2012 (9) TMI 395 - AT - Income Tax

Status of assessee Resident vs Non-resident assessee arrived seven times to India on varying periods - Revenue contended number of days of stay in India to be 187 whereas assessee contended for exclusion of day of arrival on ground that he arrived late in the night after completing his work abroad and attends to the work next day and generally leaves early in the morning so as to attend the work again after arriving at the destination Held that - Day of arrival, particularly late in the day should be excluded. If we exclude the date of arrival as it is not a complete day, the stay of assessee is less than 182 days Decided in favor of assessee Penalty u/s 271(1)(c) Held that - Since in assessment proceedings, assessee status is confirmed as Non Resident, there is no question of addition of the amount. Therefore, penalty u/s 271(1)(c) does not survive. Even otherwise the issue is one of the debatable nature. There is only a claim of status. Therefore, even otherwise also penalty u/s 271(1)(c) was not called for - Decided in favor of assessee

Summary

Issues:
1. Determination of residency status based on the number of days stayed in India.
2. Taxability of salary income in India.
3. Penalty under section 271(1)(c) for furnishing inaccurate particulars.

Analysis:

Issue 1: Determination of residency status based on the number of days stayed in India
The case involved the assessment of the appellant's residency status as a Non-Resident or Resident based on the number of days stayed in India during the relevant financial year. The Assessing Officer (AO) considered the appellant as a Resident as the number of days spent in India exceeded 182 days. However, the CIT (A) analyzed the appellant's travel pattern and work schedule to conclude that the days of arrival should be excluded from the total count. The CIT (A) referred to the General Clauses Act and previous judicial decisions to support the exclusion of arrival days. Ultimately, it was held that the appellant's stay in India was less than 182 days, making him a Non-Resident for tax purposes.

Issue 2: Taxability of salary income in India
The primary contention was whether the appellant's salary income earned while working abroad was taxable in India based on his residency status. Since the appellant was determined to be a Non-Resident, the salary income was held not taxable in India. The decision was supported by precedents and legal interpretations that excluded arrival days from the calculation of the total days stayed in India. The ITAT Mumbai upheld the CIT (A)'s decision, emphasizing that the exclusion of arrival days led to the conclusion that the appellant's stay in India was below the threshold for taxability.

Issue 3: Penalty under section 271(1)(c) for furnishing inaccurate particulars
The penalty under section 271(1)(c) was initiated by the AO for furnishing inaccurate particulars regarding the appellant's residency status and taxable income. However, since the appellant's status was determined as Non-Resident, the question of taxability did not arise, leading to the cancellation of the penalty. The ITAT Mumbai affirmed the CIT (A)'s decision, stating that the issue of residency status was debatable, and there was no deliberate furnishing of inaccurate particulars. Therefore, the penalty under section 271(1)(c) was deemed unwarranted and dismissed.

In conclusion, the ITAT Mumbai dismissed the Revenue's appeals, confirming the appellant's Non-Resident status, non-taxability of salary income in India, and the cancellation of the penalty under section 271(1)(c) for furnishing inaccurate particulars.