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Issues:
1. Interpretation of the term "person resident outside India" under the Income-tax Act and Wealth-tax Act. 2. Applicability of section 10(4A) of the Income-tax Act regarding interest earned on Non-resident (External) Account. 3. Determination of the residency status of the assessee for tax purposes. 4. Consideration of statutory provisions of the Foreign Exchange Regulation Act in tax assessments. Analysis: The judgment by the High Court of Kerala, delivered by Judge V. V. Kamat, addresses three references related to the assessment year 1983-84. The first reference pertains to the Income-tax Act, while the other two relate to the Wealth-tax Act for the same year and the subsequent year. The central issue revolves around whether the assessee should be considered a "person resident outside India," impacting the inclusion of money in a Non-resident (External) Account in the computation of income and wealth. The court analyzed the provisions of section 10(4A) of the Income-tax Act, which exempts income from such accounts for non-residents. The court considered the residency status of the assessee, who had interests in India but claimed non-resident status due to the Non-resident (External) Account. The court examined the definitions of "person resident in India" and "person resident outside India" under the Foreign Exchange Regulation Act to determine the residency status of the assessee. The judgment highlighted that a person staying in India for various purposes, including with a resident spouse, is considered a resident in India. The court emphasized that to qualify as a "person resident outside India," the assessee must not be a resident in India, as per the statutory provisions. The court concluded that the assessee, despite having interests and family ties in India, did not meet the criteria to be considered a resident outside India, thus not entitled to the benefits of a Non-resident (External) Account. Regarding the specific questions raised in the references, the court provided detailed answers. It ruled in favor of the Revenue and against the assessee, stating that the assessee did not qualify as a non-resident under the Income-tax Act and, therefore, was not entitled to exemption for interest earned on the Non-resident (External) Account. The judgment emphasized the importance of the residency status in determining tax liabilities and highlighted the significance of statutory provisions in such assessments. Ultimately, the court's decision in the income-tax proceedings was deemed applicable to the wealth-tax proceedings, leading to a comprehensive resolution of all three references through this common judgment.
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