TaxTMI 
TaxTMI 
2026 (1) TMI 560
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....ome of INR 8,33,19,930. 2. The learned AO / Hon'ble DRP erred in both law and facts by erroneously concluding that the Appellant is a resident of India under section 6(1)(c) of the Act for the Financial Year ("FY") 2019-20. 3. The learned AO / Hon'ble DRP has failed to appreciate that for the FY 2019-20, the Appellant qualified as a person who "being outside India, comes on a visit to India", and thus, should be classified as a Non-Resident according to Explanation 1(b) to section 6(1)(c) of the Act, as his presence in India during the relevant previous year was for less than 182 days: 4. Without prejudice to the above ground, the learned AO / Hon'ble DRP has erred in law and facts by not appreciating that even if Explanation 1(b) to section 6(1)(c) of the Act were deemed inapplicable to the Appellant for the relevant previous year, the Appellant would still qualify as a non-resident under Explanation 1(a) to section 6(1)(c) of the Act as the Appellant departed from India to take up employment with Three State Capital Advisors Pte Ltd, Singapore during the FY 2019-20. 5. The learned AO / Hon'ble DRP has erred in law and facts, by ....
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....1. The learned AO has erred on facts and in law in charging interest under sections 234A and 234B of the Act. 12. The learned AO has erred, in law and on facts, in initiating penalty proceedings under Section 270A of the Act. The Appellant submits that each of the above grounds is independent and without prejudice to one another. Facts :- 3. The brief facts of the case show that assessee is an individual who filed his return of income for the assessment year 2020-21 claiming his status as a 'non-resident Indian' showing total income of Rs. 83,319,930. The case was selected for scrutiny and consequently the notice under section 143(2) of the Act was issued on 29 June 2021. In response to that the assessee filed his submission on 20 September 2021. Further, case of the assessee was transferred from the assessing officer of the assessment unit to the Deputy Commissioner of Income Tax, Circle 3 (1) (1), Bangalore as the assessee has declared himself as non-resident in his ITR filed on 17 February 2022. 4. The claim of the assessee is that he is a co-founder of Flipkart, an online e-commerce platform. He was part of the leadership team at the Flipkart ....
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....y the buyer on the long-term gains prior to considering the benefit under Article 13 (5) of the India Singapore tax treaty. Further the share transfer undertaken on 27 November 2019 the assessee submitted that the gain arising on the transfer of the 5,39,912 shares of FlipKart are not taxable under the Income Tax Act itself in view of Explanation 7 (a) to section 9(1)(i) of the Act. However, the tax was deducted by the buyer on the long-term gains prior to considering the provisions of the above Explanation of the Act. Assessment proceedings: - 6. One of the reasons for selection of the return of income for scrutiny was the claim of high tax refund claimed by the assessee. For this assessee explained that he was employed in Singapore and was a resident in Singapore and capital gain arising from sale of the shares on 21 June 2019 are not taxable in India under Article 13 (5) of the India Singapore Double Taxation Avoidance Agreement and the capital gain so arising from the sale of shares undertaken on 28 August 2019 and 27 November 2019 are not taxable in India under Explanation 7 (a) to section 9(1)(i) of the Act. Show cause Notice of AO: - 7. The learned assessing offi....
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....in Singapore and whether the same is more than 183 days or not, which is the necessary condition to be a tax resident of Singapore for the relevant fiscal year. Further the AO noted that according to the India Singapore DTAA, Article 4 (2), the residential status is required to be determined in accordance with "permanent home, Centre of vital interest and habitual abode" in the above two countries. The assessee is undisputedly Indian national. Thus the learned assessing officer questioned the assessee that why his income should not be assessed as a resident for the financial year 2019-20 in relation to the assessment year 2020-21. The learned AO further questioned that even assuming that assessee is a resident of Singapore for the relevant assessment year and even if it claims exemption from tax on capital gains under Article 13 (4A) and the Article 13 (4A) which is also subject to the LOB [Limitation of benefit ] clause under Article 24A (1) of the treaty. Thus, the assessee was questioned that limitation of benefit clause also prevents the assessee from claiming the benefit of Double Taxation Avoidance Agreement because his affairs are so arranged with the primary purpose to take....
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....so no tax motives can be attributed for the same. Assessee referred to his submission dated 16 March 2022 and 19 September 2022. It was further reiterated that assessee has resigned from the employment in India with the Flipkart group in November 2018 and post his resignation, the assessee left India to take up the employment in Singapore with effect from February 2019. Throughout the financial year 2019-20, the assessee has been employed in Singapore and continues to be in employment until date. Assessee further stated that he has a rented home in Singapore where he has resided throughout the financial year 2019-20. The family of the assessee is also residing in Singapore and the children of the assessee are attending schools there. The spouse of the assessee is also in employment in Singapore and the family of assessee and assessee continues to reside in Singapore till date. The assessee as well as his family has appropriate Singapore residence visas. Thus the claim of the assessee that his migration to Singapore was for bona fides personal and professional reasons and was not occasioned by the state of sale of shares of Flipkart Private Limited undertaken during the assessment y....
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....see that on the criteria of "permanent home" assessee has a permanent home in Singapore and does not have a permanent home in India. 13. With respect to "centre of vital interest "it was submitted that during the financial year 2019-20, the assessee's personal and economic relations are close to Singapore than India. It was stated that assessee's nuclear family consisting of his spouse and his two children are residing in Singapore along with the assessee for the whole of the financial year 2019-20. Further the assessee does not have any dependent family members in the India and the parents of the assessee are residing in Punjab, are independent and even prior to his migration to Singapore his parents were not living with him. His children go to school in Singapore; spouse of the assessee is also employed in Singapore. He is principal bank accounts and credit cards are also in Singapore. Therefore, even the presences of his close family in Singapore, his social relations are close in Singapore than to India. Further with respect to the economic relationship of the assessee, it was submitted that assessee is employed in Singapore, does not have any office or other similar....
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.... Explanation 7(a) to section 9(1)(i) of the Act. 17. With respect to the applicability of limitation of benefit clause as per Article 24A of the Double Taxation Avoidance Agreement assessee contended that that ambit of Article 24A is restricted to paragraph 4A and 4B of Article 13 and same is not applicable to capital gains falling under paragraph 5 of Article 13. As the assessee is capital gain earned by him on sale of shares in Flipkart Private Limited is covered under Article 13 (5) and not under Article 13 (4A) the same is not applicable. 18. It was further stated that the affairs of the assessee were not so arranged with the primary purpose to take advantage of the benefit of Article 13. The assessee once again reiterated the facts about his shifting from India to Singapore. Therefore, the assessee stated that the stand taken by the assessee in the return of income deserves to be accepted. Reasons of the Assessing Officer: - 19. The learned assessing Officer examined the explanation of the assessee and computed the days of the stay of the assessee from financial year 2015-16 to 2019-20 at 1237 days against the requirement of 365 days and also stay in the relevant p....
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.... Bangalore [2009] 34 SOT 180 (Bangalore)/ [2010] 132 TTJ 328 (Bangalore) [03-04-2009] it was stated that the issue is in fact in favour of the revenue. The learned assessing officer further rejected the claim of the assessee that interpretation of Explanation 1 (b) to section 6(1)(c) is restricted to non-resident would lead to an absurd result. It was stated that assessee has considered the hypothetical scenarios where assesses who are individuals ordinarily resident in India. The scenarios where the individuals are non-resident, then the benefit would be available to them in every possible situation under Explanation 1 (b) and that indeed is the intent of the law. Accordingly, the learned assessing officer held that the assessee is ' resident-ordinarily resident' as per the provisions Of the Income Tax Act, 1961 and the claim of the assessee's status in the income tax return filed as non-resident was rejected. 22. With respect to the residential status as per the double taxation avoidance agreement with a specific reference to ' tiebreaker test' of Article 4 (2), the learned assessing officer held that the assessee has a permanent home in India and he has be....
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....ived salary income which shows that company is based at Bangalore. He further held that from the above screenshot, it is clear that the company is working on Indian start-up ecosystems, the client and customers are Indians, the organisation mostly comprises of Indians and the office address is in Bangalore, India. He further noted that on the website there is not a single whisper of Singapore clients or operation. The learned assessing officer was also of the view that assessee has singularly been in a Startup in India and to deny that the centre of vital interest do not lie in India is an argument that is neither born by the facts nor even by imagination. Thus the learned assessing officer held that that the economic interest of the assessee also lie in India. 24. With respect to the question of habitual abode, the learned assessing officer noted that from the complete facts shown the habitual abode and nationality are obviously in this case are in India. The assessee for his entire life has been a resident of India and has been living in India and also an Indian national. Draft Assessment order: - 25. Accordingly the learned assessing officer held that the assessee is a ....
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....capital asset and to allow the deduction of the same. Thus the panel directed the learned AO to allow the expenses incurred on sale of shares. The assessee also got a benefit of deduction under section 80G of the Act on the donation made. Final Assessment Order: - 31. Accordingly the long-term computation of capital gain was made by the learned assessing officer and granted the benefit of the provisions of Rule 115 of The Income Tax Rule as well as granted deduction of the expenses incurred towards the transfer of shares. Accordingly the long-term capital gain on account of sale of shares of Flipkart Private Limited was computed at Rs. 162,54,19,504/-. 32. The assessment order was passed computing the total income of the assessee at Rs. 1,819,395,700/-. By passing an assessment order under section 143(3) read with section 144C(13) of the Act on 31st of July 2023. Submissions of ld. Sr. Advocate on behalf the Assessee: - 33. Assessee is aggrieved with the same and is in appeal before us. The learned senior advocate Shri Percy Pardiwala referred to the various grounds of appeal. He filed a paper book containing 1345 pages. He also referred to several judicial precedent....
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....onal Taxation)) calling for various details. In response, the Appellant filed detailed submissions. 6. The Jurisdictional Assessing Officer ('Ld. AO') passed the draft assessment order on 30.09.2022 and held the Appellant to be a "resident" of india both in terms of section 6(1)(c) of the Act as well as Article 4 of the India-Singapore Double Tax Avoidance Agreement ('DTAA'). As a result, the global income of the Appellant was assessed to tax in India and the Ld. AO proposed an adjustment of INR 1089,55,55,845/- to the total income of the Appellant. 7. Aggrieved by the draft assessment order, the Appellant filed his objections before the Hon'bie Dispute Resolution Panel ('DRP') which, vide its directions dated 28.06.2023, disposed of the objections of the Appellant, upholding the Ld. AO's conclusion that the status of the Appellant was "resident" but granting marginal relief to the Appellant on issues of computation of capital gains and Chapter VI-A deductions. 8. In line with the directions of the Hon'ble DRP, the Ld. AO passed the impugned Final Assessment Order ('FAO') dated 31.07.2023 confirming the status o....
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....dated 29.06.2021 under section 143(2) of the Act was issued to the Appellant by the NFAC. In response to the notice, the Appellant filed his submissions objecting to the issuance of the notice by NFAC which had no jurisdiction over the Appellant (being a non-resident), since as per the CBDT circular dated 31.03.2021, cases falling under the 'International Tax Charge' are specifically excluded from the jurisdiction of NFAC (see page 81 of the paper book). 12. Although, on filing of the objections by the Appellant, the case was transferred to the Jurisdictional AO, i.e., the DCIT, International Taxation, Circle 1(1), no fresh notice under section 143(2) of the Act was issued to the Appellant by the Jurisdictional AO. 13. The Appellant submits that the notice under section 143(2) must be issued by the officer having jurisdiction to make an assessment of an assessee and, therefore, a notice issued by an authority who has no power to assess a specific assessee, i.e., the NFAC in this case, would be without jurisdiction and void ab initio. 14. It is now well settled that the authority to make an assessment under section 143(3) is predicated on a valid n....
