TaxTMI 
TaxTMI 
2008 (4) TMI 337
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....orts. The appellant was a non-resident during the financial years 1995-96 and 1996-97 as per details below: -------------------------------------------- Financial year Asstt. year Number of days -------------------------------------------- Outside In India India -------------------------------------------- 1994-95 1995-96 234 131 1995-96 1996-97 259 107 -------------------------------------------- The appellant filed his return of income on 23rd Nov., 1999 declaring net taxable income of Rs. 6,61,210 after excluding the sum of Rs. 3,42,303 be....
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....at s. 6 of the IT Act, 1961 was amended by the Finance Act, 1990 with a view to clarify that person on board on Indian ship is also a person leaving India for the purpose of employment. He drew the attention of the Bench to Circular No. 572, dt. 3rd Aug., 1990 [(1990) 87 CTR (St) 1] which are the Explanatory Notes on the Provisions of the Finance Act, 1990. He also drew the attention of the Bench to the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Avtar Singh Wadhwan (2001) 165 CTR (Bom) 414 : (2001) 247 ITR 260 (Bom) for the proposition that an assessee working with an Indian shipping company for services performed on foreign going Indian ship, would arise outside India as the term "India" does not cover foreign going Indian ships. Thus, he submits that since the services are rendered outside India, salary received for such services would also not accrue or arise in India and therefore would not be taxable in India. He pointed out that the Hon'ble High Court had followed its own decision in the case of CIT vs. Indo Oceanic Shipping Co. Ltd. & Ors. (2001) 165 CTR (Bom) 404. 7. The learned counsel for the assessee submits that the assessee's residentia....
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....ircular of the CBDT dt. 15th Dec., 1962. He argued that this circular is in conformity with the Speech of the Finance Minister in the Central Legislative Assembly while introducing the relevant amendment bill and has further been adopted by a Circular dt. 15th Dec., 1962 by the CBDT which reads as follows: "CIT, WB's Circular letter No. J/28320/4A/10/5/58-59, dt. 5th Dec., 1962, addressed to the Secretary, Indian Chamber of Commerce, Calcutta-1-I am directed to refer to the correspondence resting with the Ministry of Finance (Department of Revenue) letter No. 4/22/61-IT(AT), dt. 25th Nov., 1961, and to state that the Department's view has all along been that an individual is 'not ordinarily resident' unless he satisfied both the conditions in s. 4B(a), i.e.- (i) he must have been a resident in nine out 'of ten preceding years; and (ii) he must have been in India' for more than two years in the preceding seven years. Thus, a person will be 'resident and ordinarily resident' if both these conditions are satisfied but he will be 'resident but not ordinarily resident' if either of those conditions is not satisfied." 9.2 He submitted that the first appellate authority was....
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....onsidered and deduction granted. 12. The learned Departmental Representative, Shri U. Anjaneyulu, on the other hand, vehemently contradicted the argument of the learned counsel for the assessee and submitted that the returns were earlier processed under s. 143(1)(a) and hence it cannot be said that the AO has formed an opinion on the same. He further relied on the judgment of the Hon'ble Supreme Court in the case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30 : (2007) 291 ITR 500 (SC) and submitted that the processing of return under s. 143(1)(a) cannot be considered as an assessment and ground of the assessee that there is a change of opinion is to be rejected. On the other hand, arguments of the assessee with respect to the validity of the order passed under s. 143(3) r/w s. 147, Shri Anjaneyulu submitted that before the first appellate authority the assessee had not pressed the ground and even otherwise, the assessee has no case as the legal issue was discussed at length, after hearing by the first appellate authority. 13. On the issue of residential status the learned Departmental Representative strongly relied on the judgment of the Hon'bl....
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....s. 115C, who, being outside India comes on a visit to India in any previous year, the provisions of sub-cl. (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." We also reproduce the circular of the CBDT (sic) No. 28320, dt. 5th Dec., 1962: "CIT, WB's circular letter No. J/28320/4A/10/5/58-59, dt. 5th Dec., 1962, addressed to the Secretary, Indian Chamber of Commerce, Calcutta-1-I am directed to refer to the correspondence resting with the Ministry of Finance (Department of Revenue) letter No. 4/22/61-IT(AT), dt. 25th Nov., 1961, and to state that the Department's view has all along been that an individual is 'not ordinarily resident' unless he satisfied both the conditions in s. 4B(a), i.e.- (iii) he must have been a resident in nine out of ten preceding years; and (iv) he must have been in India for more than two years in the preceding seven years. Thus, a person will be 'resident and ordinarily resident' if both these conditions are satisfied but he will be 'resident but not ordinarily resident' if either of those conditions is not satisfied." 15.2 On a c....
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....or more or in previous year nor he had been in India for a total period of 60 days or more in previous year together with 365 days or more in 4 years preceding that year, he will acquire the status of non-resident. The essence of s. 6(6) is that where the individual is resident in the precious year, but was not resident in India in 9 out of 10 previous years preceding that year or was not in India for total period of 730 days or more in seven years preceding that year, then his residential status will become RNOR. Thus, in order to acquire the status of RNOR, it is sine qua non that, on the other hand, he should firstly be resident in that year and thus should fulfil either of the conditions of s. 6(6). That is he should meet either of the conditions of s. 6(1), say, be in India for 182 days or more in the previous year and thereafter either of the conditions enshrined in s. 6(6) be fulfilled, say, be in India for 182 days or more in the previous year and thereafter either of the conditions enshrined in s. 6(6) be fulfilled, say, he should not be the resident in India in 9 out of 10 previous years preceding that year. 9. Adverting to the facts of the case as borne out from the a....
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....e process to unfold the legislature intent becomes impermissible'. 12. Coming back to the language of s. 6(6)(a) we find that the word 'or' has been used between the lines 'who has not been resident in India in nine out of ten previous years preceding that year' and 'has not during the seven years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more'. It is beyond our comprehension as to how the learned CIT(A) could substitute the word 'and' for the word 'or' used in the section. The intendment of the legislature is manifest that either of the two conditions of s. 6 (6)(a) and not both be complied with for acquiring the residential status of RNOR. As in the facts and circumstances of the present case, the assessee has satisfied the first condition and not the second, were of the considered opinion that the learned CIT(A) erred in holding that the residential status of the assessee was ROR. 13. Now, we will refer to the legal position arising out of the judicial precedents on the issue; which seems to be no more res integra in view of the judgment of the Hon'ble apex Court in the case of CIT & Anr. vs. Morgens....
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....year, his claim for status of RNOR cannot be negatived. 14. Before parting with this appeal and to provide completeness to this order we would like to mention that s. 6(6) has been substituted by the Finance Act, 2003 w.e.f. 1st April, 2004. In the present appeal we are concerned with the preamendment era as the assessment year involved is 2001-02. The substituted sub-s. (6) of s. 6 is prospective as has been laid down by the Lucknow Bench of the Tribunal in the case of Abhay Pratap Singh Sengar vs. ITD and hence, can have no retrospective application to the year in question. 15. To sum up, we hold that the residential status of the assessee is 'resident but not ordinarily resident' and the claim of exemption under s. 10(15)(iv)(fa) for interest amounting to Rs. 1,97,450 is as per law. The consequential charging of interest under s. 234B would also be brought to naught. We therefore, set aside the impugned order and accept the assessee's contention." We respectfully follow the decision of the Co-ordinate Bench on this issue. 15.3 Be it as it may, we find that the backdrop of the decision of the CIT(A) is the judgment of the Hon'ble Gujarat High Court in the case of Prad....