2011 (6) TMI 190 - HC - Income Tax

Residential status - non-resident - Tax liability - Assessee was to work in U.S.A., though he continued to be an employee of the company in India, on the basis of the letter of Deputation - Tribunal held that the assessee was on deputation from April 2004 to January 2005 and his stay in India from 18th August, 2004 to 6th September, 2004 was in respect of a visit to India and this period is to be excluded while considering the applicability of section 6(1)(c) - By holding so, the Tribunal accepted the alternative contention of the assessee and held that for the purpose of computing the period of 60 days as mentioned in section 6(1)(c), the period of visit to India would be excluded and assessment shall be done considering his status as non-resident .therefore, he is to be treated as non-resident and cannot be taxed as a resident under section 6(1)(c) - Decided in favour of assessee.

Summary

Issues:
Determining the tax residency status of an individual working on deputation abroad.

Analysis:
The appellant, an employee of a company in India, was deputed to work in the USA. The tax authorities assessed the appellant as a non-resident based on the deputation order's provisions, leading to a tax dispute. The Appellate Authority confirmed the non-resident status, but the Income-tax Appellate Tribunal partially allowed the appeal, considering the days spent in India. The Tribunal excluded the period of the appellant's visit to India while determining his residency status. The appellant contended that he should be taxed as a resident due to spending more than the required days in India.

The High Court analyzed the facts and found that the appellant's stay in India was excluded from the calculation of residency days, as confirmed by the employer's certificate. The Tribunal's decision to exclude the visit period for determining residency status was upheld. The Court noted that the appellant's status as a non-resident was based on factual findings supported by evidence. The Court dismissed the appeal, stating that no substantial legal question arose from the Tribunal's decision, as all relevant materials were considered in determining the appellant's tax residency status.