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....sed on 30.09.2022 and therefore, the final assessment order dated 31.07.2023 is barred by limitation. 18. Reliance is placed on: i. Shyam Sunder Bhartia v. DCIT(IT) (Reported in [2023] 149 taxmann.com 162 (Lucknow-Trib.)) - (paras 23-27); and ii. Atos India (P.) Ltd. v. DCIT (Reported in [2023] 152 taxmann.com 217 (Mumbai -Trib)) - (paras 31-35) Re. Ground Nos. 2 & 3: Determination of the residential status of Appellant under section 6(1)(c) read with Explanation 1(b) of the Act Relevant pages of AO order and directions of the DRP: Draft assessment Order ('DAO') Pages 9-35 Directions of the Hon'ble DRP Pages 2-12 FAO Pages 62 Relevant submissions DRP objections: pages 134-167 of the appeal set. 19. Section 6 of the Act provides for certain tests to determine the residential status Section 6(1) envisages two tests to determine the residential status of an individual viz.,: (i) an individual is said to be resident of India in any previous year if he is in India for a period of 182 days or more (Section 6(1)(a)); OR (ii) an individual is said to be a resident of India if he is in Indi....
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....t' in the preceding year (i.e., the FY 2018-19), the Ld. AO held that the benefit of Explanation 1(b) to section 6(1)(c) would not be available to the Appellant for the FY 2019-20. Accordingly, since the Appellant's total period of stay exceeded 60 days in FY 2019-20 and 365 days in the last 4 years, the Ld.AO held the Appellant to be a resident. 25. Explanation 1(b), on its plain language, applies to an Indian citizen or a person of Indian origin who 'being outside India' comes on a visit to India. There is no requirement for an individual to be a 'non-resident' in the preceding year. It is physical situs of the Appellant which is relevant for satisfaction of the test as to whether the Appellant is 'being outside India'. An individual who goes overseas and takes up employment overseas is 'outside India' since his situs is outside India. If such an individual continues to be employed overseas, such an individual would be said to be one who is 'being outside India'. The use of the present perfect tense is indicative of a state of existence. 26. The Ld. AO has failed to appreciate that residential status is a concept d....
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.... Case 1: Consider the case of an individual who leaves India for the first time for taking up employment anytime between 1 April-30 September of Year 1. Such an individual would be regarded as non-resident in Year 1 as per Explanation 1(a) of the Act since his number of days of stay in India would be less than 182 days. When he visits India in Year 2, he would be eligible to stay in India upto 182 days without being regarded as a resident as per Explanation 1(b). Case 2: Where an individual leaves India anytime between 1 October- 31 March of Year 1 for taking up employment, such individual would be regarded as resident in Year 1 as his stay in India exceeds 182 days. If the interpretation is that for Explanation 1(b) to be applicable the individual needs to be non-resident in the preceding year, such an individual would be regarded as a resident in Year 2 if he stays in India for 60 days or more, even if his stay in India is less than 182 days. If the individual has stayed for more than 60 days in Year 2, he will once again lose the benefit of Explanation 1(b) in Year 3 if the view taken is that the individual needs to be a non-resi....
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....ly individuals employed outside India, but also individuals who were self-employed or engaged in other avocations outside India. In this context, the Explanation was amended to bring in a reference to the "Indian citizens being outside India coming on a visit to India". The memorandum to the Finance Bill 1982 (refer paras 33-36 at page 651 of the paperbook) and the speech of the Finance Minister for 1982 budget (paras 74-76 at pages 684-685 of the paperbook) clearly articulates the aforesaid intention. There is no reference to a requirement that the individual has to be a 'non-resident' in the preceding year for availing the benefit of the said Explanation. 34 Thereafter, the amendments to Explanation 1(b) have only changed the number of days of stay in India referred to therein, without any other change in the language of Explanation 1(b). In the absence of any change in the language of the aforesaid Explanation, it is clear that the intention behind introduction of the said Explanation as articulated in the memorandum to Finance Bill 1982 continues to hold the field, and therefore, it is not necessary to refer to the CBDT circulars explaining the amendments broug....
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.... present in India for 78 days (i.e., more than 60 days but less than 182 days). Given these facts, the Bangalore Tribunal held that the assessee was non-resident. It is noted that the facts in the present case are similar to the aforesaid case of Manoj Kumar Reddy Nare and, therefore, the Appellant should also be treated as a non-resident. LIST OF RELEVANT DOCUMENTS TO BE REFERRED TO IN SUPPORT OF THE ABOVE ARGUMENTS. Document Page number in the paperbook Copy of tax return filed by the Appellant with Inland Revenue Authority of Singapore for the calendar year 2019. 113 -115 Copy of tax return filed by the Appellant with Inland Revenue Authority of Singapore for the calendar year 2020. 116-122 Copy of resignation letter dated 13.11.2018 given by the Appellant to Flipkart Internet Private Limited, India 196 Copy of in-principle approval of the employment pass issued to the to work with X to 10X Singapore Employment letter dated 17.02.2019 issued by X to 10X Singapore (formerly known as BTB Consulting Private Limited) to the Appellant. 197-200 Passport entries evidencing travel of the Appellant from India to Singapore to take up employment wi....
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.... a 'non-resident' under section 6(1)(c) read with Explanation 1(a) on the basis that the Appellant left India for the purpose of employment with Three State Singapore in the FY 2019-20, during which year he has stayed in India for a period of less than 182 days. LIST OF RELEVANT DOCUMENTS TO BE REFEREED TO IN SUPPORT OF THE ABOVE ARGUMENTS. Document Page number in the paperbook Copy of passport showing travel to India on 01.09.2019. 148 Copy of resignation letter sent to X to 10X Singapore. 1036 Copy of the employment letter issued by the Three State Singapore. 204-219 Copy of passport showing travel to Singapore on 10.09.2019 150 Copy of in-principle approval of the employment pass issued to the Appellant by Three State Singapore - Copy of the employment pass issued to the Appellant by the Ministry of Manpower, Government of Singapore authorizing Appellant to reside in Singapore and take up employment in Three State Singapore. 220-221 Re. Ground No. 5: Tie-breaker clause under Article 4 of the India-Singapore DTAA: 43. Since at the time of hearing, this ground was not gone into, the Appellant is not filin....
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....turn of income filed. It is submitted that it is not the jurisdiction of DCIT- International tax that is being questioned under this ground, but it is the treatment of the Appellant by the Ld. AO as an 'eligible assessee' which is under challenge. Since, the Appellant is not an 'eligible assessee' as per the stand of the Department as neither of the conditions prescribed under section 144C(15)(b) of the Act are fulfilled, the Ld. AO, consistent therewith, should have passed a final assessment order on or before 30.09.2022 and his failure to do so renders the assessment failing order barred by limitation. Re. Ground Nos. 2 to 4: 49. The Departmental Representative argued that in terms of Explanation 1 (b) to section 6(1)(c) of the Act, the person ought to be a non-resident and in that regard, relied on section 115C(e) of the Act. It is submitted that Explanation 1(b) to section 6(1)(c) of the Act reads ' ... being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C.... '. Hence, the Explanation is applicable to either Indian citizens or to a person of Indian origin. Explan....
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....re. He continues to be employed in that company and has not come back to India. 38. During this year, he has earned capital gain on sale of shares of a Singapore entity [Flipkart Private Limited] which has derived its valuation from an Indian entity [Flipkart India Private Limited]. Such sale took place somewhere in the month of July 2019. The second and third tranche of sales has happened in August 2019 and November 2019. According to the assessee, he submitted that the capital gain arising on the sale of a Singapore company is not chargeable to tax either as per the Indian Income Tax Act or as per the treaty. He submits that Article 13 (5) of the treaty exempt such capital gain from taxation in India. 39. He submits that that the learned assessing officer is of the view that the phrase mentioned in Explanation 1 (b) "being outside India" is only applicable to the non-resident. He strongly refuted the above finding of the learned AO. He referred to the legislative history of the above provisions. He first took us to the memorandum explaining the provision in The Finance Bill 1982 and referred to clause 43 wherein some relaxation was granted to the test of residency in India.....
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....lation of section 6(3) which is placed at the submission before the learned dispute resolution panel wherein the word "being outside India" and "non-resident" were also mentioned. His submission was that if the person ' being outside India ' is to be interpreted as Nonresident only, the statue would have used that simple phrase of " Nonresident' only. 40. Accordingly, the contention of the learned authorised representative was that the assessee's case falls in the Explanation 1 (b) of the Act and therefore for application of clause (c) of subsection 1 of section 6, period of 182 days should be considered, instead of the period of 60 days considered by the learned assessing officer. Therefore his contention was that according to that Explanation, the assessee is not a resident of India. 41. He submits that assessee has stayed for 127 days in this financial year, which is less than 182 days for this year. 42. Even otherwise his contention is that, even if he fails to satisfy that the case of the assessee falls under Explanation 1 (b), his case also falls under clause (a) of the above Explanation. He submits that if a citizen of India who leaves India in any p....
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....pore and he is also considered to be a resident of India, the tie breaker test between the residential status between these two countries is required to be applied. He Referred to Article 4 (2) of the DTAA. He submits that assessee is employed by Flipkart India, left India in November 2018, resigning from that particular place. He referred to provisions of Article 4 (2) and stated that the assessee has a permanent home in Singapore, his centre of vital interest are also situated in Singapore, his habitual abode is also in Singapore. Therefore, he should be considered as a resident of Singapore even applying ' tie breaker test' also. He submits that once the assessee has moved to Singapore he is staying there in a service apartment, therefore staying in a rented flat till 2019, is his permanent home available to him in Singapore. It was further stated that assessee has a home available to him in India, however, it is not in a habitable position and therefore the assessee does not have any home which can be said to be a permanent home available to the assessee. With respect to the centre of vital interest of the assessee, he referred to the submission made before the learned ....
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....essee has filed its return of income stating him to be 'non-resident". He further stated that assessee has shown his residence jurisdiction of ' Singapore" and also given tax identification No. of that country. He referred to the draft assessment order dated 30 September 2022, in paragraph No. 21 of that order, where the status of the assessee was considered to be a 'resident'. He further referred to paragraph No. 26 of the draft assessment order where in conclusion the learned assessing officer held that assessee is a 'resident and ordinary resident of India'. He further referred to the provisions of section 144C of the Act, and submitted that in case of an 'eligible assessee', the learned assessing officer should have at the first instance passed the draft assessment order. If the assessee is not an 'eligible assessee', there is no need to pass the draft assessment order. For the definition of the 'eligible assessee', he referred to the provisions of section 144C(15)(iia) of the Act. He submits that when the assessee is a 'resident of India', he is not an 'eligible assessee' and therefore in his case, no draft assess....
