarily resident of India" besides the other condition of not being in India for seven hundred and thirty or more days in the preceding seven years. When an individual is not in nine years out of ten preceding years a resident of India, it would mean that in none of ....