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.... submitted that in the return of income, the assessee declared his residential status as a "non-resident" and claimed refund of Rs.136,15,32,200/- against taxes deducted at source on income arising in India. The case was selected for scrutiny under CASS and was initially assigned to the Faceless Assessment Unit. In view of the assessee's claim of non-resident status, the case was transferred to the Assessing Officer having jurisdiction over international taxation. The subsequent assessment proceedings were thereafter carried out by the said jurisdictional Assessing Officer in accordance with law. 2. During the course of assessment proceedings, the assessee contended that he qualified as a non-resident under Explanation 1(b) to section 6(1)(c) of the Income-tax Act, 1961 ("the Act"), on the ground that he is a citizen of India visiting the country. In the alternative, the assessee further sought to claim the benefit of Explanation 1(a) to section 6(1)(c) by asserting that he had left India for the purpose of employment abroad. The assessee also submitted that his stay in India during the relevant previous year was 141 days. 3. The factual position, however, cle....
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.... 4. It is respectfully contended that a plain and harmonious reading of Section 6(1)(c)- even without recourse to the Explanations appended thereto-unambiguously establishes the residential status of the assessee as "Resident" for the relevant assessment year. The statutory requirements under the main provision stand fulfilled on the admitted facts. 5. Without prejudice, should the assessee seek to rely upon the benefit of Explanation 1 to Section 6(1), the burden of proof squarely lies upon him to establish, with cogent, credible, and verifiable evidence, that the strict conditions contemplated therein are satisfied. It is a settled principle of law that an Explanation to a statutory provision is in the nature of an exception or clarification, and cannot be mechanically invoked to dilute, override, or nullify the express mandate of the main provision, unless the assessee establishes a clear factual foundation. Determination of the Residential Status of the Appellant under Section 6(1)(c) read with Explanation 1(b) of the Income-tax Act, 1961 6. The assessee has sought to invoke the provisions of Explanation 1(b) to Section 6(1)(c) of the Income-ta....
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.... NRIs from inadvertently becoming residents due to extended visits to India, and not to shield those who were residents of India until the immediately preceding year and merely undertook last-minute foreign visits as a part of regular business trips. 11. The present case does not fall within the purview of this relaxation. The assessee was a resident of India up to FY 2018-19 and cannot be equated with a non-resident Indian "coming on a visit" from abroad. It is respectfully submitted that such a factual scenario does not meet either the letter or the spirit of the law. The assessee cannot be permitted to take shelter under a provision intended for genuine non-residents merely on the basis of departure to a foreign country before the commencement of the financial year, particularly in light of his frequent trips abroad. 12. Accordingly, the assessee's contention that Explanation 1(b) applies to his case is wholly misconceived and untenable. The provision was enacted with the clear legislative intent of enabling genuine Non-Resident Indians to spend longer periods in India for the purpose of managing their investments without jeopardising their non-resident sta....
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....worded to apply to "a citizen of India, or a person of Indian origin within the meaning of section 115C, who, being outside India, comes on a visit to India." The reference to "person of Indian origin" as defined in section 115C, coupled with the consistent legislative history and CBDT Circulars No. 346 (30-6- 1982), 554 (13-2-1990) and 684 (10-6-1994), makes it abundantly clear that the relaxation was intended only for genuine non-resident Indians and persons of Indian origin settled abroad who visit India for limited periods. 16. It is therefore submitted that the phrase "being outside India" cannot be extended to cover a person who was resident in India up to the immediately preceding year, and who merely undertakes a short departure abroad before the commencement of the financial year, only to return frequently and continue to maintain substantial presence in India in the relevant financial year. To interpret otherwise would defeat the legislative intent and permit residents to wrongfully claim the relaxation meant exclusively for non-residents. 17. Further, Assessee's reliance on the case of Manoj Kumar Reddy [2009] 34 SOT 180 (Bangalore) is wholly mispla....
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....the ambit of this relaxation. Accordingly, the assessee cannot claim the extended threshold of 182 days and is squarely a resident under section 6(1)(c) of the Act. Determination of the Residential Status of the Appellant under Section 6(1)(c) read with Explanation 1(a) of the Income-tax Act, 1961 21. The assessee has attempted to claim the benefit under Explanation 1(b) to section 6(1)(c) as discussed above. Failing that, the assessee has sought to invoke Explanation 1(a) as an alternate route. The relevant provision is reproduced below for clarity: ... Explanation 1 .- In the case of an individual: (a) Being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty-two days" had been substituted." ... 22. In simpler terms, to claim the benefit of Explanation 1(a), the following conditions....
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....eptember 2019, the date on which the assessee claims to have resigned from employment with X to 10X Technologies Pte. Ltd, Singapore while being in India. [This Agreement is on the page no. 440 of the paperbook] 26. It is therefore submitted that the assessee's assertion that he was present in India itself after resigning from X to 10X Technologies Pte. Ltd, Singapore and prior to taking up employment with Three State Capital Advisors Pte. Ltd., is factually incorrect and directly contradicted by documentary evidence. The signing of the Executive Agreement on 20th August 2019 clearly establishes that the assessee was fully aware of his forthcoming role and that the employment would commence upon issuance of the final employment pass by the Ministry of Manpower, Singapore. The application for the employment pass was submitted on 21st August 2019, well before the assessee's resignation from X to 10X Technologies Pte. Ltd, Singapore on 5th September 2019. [Please refer to the page no. 456 of the paperbook] 27. It is thus evident that the assessee remained employed with X to 10X Technologies Pte. Ltd, Singapore and stayed in Singapore during this period. His v....
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....ame day, without adherence to the contractual notice period. The assessee has also failed to submit the Minutes of the Board of Directors' meeting of X to 10X Technologies Pte. Ltd, Singapore, which could have substantiated the purported waiver or acceptance of immediate resignation. This further underscores that the assessee's claim regarding resignation while being in India is unsupported by credible documentary evidence. 33. The assessee has failed to establish that he left India during the relevant previous year/financial year, a prerequisite to claim the benefit under Explanation 1(a). The inconsistencies in the documentary record, including resignation letters and employment agreements from closely held companies under the assessee's control suggest that these documents were orchestrated to create the appearance of compliance with Explanation 1(a). These documents are not corroborated by independent evidence, such as emails, official correspondence etc. 34. Consequently, the second condition under Explanation 1(a), requiring the assessee to leave India in the relevant previous year, remains unfulfilled. It is also on record that the assessee hims....
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....n under Explanation 1(a)-that the assessee should have left India in the relevant previous year for the purposes of employment outside India-is not satisfied. 39. In light of the foregoing analysis, it is established that the assessee does not qualify for the benefit of Explanation 1(a). Since the assessee was in India for more than 60 days during the relevant previous year and more than 365 days in the preceding four years, he squarely falls within section 6(1)(c) and is required to be treated as a Resident for tax purposes in India. Substance over Form 40. It has already been demonstrated in the preceding paragraphs that the assessee cannot claim the benefit of either Explanation 1(a) or Explanation 1(b) to section 6(1)(c) of the Income-tax Act, 1961, whether separately or cumulatively. 41. However, beyond the technical ineligibility, the larger picture reveals that the assessee has devised a colourable device to present his stay and movements as either (i) "leaving India for the purpose of employment" or (ii) "visiting India while being outside India," solely with the intention of escaping capital gains taxation that is otherwise rightly charg....
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....46 dated 30-06-1982, No. 554 dated 13-02-1990, and No. 684 dated 10-06-1994, was never to provide any relaxation for self-created arrangements or artificial "foreign employment." These circulars explicitly confirm that the provisions under Explanation 1(b) to Section 6(1)(c) are intended solely for genuine Non-Resident Indians (NRIs) visiting India, and not for taxpayers attempting to extract the benefit on thier residency status to avoid capital gains tax. 45. The Switch to Three State Capital Advisors Pte. Ltd, Singapore. * April 12, 2019: Assessee incorporated BTB ADVISORS PTE. LTD., Singapore. Again, he was a co-founder and substantial shareholder. * Assessee has frequently travelled to India during the period April 2019 to August 2019. * August 20, 2019: Assessee signs Executive Agreement with Three State Capital Advisors Pte. Ltd, before resigning from the previous employment with X to 10X Technologies Pte. Ltd., Singapore. * September 1, 2019: Assessee comes to India. * September 5, 2019: Assessee claims to have resigned from X to 10X Technologies Pte. Ltd, Singapore while in India. However, the resignation letter was bot....
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....pulate dates cannot be allowed to override the clear statutory requirements and factual reality 48. Conclusion-Colourable Device to Evade Tax The above chronology and facts prove that the assessee orchestrated a scheme to portray his presence abroad as "employment" and his presence in India as "visits," with the sole purpose of avoiding Indian taxation on capital gains. i. His so-called "employers" were companies founded and substantially owned by him. ii. His movements between India and Singapore were frequent and inconsistent with a genuine independent employment. iii. His resignation and re-employment were timed precisely to create the appearance of compliance with the conditions of Explanation 1(a) to Section 6(1)(c). 49. Thus, both Explanation 1(a) and 1(b) are inapplicable. The doctrine of substance over form squarely applies, and the assessee's residential status must be determined on the basis of his actual stay in India, not on the artificial constructs of self-employment arrangements. Accordingly, the assessee is to be treated as a Resident for FY 2019-20, and liable to capital gains tax in India. 50. In v....
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....the shoulders of the guideless, good citizens from those of the 'artful dodgers'. It may, indeed, be difficult for lesser mortals to attain the state of mind of Mr. Justice Holmes, who said, 'Taxes are what we pay for civilized society. I like to pay taxes. With them I buy civilization'. But, surely, it is high time for the judiciary in India too to part its ways from the principle of Westminster and the alluring logic of tax avoidance. We now live in a welfare state whose financial needs, if backed by the law, have to be respected and met. We must recognise that there is behind taxation laws as much moral sanction as behind any other welfare legislation and it is a pretence to say that avoidance of taxation is not unethical and that it stands on no less moral plane than honest payment of taxation. In our view, the proper way to construe a taxing statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process m....
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....s status must be determined on the basis of substantive facts, which firmly establish him as a resident for the relevant previous year. Tie-breaker clause under Article 4 of the India-Singapore DTAA: 54. This issue has been elaborately discussed in the Assessment order. Article 4 of the India-Singapore Double Taxation Avoidance Agreement discussed briefly as under. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows. Provisions of the Article 4(2) Assessee's case a. he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ; Assessee has a permanent home in India. He has been living in C-703, Mantri Classic Apartments, ST Bed layout, Koramangala, Bengaluru, Karnataka, India (560034), as per the Income Tax Records. Further, from the Income Tax records assessee has purchased a large residential house in Korama....
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....uing notices under Section 143(2) is without merit and deserves to be dismissed. The Hon'ble High Court of Karnataka has clearly upheld the authority of NaFAC, confirming that such notices are valid and legally enforceable. On the Issue Eligible Assessee: 58. This issue has already been dealt with in detail in the assessment order. The assessee had claimed the status of 'Non-resident' in the return of income filed. However, during the course of assessment proceedings, when the Assessing Officer proposed to determine the status as 'Resident', the scope of total income under section 5 of the Act automatically expanded to include all income accruing or arising outside India during the relevant year. This necessarily resulted in a clear variation between the income returned by the assessee and the proposed assessed income as per draft order. 59. Since such variation is undeniably prejudicial to the interest of the assessee, section 144C(1) of the Act mandates passing of a draft assessment order. Accordingly, the Assessing Officer has rightly invoked the provisions of section 144C and passed a draft order, thereby affording the assessee a s....
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....(Bombay), on this issue is entirely misplaced, as the facts of that case are materially different from the present matter. In Soares, the petitioner had initially filed a return claiming status as 'Resident', subsequently filed a revised return as 'Non-resident', and later withdrew or abandoned the revised return, ultimately accepting himself as a 'Resident'. Consequently, there was no subsisting variation between the income returned and the income assessed, which is the pre-condition for invoking section 144C. The Hon'ble High Court, therefore, merely set aside the draft order and directed that assessment be made treating the assessee as Resident, as per his own final stand. 64. In contrast, in the present case, the assessee continues to assert that he is a non-resident, while the Assessing Officer has proposed to determine him as a resident, thereby creating a clear variation in income under Section 144C. Unlike Soares, there has been no abandonment of the non-resident claim. Therefore, the procedure under Section 144C is squarely applicable, and the assessee cannot derive any support from the Soares decision. 65. Further, Hon'ble....
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....ncluding the date of resignation on 5th September 2019, has no bearing on the commencement of employment with Three State Capital Advisors Pte. Ltd., except to create the appearance of compliance with the conditions of Explanation 1(a) to Section 6(1)(c). This deliberate attempt to manipulate dates cannot be allowed to override the clear statutory requirements and factual reality. 69. Viewed holistically, the assessee's conduct demonstrates a classic case of a colorable device, where form is used to disguise substance. The substance-over-form principle applies squarely, and such artificial arrangements cannot be given judicial approval, as reinforced by the Hon'ble Supreme Court in McDowell & Co. Ltd. v. CTO 154 ITR 148 (SC), Hyatt International Southwest Asia Ltd [2025] 478 ITR 238 (SC), which strongly discourages schemes intended to evade tax. 70. In conclusion, the assessee is ineligible to claim the benefits of Explanation 1(b) or Explanation 1(a), separately or collectively. In law and on facts, the assessee must be treated as a resident of India, and all income as per section 5(1) of the Act, must be fully subjected to taxation under the Income-tax A....
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....sessee are quite distinguishable and therefore all these decisions do not apply. 55. He further submitted that if the learned assessing officer had not passed the draft assessment order in the instant case but if final assessment order would have been passed, and if later on the assessee succeeds before the higher forum that his status is "non-resident", then the assessee would say that the learned assessing officer should have passed the draft assessment order first. Therefore his submission was that 'at the first instance' the provisions itself says that in case of an eligible assessee, draft assessment order should have been passed. He submits that the assessee cannot claim that in his return of income he is a non-resident and for the purpose of procedure of the assessment, he is claiming that the procedure should have been adopted of a resident not of a non-resident. He otherwise submitted that that decision of the honourable Bombay High Court on its observation clearly shows that assessee cannot have both the worlds. Thus he submits that that ground No. 7 of the appeal of the assessee should fail on this count itself. 56. On the issue of resident versus non-resid....
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....to Singapore consequent to the sale of shares was alleged by the learned assessing officer to be an anti-avoidance of tax Step. He further referred to the reply of the assessee at page No. 7 dated 14 March 2022 wherein the assessee did not give the complete detail but sought an adjournment. He further referred to page No. 186 of the submission of the assessee dated 16 March 2022 wherein on page No. 187 the assessee replied that "the assessee has left India for the purpose of taking up employment as chief executive officer of X to 10X technologies pte Ltd (previously known as B2B consulting PT Ltd) and commenced work in Singapore with effect from 22 February 2019. A copy of the employment letter as well as letter to the Ministry of Manpower confirming his date of joining the company is enclosed as annexure 4A and 4B respectively. The employment pass that had been issued to the assessee by the Ministry of Manpower, Singapore in this regard is enclosed as annexure 5. As co-founder and principal shareholder of X to 10 X, the assessee has continued to advise and guide X to 10 X till date. The assessee spouse and his two minor children moved to Singapore to take up residence with the ass....
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....sued in the name of BTB Advisors Private Limited on 16 September 2019. He further referred to page No. 703 of the paper book which is a notice issued by the learned assessing officer on 21 September 2022 wherein the learned assessing officer as per paragraph No. 8 clearly asked the assessee to show his residential status as per The Double Taxation Avoidance Agreement also holding that the learned assessing officer has already held that the assessee is resident as per provisions of section 6(1)(c) of the Act. He further referred to reply of the assessee placed at page No. 709 of the paper book and referring to page No. 722 of the paper book submitted that assessee has a permanent home in India as already stated by the learned assessing officer. He further referred to page No. 1036 which is a resignation letter issued by the assessee to the board of directors of X to 10X PTE Ltd on 5 September 2019 which is accepted and confirmed by Mr Sai Kiran Krishnamurthy, director of the above company. It was further stated that the resignation letter is dated 5 September 2090, wherein the resignation was to be effective from 1 September 2019 waiving of the formal notice period as per agreement.....
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....g may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by restoring to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. Courts are now concerning themselves not merely with the genuineness of a transaction, but with the intended effect of it for fiscal purposes. No one can now get away with a tax avoidance project with the mere statement that there is nothing illegal about it, and ld. ASG vehemently relied up on the decision of Honourable supreme court in Mc Dowell & Co. Ltd. vs. Commercial tax Officer [1985] 22 Taxman 11 (SC)/[1985] 154 ITR 148 (SC)/[1985] 47 CTR 126 (SC)[17-04-1985]. 61. The learned Additional Solicitor General read his detailed note which is as under :- REBUTTALS TO SUBMISSION MADE BY THE APPELLANT ON 24.10.2025 1. The Appellant has filed further submissions on 14.10.2025 in response to the Revenue's written submissions dated 24.09.2025. In continuation of, and without prejudice to, the submissions already placed ....
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....1.1(a) of Appellant's submissions dated 14.10.2025: 6.1 At the outset, it is respectfully submitted that the Appellant's reliance on the Explanatory Memorandum to the Finance Bill, 1982 is selective and misconceived. The Finance Minister's Budget Speech of 1982, introducing the amendment, explicitly records that the object was to liberalise the residence test in the case of Non-Resident Indians visiting India. The contemporaneous CBDT Circular No. 346 dated 30.06.1982 reaffirmed this intent by clarifying that the relaxation was provided to enable NRIs settled abroad to spend a longer period in India without jeopardising their non-resident status. The subsequent clarificatory Circulars No. 554 (13.02.1990) and No. 684 (10.06.1994) consistently echoed the same legislative policy. 6.2 Further, the Appellant himself refers to the Explanatory Memorandum to the Finance Bill, 1982 and notes that an explanation to section 6(1) was first introduced vide the Finance Act, 1978 to enable Indian citizens rendering services outside India to stay in India on leave or vacation "without becoming resident." The repeated use of the phrase "without becoming resident" is o....
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....laced on record does not indicate that, at the start of the previous year, the Appellant had shifted his centre of life, residence, or economic activity outside India in a manner consistent with the legislative intent underlying Explanation 1(b). The alleged foreign employment was in an entity incorporated and controlled by the Appellant himself and remained closely connected to India in terms of business focus, value, workforce, and operational linkages. Furthermore, the Appellant's initial residence in a serviced apartment before the start of the previous year reinforces that his presence abroad was temporary and exploratory, rather than a settled relocation of the nature envisaged under Explanation 1(b). This requirement of establishing permanency prior to 01.04.2019 is particularly material in the present case, as the Appellant's first recorded entry into India during the relevant previous year was on 02.04.2019 itself, as evident from passport stampings. Thus, unless a settled base abroad existed before 01.04.2019, the Appellant's arrival in India on 02.04.2019 cannot be characterised as a "visit from abroad" within the meaning of Explanation 1(b). 6.8 It ....
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....t time. 7. Counter Rebuttal to Para 1.1(b): 7.1 The Appellant's interpretation of CBDT Circular No. 684 dated 10.06.1994 is also erroneous. The circular refers to "a non-resident, i.e., a citizen of India or a person of Indian origin," which merely clarifies that a non-resident may be either an Indian citizen or a person of Indian origin. These are the exact words used in Explanation 1(b), and therefore, the Appellant's attempt to assign a different connotation or expanded meaning to them is wholly unfounded. 7.2 Furthermore, the heading of the circular, "Liberalisation of the criterion for determining residential status in the case of Non-Resident Indians," unequivocally demonstrates that the intended beneficiaries are Non-Resident Indians visiting India, and not individuals who continue to retain resident status in India. The context, structure, and terminology of the circular are fully aligned with the legislative intent underlying Explanation 1(b). 7.3 It is therefore submitted that CBDT Circular No. 684 (1994), when read in conjunction with Circulars No. 346 (1982) and No. 554 (1990), supports and reinforces the Revenue's interpr....
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....a 1.1(e): 10.1 The Appellant's contention that the Revenue is attempting to "rewrite" the statute is devoid of merit. The Revenue's interpretation flows directly from the statutory language "being outside India, comes on a visit to India" as enacted by the Legislature. The use of the word "visit" is deliberate and denotes that India must not be the place of residence of the individual at the material time; rather, it must be a place visited from an existing residence outside India. Had Parliament intended to extend the relaxation to all Indian citizens travelling abroad for any purpose or for short durations, it would have adopted broader wording such as "being outside India for any reason" or omitted the phrase "comes on a visit to India" altogether. 10.2 The construction advanced by the Revenue is therefore based on the plain and ordinary meaning of the statutory text and preserves the integrity of the provision as an exception intended for Indian citizens or persons of Indian origin who had already established a settled base outside India prior to the commencement of the relevant previous year, and who thereafter visit India. There is no question of add....
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....he Appellant seeks to remove the express requirement "being outside India, comes on a visit to India" from Explanation 1(b) and replace it with a broader, textually unsupported construction; such an approach is impermissible. 12.3 Further, the argument that the Appellant would suffer a permanent disadvantage if the benefit of Explanation 1(b) is denied for the relevant year is factually and legally unfounded. Even if the Appellant does not qualify for the relaxation under Explanation 1(b) in Year 2, there is no perpetual prejudice, because: i. the Appellant may still establish residential status for that year [year 2] through the tie-breaker clause under Article 4 of the India-Singapore DTAA, which ultimately allocates residency to only one country, and ii. if in subsequent years [year 3] the Appellant genuinely establishes a settled and permanent base outside India, he may avail the benefit of Explanation 1(b) from future years, once the factual conditions for its applicability are satisfied. 12.4 Thus, the statutory framework already provides mechanisms to ensure that an assessee is not subjected to double taxation or permanent detriment. The "....
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....e the consistent legislative intent, which has always been that the relaxation under Explanation 1(b) is intended for individuals already settled outside India and thereafter visiting India. 13.5 Even otherwise, the Appellant's reliance on section 115C is irrelevant to the core issue. Explanation 1(b) is not concerned with defining "NRI" but with identifying the limited category of persons eligible for relaxation from the 60-day rule. The Explanation must be interpreted with reference to its context, purpose, and accompanying Circulars. On this basis, the provision unquestionably applies only to individuals who had a non- resident base abroad prior to the start of the relevant previous year and thereafter visit India. 13.6 Therefore, the Appellant's attempt to distinguish between "citizen of India", "person of Indian origin", and "non-resident Indian" does not assist his case. The Revenue's reference to section 115C was contextually appropriate and only for the limited purpose of demonstrating that the Legislature consistently intended this relaxation for individuals who were already outside India in a settled and demonstrable manner, not for those who....
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....ion 6(1)(c) and not on the application of Explanation 1(b). The Tribunal's reasoning, if anything, supports the Revenue's interpretation that Explanation 1(b) is available only where the individual has already established a genuine, substantive, and compelled base outside India prior to the relevant year and thereafter visits India. The Appellant's reliance on the ruling is therefore misplaced and unsustainable. 15. Counter Rebuttal to Para 1.4(a): 15.1 At the outset, the Appellant's objection that the Revenue's submissions constitute a "new ground" being raised for the first time at the appellate stage is wholly untenable. It is well-settled that the Income-tax Appellate Tribunal is the final fact-finding authority and is vested with wide jurisdiction to examine all facts, materials, and legal contentions necessary for a correct adjudication of the matter. The Tribunal is not confined merely to the record as it existed before the lower authorities; rather, it is empowered to consider any material or argument that assists in determining the correct tax liability in accordance with law. This principle has been consistently affirmed in the follow....
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....amily's relocation demonstrates a bona fide shift does not meet the statutory test for claiming the benefit of Explanation 1(b). 17. Counter Rebuttal to Para 1.4(c): 17.1 The Appellant's reliance on the existence of employees, office premises, invoicing, Singapore tax filings and the earning of revenue by X to 10X Singapore to demonstrate a genuine foreign employment is misplaced. These assertions do not address the core statutory requirement under Explanation 1(b), which is whether the Appellant's own presence outside India was compelled by a genuine, independent employer- employee relationship, and whether India had ceased to be his residential and economic base at the commencement of the relevant previous year. 17.2 Firstly, the Appellant claims that X to 10X Singapore earned revenue from "more than 20 customers" during FY 2019-20. However, no details have been furnished to establish: - how many of these customers were Indian entities or India-linked clients, - how many were connected to or referred through the Indian subsidiary or Indian business network, and - whether such business was effectively serviced from ....
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.... discharged this burden. Reliance on subsequent tenancy arrangements, children's schooling, or issuance of Dependent Passes during FY 2019-20 does not establish that such permanency existed at the commencement of the year. 18.3 Secondly, the Appellant's argument that Indian business linkages are irrelevant is misconceived. While the geographical location of customers alone may not be determinative, where the foreign "employment" is intrinsically linked to, derived from, or controlled through India, such ongoing and substantial nexus negates the inference that the Appellant had shifted his residential and economic base outside India. In the present case, the Appellant's Singapore role was closely tied to Indian operations, value creation and business relationships, and therefore cannot be equated to an independent foreign posting. 18.4 Thirdly, the documents cited by the Appellant-Employment Pass, Dependent Passes, tenancy, and schooling of children-may establish residence during FY 2019-20, but they do not prove "being outside India" at the start of the previous year, which is the relevant statutory test for invoking Explanation 1(b). Subsequent steps ....
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.... included is irrelevant unless the primary, foundational requirement of being already outside India in a settled capacity is met. 19.4 Promoter-Driven Entrepreneurial activity abroad is not a substitute for "Being outside India": The Appellant's status as an entrepreneur for many years does not by itself prove that his move to Singapore constituted a shift of residence. Entrepreneurial activity can be carried out from any jurisdiction and does not establish that India ceased to be his principal base at the commencement of the year. An entrepreneurial venture where the Appellant retains freedom to choose his place of residence does not meet the standard of a compelled or externally-structured foreign engagement underlying Explanation 1(b). 19.5 Budget Speech extract does not assist the Appellant: The Budget Speech extract relied upon by the Appellant merely clarifies that the benefit is not confined to formal employment. It does not remove the condition that the individual must already be situated outside India before visiting India. The Appellant's reading isolates a single sentence to dilute a threshold that remains firmly embedded in the statutory text a....
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....iance on Sudhir Choudhrie v. ACIT is misplaced. That decision merely reiterates that residential status must be determined strictly on the basis of the statutory day-count tests under section 6(1), and that such statutory criteria cannot be overridden by subjective considerations. The Revenue is not seeking to override section 6(1) by importing any extraneous conditions; rather, the Revenue is demonstrating that the Appellant does not satisfy the threshold condition for availing the relaxation under Explanation 1(b), namely, that he must have established a settled, permanent base outside India before the commencement of the relevant previous year. 20.5 Further, the factual matrix in Sudhir Choudhrie is fundamentally different and, in fact, reinforces the Revenue's position. In that case, the assessee had relocated long prior to the relevant assessment year, having moved his entire family outside India in the year 2000, and had since been residing abroad on a residency visa/highly skilled visa in the UAE and the UK. For A.Y. 2005-06, the assessee's long-term relocation and permanent base outside India were undisputed and accepted by both parties. The Tribunal, there....
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.... fields, and the Appellant's attempt to invoke both to suit convenience is inherently contradictory and untenable. 21.4 The Appellant's own timeline disproves his Explanation 1(a) claim and exposes renewed India nexus: If the Appellant's contention is that he qualifies under Explanation 1(a) only after resigning from X to 10X Singapore on 05 September 2019, then by his own admission, his stay in India from 05 September to 10 September 2019 would amount to a return to India after cessation of employment abroad. This re-entry and continued stay in India during this period re-establishes his nexus with India. This re-entry undercuts the claim of continuous foreign employment; in any case, the Appellant still fails the statutory conditions of Explanation 1(a) on their own terms. 21.5 The Appellant fails both Explanation 1(a) and Explanation 1(b) on merits. - Explanation 1(a) applies where the individual leaves India during the relevant previous year for the purpose of employment outside India. The Appellant left only in February 2019, i.e., prior to the start of previous year, and therefore does not satisfy the statutory timing condition. ....
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....). 23.2 Further, if the Appellant's resignation dated 05 September 2019 is to be accepted as the point of cessation of his earlier role, then his presence in India between 05 September and 10 September 2019 cannot be ignored. This period evidences a re-entry and renewed stay in India, thereby re-establishing his personal and residential ties with India, which is inconsistent with the assertion of a continuous foreign employment status. The Appellant cannot selectively disregard this India stay while attempting to align facts to suit Explanation 1(a). The inconsistency in the Appellant's own factual narrative erodes the credibility of the claim. 24. Counter Rebuttal to Para 2.2(c): 24.1 The Appellant has still not produced any independent or contemporaneous documentary evidence to substantiate the alleged resignation from X to 10X Singapore on 05 September 2019. A self-generated resignation letter, without corroboration from independent records, does not establish the fact of cessation of employment. In the normal course of corporate governance, resignation of a CEO or key managerial person would be reflected through board resolutions, minutes of m....
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.... period. This silence in formal records further undermines the credibility of the Appellant's version. 25.3 In these circumstances, the Appellant's visit to India immediately prior to taking up the new role creates the clear impression that the visit was utilised to create a semblance of compliance with Explanation 1(a), rather than arising from any genuine employment necessity. Commercial or regulatory considerations may justify a change of employer abroad, but they do not convert an internal job transition abroad into a "departure from India for employment" under the Act. 25.4 Accordingly, to satisfy Explanation 1(a), the Appellant must demonstrate that he left India during the previous year for the purpose of employment. The facts placed on record do not establish that the Appellant's departure from India was for taking up employment with Three State Advisors Singapore, and thus the statutory condition under Explanation 1(a) remains unfulfilled. 25.5 The Appellant's further reliance on the argument that the change of role was driven by regulatory, professional, or business requirements-such as MAS licensing norms or investor expectation....
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.... the Appellant's engagement was not under an independent third-party employer at arm's length, but arose in the context of a structure which he himself promoted and controlled. 26.3 Therefore, the core statutory trigger present in British Gas, leaving India to take up employment outside India, is completely absent here. The ruling relied upon by the Appellant actually underscores the Revenue's position that the act of leaving India for employment is a necessary statutory condition for Explanation 1(a) to apply. 26.4 The Appellant's assertion that it is "common practice" to sign a new employment contract before resigning from an existing role is irrelevant. Even if such practice exists generally, commercial convenience cannot override statutory language. Explanation 1(a) mandates that the individual must leave India during the previous year for the purpose of employment, and this essential requirement is not satisfied in the present case. 26.5 Accordingly, the reliance placed on British Gas is inapposite and does not advance the Appellant's case in any manner. 27. Counter-Rebuttal to para 2.3: It is submitted that if t....
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....ame reservation does not cure this defect. Name reservation is not equivalent to a change of legal identity of the entity. Hence, the Revenue's objection stands. 29. Counter-Rebuttal to para 29 mentioned in Table 2.3: 29.1 The Appellant continues to fail to substantiate the fact, date, and mode of resignation from Xto 10X Singapore with credible evidence. Passport stampings may show physical presence in India, but they do not prove the fact of resignation. 29.2 A cessation of employment of a CEO is a formal act that must be supported by independent and contemporaneous records, such as: * board resolution approving resignation, * statutory filings, * corporate records reflecting cessation of employment, * financial statement disclosures (especially in Singapore), none of which have been provided. 29.3 The omission of such a key event from the Appellant's own detailed submission dated 16.03.2022 (pages 186-187 of the Paper Book), where the Appellant had meticulously narrated the chronology of events, indicates that the "resignation while in India" narrative is an afterthought introduced only at t....
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....rporate record further weakens the credibility of the resignation claim and reinforces the Revenue's position that the alleged resignation is unsupported by reliable evidence. 33. Hence, despite multiple opportunities across the assessment, DRP, and appellate stages, the Appellant has failed to substantiate the fact, timing, and validity of his alleged resignation from X to 10X Singapore through any independent or contemporaneous evidence. The absence of Board resolutions, statutory filings, or documentary proof, coupled with the omission of such a material event from the Appellant's own earlier submissions, indicates that the resignation narrative is an unverified and unsupported assertion. As the resignation is the very foundation of the Appellant's Explanation 1 (a) claim, the failure to establish this fact renders the claim unsustainable. Consequently, the Appellant has not discharged the burden of proof, and the benefit of Explanation 1(a) cannot be granted. The Appellant cannot seek a statutory relaxation on the basis of an unproven factual event. 34. Counter-Rebuttal to Para 2.4(a): The Appellant's objection that the Revenue's s....
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....e September 2019 shift did not constitute a fresh act of leaving India for new employment. 36.2 The subsequent leasing of a separate office in January 2020 is irrelevant for the purpose of Explanation 1(a), as it occurred after the relevant period and cannot retrospectively establish that the Appellant had taken up "new employment outside India" at the material time. The factual position as it existed at the relevant time clearly demonstrates continuity, not change, in the Appellant's professional establishment in Singapore. A cosmetic separation of workspaces cannot convert an internal role transition into a new employment outside India. 37. Counter-Rebuttal to Para 2.4(d): The Appellant's submission that the two entities have distinct business activities-one engaged in consultancy and the other in investment management-does not assist his case. The nature or line of business of the foreign entity is not the test under Explanation 1(a). The only relevant enquiry is whether the Appellant left India during the previous year for the purpose of taking up employment outside India. The admitted facts show that the Appellant had already gone abroad in F....
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....corporate records, thereby undermining the credibility of the Appellant's version. The attempt to portray this internal transition as a distinct foreign employment capable of triggering Explanation 1(a) is inconsistent with the factual matrix, the statutory requirement, and the settled interpretative principle that substance must prevail over form. Accordingly, the Appellant's submissions under Point 2.4 are untenable and do not satisfy the statutory conditions for claiming the benefit of Explanation 1(a). 40. Counter-Rebuttal to Para 3-Substance over Form: 40.1 The Appellant's objection that the Revenue is invoking the principle of "substance over form" for the first time at the ITAT stage is misconceived. When determining residential status and the applicability of a statutory relaxation such as Explanation 1(a), this Hon'ble Tribunal is required to consider the true legal character and substance of the underlying arrangement, irrespective of the labels adopted by the Appellant. 40.2 It is well-established that the ITAT, being the final fact-finding authority, is empowered to examine the real nature of the transaction, the surrounding ci....
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....e on events that occurred after the commencement of the relevant previous year-such as gradual family relocation, school admissions, club memberships, acquisition of Singapore Permanent Residency at a later stage, and subsequent application for citizenship-are wholly irrelevant for the purpose of determining residential status under section 6. Residential status must be determined with reference to the factual position as it existed at the start of the previous year, and not based on subsequent developments or progressive settlement abroad. These post-facto circumstances cannot retrospectively establish that the Appellant was "being outside India" at the material time. (ii) Continued nexus with India negates claim of settled base abroad Even during the period relied upon by the Appellant, his personal, economic, and business nexus with India remained substantial, and his Singapore arrangement was still intertwined with India-linked interests. The Appellant retained significant control, influence, and value connection with Indian business operations, and the alleged shift to Singapore was neither complete nor independent at the commencement of the relevant previous year. Th....
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....3. Article 4(2)(a)-Permanent Home Test 43.1 The Appellant's claim that he did not have a "Permanent Home" available to him in India during the relevant previous year is factually incorrect and misleading. It is an admitted position on record that the Appellant owned substantial immovable residential properties in India, including: * A residential property in Koramangala, Bengaluru valued at approximately Rs.36.75 crore, * A land valued at approximately Rs.1 crore, and * An apartment in Mantri Classic, Bengaluru valued at approximately Rs.2.75 crore. [Schedule AL- AY 2018-19] 43.2 Under the OECD Commentary and judicially accepted interpretation of the Permanent Home Test, ownership and availability of residential property is sufficient to constitute a permanent home; physical occupation or completion of renovation is not a pre- condition. The mere fact that one of the properties was under construction or undergoing renovation does not negate the fact that the Appellant owned and retained residential accommodation in India throughout the relevant period. 43.3 In contrast, the Appellant's accommodation in Singapore during t....
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....ked operational substance during the relevant period and had not matured sufficiently to constitute a shift of economic centre of gravity outside India, (iii) Further, the Appellant continued to hold substantial unlisted equity shares worth several crores of rupees in Indian private companies during the relevant year, as evident from his Income Tax Return. The quantum of his Indian shareholdings far exceeded any investments or capital interests held in Singapore, clearly indicating that the core of his personal wealth, economic interests, and value concentration remained in India. (iv) The Appellant continued to hold, control, or influence India-based assets and business interests of significant magnitude, thereby retaining economic gravity in India. These factors clearly demonstrate that India constituted the primary economic centre of the Appellant's life during the relevant period. 44.4 Personal and Residential Nexus with India: In addition to the economic ties: (i) The Appellant retained ownership of multiple high-value properties in India during the relevant year, reflecting continued personal and residential roots in India. The....
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....eate a habitual abode in Singapore for the relevant year. Accordingly, the Habitual Abode Test under Article 4(2)(b) also weighs in favour of India. 46. Post-Year Developments Are Irrelevant for Tie-Breaker Analysis: 46.1 The Appellant's reliance on subsequent life events, including family shifting, schooling of children in Singapore, social memberships, PR/citizenship applications, and lifestyle changes etc. is legally irrelevant. Such post-year developments cannot retrospectively rewrite the factual position as it existed at the commencement and during the relevant previous year. 46.2 The tie-breaker under Article 4(2) must be applied strictly with reference to the factual matrix during the year in question, and cannot be influenced by personal circumstances developing in later years. 47. Conclusion on Tie-Breaker: In view of the above, the Appellant's reliance on Article 4 of the India-Singapore DTAA is misconceived and unsustainable. Even assuming Singapore tax residency is accepted, the Appellant does not meet the factual tests under Article 4(2) that would allocate residence to Singapore. The Permanent Home, Centre....
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....ction 144C(15)(b), is wholly misconceived and contrary to both the language and purpose of section 144C. 51.2 Assessee's own claim of Non-Resident status triggered section 144C: The Appellant himself filed the return of income declaring the status of "Non-Resident" for the relevant assessment year. During the course of assessment, when the Assessing Officer proposed to determine the residential status as "Resident", the scope of total income under section 5 automatically expanded, resulting in a clear and undeniable variation prejudicial to the interest of the Appellant. 51.3 Once such prejudicial variation arose in the case of an assessee who had claimed non- resident status, it squarely attracted section 144C, mandating the passing of a draft assessment order. The Assessing Officer has, therefore, correctly invoked section 144C and issued a draft order. 51.4 Prejudicial variation is the only test-not final outcome: For the purpose of section 144C(1), what is relevant is the variation proposed in the draft order, and not the final determination made thereafter. The Appellant's argument that the AO, having held him to be a resident in the final or....
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....the issue of the eligible assessee he submitted that if the assessing officer is of the view that assessee is a resident in India, he should not have passed the draft assessment order but should have passed the final assessment order. The movement he has passed the draft assessment order, he has to understand the consequence of the same. He submitted that the issue is squarely covered by the decision of the honourable Bombay High Court in favour of the assessee. With respect to the residential status he submitted that that the meaning to the phrase ' being outside India' given by the revenue is totally absurd. He submitted that if that would have been the intention of the legislature, it would have used a simple phrase "who is a non-resident of India" instead of, 'being outside India'. With reference to various circulars referred to by the learned assessing officer it was submitted that those were based on the three presentation of non-resident Indians but that does not mean that it should not apply to anybody else who fulfils the requirement of the law. With respect to the challenge by the learned additional Solicitor Gen stating that it is a colourable device and ....
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.... to the submissions made by the learned ASG, therefore, assessee was given an opportunity of hearing and to make any submission which he would like to place on record. Pursuant to that the assessee submitted a detailed rebuttal to the written submission filed by the respondent on 31st of October 2025 by filing a detailed paper book on 12 November 2025 wherein a written submission of 24 pages was provided along with the reliance was placed on nine different judicial precedents. 64. The written submission placed by the assessee on 12-11- 2025 is as under :- REBUTTALS TO WRITTEN SUBMISSIONS MADE BY THE RESPONDENT During the hearing held on 31 October 2025, the Appellant had craved leave to file responses after perusing the written submissions filed by the Revenue ("Revenue's submission dated 31 October 2025") at the hearing on 31 October 2025. Accordingly, the Appellant makes the following additional submissions. To avoid repetition, the present response is confined to addressing the new arguments and allegations raised by the Revenue. The Appellant respectfully requests that its earlier submissions dated 12 February 2024, and 14 October 2025 be read ....
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.... argues that for Explanation 1(b) to section 6(1)(c) to be applicable, the Appellant should have demonstrated a "stable and permanent" residence overseas in the preceding year. Please refer Paragraphs 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 8, 9.2, 10, 13.5, 13.6, 14,16, 17, 18, 19 and 20 of the Revenue's submissions dated 31 October 2025 in this regard. 6. Further, the Revenue's submissions are not only confined to a fresh legal interpretation of the provisions but also make fresh allegations on factual matters, all of which is impermissible in a sur-rejoinder. Please refer Paragraphs 6.8, 6.9, 18.4, 44.3 and 45.2 of the Revenue's submissions dt 31 October 2025 in this regard. 7. The Revenue is attempting to wholly re-write its case before the Tribunal by attempting to ascribe an entirely new meaning to the phrase "being outside India" that is diametrically opposed to the position consistently taken by them throughout the assessment and appellate proceedings. 8. At the Appellate stage, the Revenue is precluded from travelling beyond the scope of the original assessment order which is the subject matter of appeal. Doing so would mean re-writing or rev....
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....sition, in the Revenue's submissions dated 31 October 2025, the Revenue argues that for Explanation 1(b) to section 6(1)(c) to be applicable, the Appellant should have demonstrated a "degree of permanence, stability and substantive presence" overseas at the commencement of the relevant year, and that it does not apply to a case of "temporary" or "transitional stay" outside India. 2. At the outset, the Appellant submits that Explanation 1(b) to section 6(1)(c) nowhere refers to "permanence, stability and substantive presence", concepts that are undefined and not capable of objective proof. 3. The Revenue claims that it is the "legislative context" and "judicial interpretation" that is relied upon to advance this interpretation. 4. In this regard, the Appellant has made detailed submissions explaining the legislative history of Explanation 1(b) [page 710 to 716 of the paperbook]. The Hon'ble ITAT would appreciate that nowhere in the legislative history for Explanation 1(b) is there a reference to the theory of "degree of permanence, stability and substantive presence" overseas at the "commencement of the relevant year" that is sought to be applied b....
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....ent of the Revenue that for Explanation 1(b) to section 6(1)(c) to be applicable, the Appellant should have demonstrated a "degree of permanence, stability and substantive presence" overseas at the "commencement of the relevant year" should therefore be completely rejected as neither having any legislative or judicial basis, nor being of a nature which could ever have been the legislative intent. 10. As elaborated by the Appellant in its submissions before the lower authorities, the term "being outside India" can only refer to an individual whose situs is outside India and continues to be outside India during the relevant previous year. What is relevant is where the individual was situated i.e. whether in India or outside India and no other factor can be read into the test. 11. At best, a distinction may be drawn between a person who is outside India on a short-term trip, and a person who is situated overseas pursuant to an intention to reside outside India. The latter would be clearly covered within the ambit of the Explanation 1(b) to section 6(1)(c). 12. From the facts of the case, it is clear the Appellant's stay in Singapore since February 2019 w....
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....ed to the Appellant is wholly irrelevant. It is noted that for the purpose of Explanation 1(b) to section 6(1)(c), there is no requirement for the taxpayer to have been engaged in employment overseas. In fact the legislative history as elaborated by the Appellant clearly shows that stay overseas for any reason including self-employment or any other "avocation" overseas is sufficient to meet the requirement of "being outside India". (v). The Appellant and his family moved to Singapore under long-term residence visas which permitted them to live in Singapore for the long-term. The long-term employment visa of the Appellant clearly shows that the Appellant's presence in Singapore was not merely a temporary visit but pursuant to his permanent employment with X to 10X Singapore [Refer page 432 of the paperbook]. (vi). The Appellant's spouse and two children had moved to Singapore in March 2019 on long-term "Dependent Pass" visas to join the Appellant at Singapore. The in- principle approval towards these Dependent Passes were issued on 11 February 2019. No person would have uprooted his family from India if his stay overseas was intended to be "temporary" or on....
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....r over six years. On 13 July 2021, the Appellant purchased a home in Singapore, and on 2 October 2024, he applied for Singaporean citizenship. These facts reflect an enduring commitment to Singapore as the family's permanent base, not a transient relocation. More than six years have passed since the family's move. The Appellant continues to live and work in Singapore, and his children remain enrolled in local schools. (xi). The question of whether the stay was "temporary" or permanent can only be addressed by looking at subsequent facts which the Revenue cannot ignore. These facts, taken cumulatively, establish precisely the permanence and stability that the Revenue argues is the touchstone for determination of whether a person can be regarded as "being outside India". (xii). Put differently, it is not clear what else a person in the Appellant's shoes could have done differently to demonstrate that the presence in Singapore was pursuant to a long-term relocation. The Appellant's family migrated to Singapore in March 2019; Appellant took up permanent employment in Singapore in February 2019; long-term visas were obtained in FY 2018-19; in fact even ....
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....based in India at the commencement of the previous year 2019-20. 3. The Revenue argues that during the FY 2019-20 that the Appellant's base was already in Singapore. Since as per the Revenue the Appellant was based in India at the commencement of the FY 2019-20, it can only mean that the Revenue implicitly concedes that at some point of time during FY 2019-20, the Appellant has migrated from India to Singapore. In other words, the Revenue concedes that the Appellant has left India during FY 2019-20. 4. It is not controverted by the Revenue that the Appellant was indeed engaged in employment in Singapore with X to 10X Singapore and Three State Advisors Singapore. The Appellant has provided ample evidence including Employment Passes issued by the Government of Singapore, the statutory Form IR8A issued by the employer entities in Singapore and other documentation in support of the fact that the Appellant was indeed engaged in employment in Singapore. 5. Therefore, if the Revenue's argument that the Appellant was not a person who can be characterized as "being outside India" at the commencement of the previous year 2019-20 is accepted, it must also fo....
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....ssing Officer rejected the claim by inter-alia contending that the taxpayer had taken up employment in a company where he was the 100% shareholder and therefore was not an employee simplicitor. The Mumbai Bench upheld the taxpayer's claim that the term on the basis that "employment outside India" under Explanation 1(a) includes self-employment and is not restricted to a conventional salaried employment only, by specifically relying on the decision of the Kerala High Court in Abdul Razak (supra). This ruling further clarifies that the benefit of Explanation 1(a) to section 6(1)(c) cannot be denied merely because the taxpayer is the sole shareholder of the employer entity. 9. The Revenue has sought to argue that X to 10X Singapore and Three State Advisors Singapore were controlled by the Appellant and on that basis has attempted to argue that Appellant's employment must be disregarded. 10. The Kerala High Court in Abdul Razak (supra) has held that even self- employment is covered under the term "employment". This being the case, employment in a company which is controlled by the Appellant would certainly be covered under the ambit of both the clauses of Expl....
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....f employment". The only requirement in this limb is that the Appellant should have been engaged in "employment" in Singapore. In this regard it is submitted that the identity of the employer entity is not relevant; all that is relevant is whether the Appellant was engaged in employment activity in Singapore. In other words, the requirement of this limb would be met irrespective of whether the Appellant was employed by X to 10X Singapore or Three State Advisors Singapore, or even academically speaking, by an Indian company in its Singapore office. This being the case, the Revenue's attempts at raising doubts on the veracity of the Appellant's resignation from X to 10X Singapore are wholly irrelevant. Even if the Revenue's stand that the Appellant did not resign from X to 10X Singapore were to be accepted, the fact is that the Appellant was engaged in employment in Singapore which is the sole criteria for this limb. Whether the employment was with X to 10X Singapore or Three State Advisors Singapore is wholly irrelevant. 16. Explanation 1(a) and Explanation 1(b) to section 6(1)(c) in their present form were first introduced by the Finance Act 1982. The E....
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....ITR 304), and a construction that accords with reason and justice must be preferred to one that would completely defeat the intention of the legislature without advancing the object of the provision (CWT v Rajlaxmi 203 ITR 919). [Refer Para 11, Page 23 of Kanga & Palkhivala's The Law and Practice of Income Tax Eleventh Edition, Volume 1] 21. As regards the employment with Three State Advisors Singapore, the settled facts which are not in dispute are as follows - (a) The Appellant travelled from India to Singapore on 10th September 2019, which is supported by stamps in the Appellant's passport; (b) The Appellant was granted an Employment Pass from the Government of Singapore for employment with Three State Advisors Singapore dated 12th September 2019 i.e. soon after the Appellant's arrival in Singapore. 22. If it is clear that the Appellant commenced employment with Three State Advisors Singapore on 12th September 2019, it is but obvious that his cessation of employment with X to 10X Singapore pre-dated the same. Further, the Revenue has no where disputed the statutory Form IR8A issued to the Applicant which clearly records the last wo....
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....al allowed the benefit under Explanation 1(b). 2. The Revenue has contested this by making a bald statement that-"the only reason the assessee in that case was held to be a non-resident was because his stay in India was less than 60 days after excluding deputation-related days. The 182-day relaxation under Explanation 1(b) was neither applied nor required for the decision". The Revenue concedes that deputation-related days (i.e., visits to India during the period of deputation overseas) were excluded. However, on one hand, the Revenue misleadingly asserts that Explanation 1(b) was not applied. On the other hand, the Revenue has not offered any reason for such exclusion. 3. From the ruling, it is very clear that that Tribunal excluded the "deputation-related days" by applying Explanation 1(b). This in fact was the core issue at hand. Please refer specific extracts of the Tribunal ruling which confirms this - "3.15 Considering the legislative history of amendments and the purpose for which the amendments have been introduced, one has to consider the entry of the person in India during the previous year. If all the entries are in India for the purpose of a v....
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....er- mandated deputation is misconceived. Nothing in the Tribunal's reasoning confines the benefit of Explanation 1(b) to such cases. 10. On the contrary, the legislative text itself expressly covers self-employment and any other avocation, making it clear that Explanation 1(b) extends to all individuals outside India irrespective of whether the move was employer-driven or self-initiated. [Refer page 642 to 698 of the paperbook] D) Rebuttals of specific arguments In addition to the above submissions, the Appellant has also set out para-wise rebuttal to specific contentions of the Revenue - Para in Revenue's Rebuttal by the Appellant submission Para 6.1 The Appellant is unable to trace any reference in the Budget Speech of 1982 or the CBDT Circular No. 346 dated 30.06.1982 which states that the object was to liberalize residence test in the case of NRIs visiting India. To support this, the exact text of the Finance Minister's Speech is reproduced below - "Under another test, persons who have been in India for 365 days or more in the four years preceding the relevant year, become resident in that year by being ....
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.... at this stage. The tie-breaker clause operates only after residence has been determined under the respective domestic laws of the Contracting States. It cannot be invoked to deny the application of a domestic statutory exemption at the threshold. Secondly, India does not have comprehensive DTAAs with all jurisdictions (for instance, Zimbabwe, Taiwan, Venezuela). Hence, to suggest that the availability of Treaty relief negates prejudice is patently incorrect. Thirdly, the Revenue's argument in para 12.3 is self-contradictory. Revenue's primary argument has been that the Appellant's residence in "prior year" is the key factor for applying Explanation 1(b). On the other hand, in Para 12.3, Revenue contradicts by stating relief can be claimed when the permanence of stay abroad is established in "future years". If permanence is to be tested prospectively, then residence in preceding year necessarily becomes irrelevant. Para 6.8, 6.9 As regards the purported lack of clarity concerning the Appellant's stay in India and visits during the COVID-19 period, detailed records of the Appellant's presence in India for the four years preceding his de....
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....nce.". What is relevant is the place from where the taxpayer is administering the investments. In the present case, the Appellant was administering the business and investments from Singapore and earning active income in the form of salary in Singapore. This demonstrates that the Appellant's economic interests were primarily situated in Singapore : and not in India. While the Appellant respectfully submits that location of investments as not being relevant, as specifically requested by the Hon'ble Panel, tabulation of assets held by the Appellant in india vs outside India is enclosed as Annexure A. The Appellant would be pleased to share further details if required by the Hon'ble Panel. As evident in the said annexure, the asset composition in Singapore is greater than India. Further, the position of assets has to be seen not while the Appellant was in India, but after the relocation. The investments made by the Appellant after he moved to Singapore have been overwhelmingly outside India reflecting the shift in economic nexus to Singapore. Para 45.2 As explained above, the Appellant's family relocation, children's sch....
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....es the Residential Status of an assessee. It provides that :- 69. For the purposes of this Act,- (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or (c) having within the four years preceding that year been in India for a period or periods amounting in all to three hun-dred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. [Explanation 1.]-In the case of an individual,- (a) being a citizen of India, who leaves India in any previous year [as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty-two days" had been substituted ; (b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section ....
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....d period of 60 days in India to be considered a resident under clause (1)(c) is relaxed to 182 days. The objective behind this relaxation is to enable non-resident Indians who have made investments in India and who find it necessary to visit India frequently and stay here for the proper supervision and control of their investments to retain their status as non-resident. 77. CIRCULAR NO. 684, DATED 10-06-1994 provides that :- FINANCE ACT, 1994 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 o....
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....in trading pharma company in USSR. From the year 1986-1987, he did his business management from Sweden. He again worked in a trading pharma company. Between 1989 to 1995, he had worked in Ukraine after which he set up his own business in pharmaceutical sector primarily in Russia, Ukraine and CIS countries for which purpose he had set up a trading house at Ukraine. He had acquired immovable property in Ukraine in 1995 and 1997. The assessee had permanent resident status in Ukraine till 2002. After that along with his family, he shifted to England but continued his business interest in Ukraine, Russia and CIS Countries. The assessee had acquired properties in Ukraine but continued his business interest as earlier. 7. These facts would demonstrate that the assessee had migrated to a foreign country where he had set up his business interest. He pursued his higher education abroad, engaged himself in various business activities and continued to live there with his family. His whatever travels to India, would be in the nature of visits, unless contrary brought on record. We do not find that the Tribunal, therefore, committed any error." 79. In Additional Director of Income-ta....
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....a) got satisfied when the assessee decided to relocate his family outside India and took self-employment there. It was submitted that the Department has been accepting that the assessee was "being outside India" and the residency status of the assessee has been assessed as that of a "non- resident" by the Assessing Officer in the assessment years 2003-04 and 2004-05. The learned authorised representative also relied upon the decision of co-ordinate Bench of the Income-tax Appellate Tribunal in the case of Suresh Nanda v. Asstt. CIT [2012] 23 taxmann.com 386/53 SOT 322 (Delhi) in support of his submission that the sole relevant test for determination of residency status is the number of days criteria. It was submitted by the learned authorised representative that this decision had been upheld by the jurisdictional High Court in CIT v. Suresh Nanda [2013] 35 taxmann.com 199/216 Taxman 185/352 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 [2014] 42 taxmann.com 115/62 SOT 167(Hyd.-Trib.). About the decisions relied upon by the learned Commissioner of Income-tax (Departmental representativ....
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....) has vehemently supported the case of Department in which while determining the residential status, much weightage has been given to economic and legal relationship of an assessee with India. We do not find any merit in this contention. Provisions of section 6 earlier provided that an individual would be a resident of India if he maintained for himself a dwelling place in India. These provisions have undergone several amendments and the legislative intention is in fact encouraging "non-residents" to maintain investments in India and still not losing the status of a "non-resident". In this regard it would first be relevant to note the provisions under the 1922 Act which were in section 4A and provided for as under : "4A. Residence in the taxable territories .- For the purpose of this Act- (a) any individual is resident in the taxable territories in any year if he- (i) is in 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 o....
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....ens, who are employed or engaged in other avocations outside India, the Finance Act has made the following modifications in the tests of residence in India :- (i) The provision relating to maintenance of a dwelling place coupled with stay in India of 30 days or more referred to in (b) above has been omitted. (ii) In the case of Indian citizens who come on a visit to India, the period of '60 days or more' referred to in (c) above will be raised to '90 days or more'. (iii) Where an individual who is a citizen of India leaves India in any year for the purposes of employment outside India, he will not be treated as resident in India in that year unless he has been in India in that year for 182 days or more. The effect of this amendment will be that the test of residence in (c) above will stand modified to that extent in such cases." 7.4 Further relaxation in law came by 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 (S....
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....to appreciate the arguments of the learned Commissioner of Income-tax (Departmental representative) as noted above. 80. Thus in the above case also the coordinate bench has interpreted the word 'being outside India' for non-residents only as assessee was residing abroad and came to India claiming extension of time line from 60 days to 182 days. 81. Subsequent amendment in clause (b) of Explanation 1 also shows that it is enacted to counter instances where individuals who actually carry out substantial economic activities from India manage their period of stay in India to remain a non-resident in perpetuity and not be required to declare their global income in India. The amendment restricts the relaxation in clause (b) in Explanation 1. This, it is not obviating the difficulty of ' Non-resident' but restrictions to their non- residential status. This also shows that clause (b) of Explanation [1] applies only to non-residents. 82. Thus, we hold that ld AO and Ld DRP has correctly held that period of stay cannot be extended to 182 days instead of 60 days for deciding the residential status of the assessee as per second limb of section 6(1)(c) of the Act by vir....
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.... on 10/4/2019, Director of X to 10 X Technologies PTE ltd confirms that assessee is working with them as Chief Executive Officer [ page no 201 of paper book. Thus assessee left India for the purposes of employment as Chief Executive officer of X to X Technologies PTe Limited on 22/09/2019.[ Para no 7.6 of the paper book page no 379] Thus, he left India for employment in F Y 2018-19 and not in FY 2019-20. Thus, his claim would be proper if the AY involved is 2019-20 as he left India for the purposes of employment in that AY. However, the facts further goes in para no 7.8 of his submission [ page no 379 of the paper book], assessee submits that :- " 7.8 The assessee spouse and children also moved to Singapore in March 2019. The assessee submits that he continues to reside in Singapore with his family till date. The assessee's children attend school in Singapore. The assessee spouse has been in employment in Singapore. The assessee and his spouse of applied for and granted permanent resident status in Singapore. 7.9 The assessee submits that he has been residing in Singapore since February 2019 till date. He only comes on brief visits to India for business and pe....
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....ll be determined as follows :- (a) he shall be deemed to be a resident of the state and which he has a permanent home available to him, if he has a permanent home available to him in both states, he shall be deemed to be a resident of the state with which his personal and economic relations are closer (centre of vital interest), (b) if the state in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either state, he shall be deemed to be a resident of the state in which he has an habitual abode (c) if he has an habitual abode in both states or in neither of them, he shall be deemed to be a resident of the state of which he is a national (d) if he is a national of both states or of neither of them, the competent authorities of the contracting State shall settle the question by mutual agreement. 92. With respect to the permanent home it is submitted by the assessee that assessee has migrated to Singapore in February 2019,. Upon moving to Singapore, the assessee initially occupied the apartment at No. 2, Kim Sang walk, great word serviced apartments, #32-08, Singapore from 26 Febr....
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....dents. It is also the claim of the revenue that when the assessee is coming to India, despite specific query by the bench, regarding his Indian presents and accommodation, the assessee has remained relatively silent and has not furnished full particulars regarding the stay and use of residence in India which further weakens the claim of the assessee. We also find that even in the rebuttal filed by the assessee by way of written submission on 31 October 2025, the assessee did not rebut the claim of the learned that ASG mentioned in paragraph No. 43.4 of his submission. The revenue is also contesting that the assessee himself as a claim deduction under section 54F of the Act which is available only in case of a purchase or construction of residential house. Therefore now the stand of the assessee is contradictory that his house is not habitable at all. 95. On careful consideration we find that the assessee has a residential apartment on rent in Singapore and further the assessee has owned property at C- 703, Mantri Classic apartment, Kormanagala Bangalore and further house at Kormangala, Bangalore. At paragraph No. 34 of the assessment order, the assessee was asked by the learned ....
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.... spouse of the assessee is also employed in Singapore. Thus the assessee's personal relations are close to Singapore. The assessee has its principal bank accounts and credit cards in Singapore and his visit to India were very short and principally for business purposes. The assessee is employed in Singapore since February 2019 and also administers his investments from Singapore therefore his economic relations are also based in Singapore. 97. Compared to this the claim of the revenue is that assessee's own residence lies in India, he did not have much immovable assets in Singapore. The learned assessing officer extracted the assets and liability statement of the assessee for financial year 2019-20 and stated that assessee has movable properties in the form of vehicles et cetera and bank deposits et cetera of Rs. 2,00,00,003 crores. Shares and securities owned by the assessee is Rs. 290 crores and loans and advances our Rs. 256 crores. It was further stated that on the sale of shares of record private limited, Singapore the assessee has earned huge capital gain which is derived from the underlying assets in an Indian entity such as Phillip Carter India Ltd. Therefore the ....
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....ant's migration to Singapore do not have any bearing on his centre of economic interest as such. Assessee also pressed into service the fact that individuals who have become non-resident face restrictions under the Foreign Exchange Management Act 1999 in repatriating overseas funds and investments made in India when they were resident. Thus the investments made in India are not by any means an indicator of the centre of economic relations since there was a regulatory restrictions on repatriation of funds outside India for the purposes of overseas investments. The assessee also submitted that majority of the investments made in India by the assessee are passive portfolio investments such as investment in alternative investment funds, mutual funds, portfolio investments in start-ups et cetera. The assessee submitted that total amount of investment made in India as on 31st of March 2020 is Rs. 73,792 lakhs out of which Rs. 60,035 lakhs was invested in earlier years while the assessee was a resident of India. Thus it was the contention that investments made in India prior to the assessee's migration to Singapore do not have any bearing on his centre of economic interest as such....
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....rsonal relations of the assessee are concerned, the assessee's family has travelled with him though gradually to Singapore. His wife has taken employment and children have also started schooling there. So far as the investments are concerned the assessee has immovable properties in India of approximately Rs. 40 crores, bank account holding of Rs. 7.29 crores, shares and securities of Rs. 65,967 lakhs, and the loans and advances of Rs. 30 crores. The summary of investment outside India shows that the bank balances as on 31st of March 2020 is Rs. 12,084 lakhs, investment in shares and securities of Rs. 74,100 lakhs and loans and advances of Rs. 16 crores. The total investment outside India is Rs. 87,789 lakhs. Out of the above the investment made during the financial year 2019-20 is $ 1,14, 659,000. Prior to this, there was a minuscule investment by the assessee outside India. Thus it is apparent that most of the investments are made by the assessee outside India during financial year 2019-20. The claim of the assessee is that the centre of vital interest must be seen after the assessee migrated outside India and the claim of the revenue is that it should not be seen at that poin....
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....he first in the environment very has always lived, where he has always worked and where he has his family and possessions, can, together with other elements go to demonstrate that he has retained his centre of vital interest in the first state. In the present circumstances, the assessee has made investment only after he has shifted to Singapore. Still his major investment, his house properties are situated in India. His family has also migrated with him over a period of time. The wide variety of investments that he has made while in India such as alternative investment funds, unlisted companies equity shares, listed equity shares and mutual funds do not exist in Singapore. In Singapore the assessee has made investment in shares of unlisted companies and further held substantial assets through family trust where assessee and his wife are the major beneficiaries. Further the assessee's major capital commitments of investments are also in India. Assessee has also provided loans to the tune of Rs. 30 crores to various entities in India. Assessee does not own any immovable property outside India. Therefore it is apparent that assessee has retained his houses in India where he has de....
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....cer has not disturbed the nature of foreign exchange gain as part of 'export turnover' as claimed by the assessee. He has nowhere held that it be treated as 'Income from other sources' on that 90 per cent of the same warrants deduction from the profits of the business as per Explanation ( baa) below sub-section (4C) to section 80HHC. His area of dispute is that since the amount has been realized in the subsequent year, hence, the deduction cannot be allowed. In our opinion the ld. DR cannot go beyond the assessment order and bring an altogether different case, thereby undoing what has been done by the Assessing Officer. The power to modify the assessment order to the advantage of the Revenue, apart from suo motu action by the Assessing Officer under sections 147 or 154, lies only with CIT under section 263, which cannot be usurped by the ld. DR while arguing the appeal. The scope of the arguments of the ld. DR is restricted to support the view taken by the Assessing Officer. He can strengthen the view taken by the Assessing Officer from any angle, he likes, but cannot bring out an altogether different case de hors the view of the Assessing Officer. His area of argum....
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....d had participated in proceedings culminating into assessment order, it could not challenge jurisdiction of Assessing Officer to pass impugned assessment order. Accordingly, respectfully following the decision of the honourable Karnataka High Court we dismiss ground No. 6 of the appeal. 112. With respect to ground No. 7 of appeal, assessee claims that learned assessing officer has treated the assessee as a 'resident' as per draft assessment order dated 30 September 2022, it is the argument of the assessee that when assessee is a 'resident' assessee, there is no requirement of passing of the draft assessment order u/s 144C(1) of the Act in case of a 'resident' assessee. Therefore, the learned assessing officer passing the draft assessment order on 30 September 2022 and thereafter pursuant to the directions of the learned dispute resolution panel passes the final assessment order on 31 July 2023 is not in accordance with the provisions of the Act. Therefore, the assessment order passed on 31 July 2023 is barred by limitation. Several judicial precedents were relied upon by the learned authorised representative and contested by the learned ASG. 113. On ca....
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....er should have passed the draft assessment order. However the definition of the 'eligible assessee' as extracted in paragraph No. 22 of that decision is quite different then the definition of the 'eligible assessee' before us. Further in paragraph No. 26 the coordinate bench held that the assessee being an individual, even in case if he were to be held to be a non-resident, his case would not fall within the definition of eligible assessee as prescribed under section 144C(15) of the Act. In that case, further, the assessee has not challenged the change of his residential status as it is apparent by the decision of the coordinate bench in paragraph No. 34. Therefore, the facts of this case are quite distinguishable for the reason that [1] there is a change in definition of eligible assessee before us and as well as [2] here the assessee is contesting that his residential status should be of a non-resident. [3] We further note that in the decision of the coordinate bench there was no adjudication on the specific wording of the provisions of section 144C(1) where the words are 'notwithstanding anything to the contrary contained in this act', 'in the first i....
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.... Aldrin Alberto Araujo Soares V DCIT (2024) 162 taxmann.com 186 (Bombay) was also heavily relied upon by the learned authorised representative stating that in that case it has been held that if in case of an assessee held to be a resident of India, passing of the draft assessment order would not be valid. Therefore, according to the assessee this covers the issue in favour of the assessee. 118. To correctly appreciate the contentions of the parties, it is better to look into the facts of that case. The facts clearly show that originally the assessee filed return of income where he claimed himself to be resident in India. Subsequently after three days, he filed a revised return claiming his status to be of non-resident. The learned assessing officer passed a draft assessment order holding him to be resident of India. Assessee challenged the draft assessment order. If the assessee were held to be a non-resident, he was to claim a refund of Rs. 6,269,263/-. The learned assessing officer at the time of passing of the draft assessment order observed that since the petitioner, in his revised return, had claimed that he was a non-resident, the draft order under section 144C was being i....
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....20. We also look at the issue that at what time the definition of eligible assessee according to section 144C(15)(b)(ii) is required to be tested. The law says that it should be 'in the first instance'. It is also important to note that why this phrase has been put into the provisions of section 144C(1) of the Act. This is for the reason that if the status of the assessee stated by the assessee is falling into the above clause than the learned assessing officer is duty-bound to pass the draft assessment orders irrespective of any variation. For the sake of consideration, suppose in case of the assessee, the learned dispute resolution panel would have held the assessee to be a non-resident, naturally the draft assessment order passed by the learned assessing officer would have survived. Take another situation, that if the learned dispute resolution panel would have held it to be resident assessee, then, if the view of the learned authorised representative is accepted, then, the learned assessing officer could not have passed the draft assessment order but should have passed the final assessment order and therefore even the proceedings before the learned dispute resolution pa....