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2018 (5) TMI 1380 - AT - Income TaxIncome accrued in India - period of stay in India - Stay in India for 181 days - NRI status of assessee - rectification application - salary income was wrongly offered in the return of income - Held that - Assessee is a NRI, worked as a crew member of foreign ships during the previous year relevant to the assessment year 2011-2012 and was not disputed by the AO and CIT(A). In the rectification proceedings the assessee as required by the AO has produced original copy of passport, Acknowledgement of ITR-1 for the assessment year 2011-2012, the wages statement and original TDS certificate and also explained that the assessee stayed for 181 days in India in the previous year and pursuant to section 6(1) of the Act if an individual is resident in India for more than 182 days or more during a financial year, he is considered as resident of India for tax purposes and the entire income earned in or outside India would be taxable in India. AR referred to the computation of income filed by the assessee wherein it was mentioned that the assessee received salary for 184 days outside India and claimed exemption u/s.5(1)(c) of the Act, we are of the substantive opinion that the matter requires further examination and verification of facts by the AO. Accordingly, we restore the disputed issue to the file of AO and we direct the assessee to substantiate its stay in India for claim of exemption and the assessee shall cooperate in submitting the details for early disposal of the case. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Determination of Residential Status 2. Treatment of Salary Income 3. Rectification of Mistake under Section 154 4. Applicability of CBDT Circular No. 549 5. Jurisdiction of Appellate Authorities to Entertain Fresh Claims Detailed Analysis: 1. Determination of Residential Status: The assessee, a non-resident Indian (NRI), worked as a crew member on foreign ships. He stayed in India for 181 days during the relevant assessment year. The assessee argued that his residential status as an NRI was clear from the return filed, and thus his salary income earned abroad should not be taxable in India. The Tribunal noted that the residential status of the assessee was not clearly verified by the lower authorities, which is crucial for determining the taxability of his income. 2. Treatment of Salary Income: The assessee received a salary of US$ 51,043.46, which was converted to ?22,45,912. He claimed that this income, earned as a crew member of a foreign ship and received outside India, should not be taxable in India under Section 5 of the Income Tax Act. The Tribunal acknowledged that if the assessee's status as an NRI is confirmed, the salary income earned abroad would not be taxable in India. 3. Rectification of Mistake under Section 154: The assessee filed a rectification application under Section 154, arguing that the total income shown in the return was incorrect and should be treated as nil. The Assessing Officer (AO) rejected this application, stating that changing the income figure from ?27,43,360 to nil cannot be considered a mistake apparent from the record. The Tribunal, however, highlighted that if the assessee's NRI status is verified, the inclusion of salary income in the return could be considered a mistake apparent from the record, warranting rectification under Section 154. 4. Applicability of CBDT Circular No. 549: The AO relied on CBDT Circular No. 549, which states that the assessed income cannot be less than the returned income. The Tribunal observed that this circular does not preclude the rectification of a genuine mistake in the return of income, especially if the mistake pertains to the residential status and the consequent taxability of income. 5. Jurisdiction of Appellate Authorities to Entertain Fresh Claims: The Tribunal referred to several judicial precedents, including the Supreme Court's decision in Jute Corporation of India Ltd. v. CIT and the Bombay High Court's decision in CIT vs. Pruthvi Brokers & Shareholders, which establish that appellate authorities have the jurisdiction to entertain additional claims not made in the original return. The Tribunal emphasized that the appellate authorities can consider fresh claims if they are based on material already on record and are otherwise tenable in law. Conclusion: The Tribunal set aside the order of the CIT(A) and restored the matter to the file of the AO for verification of the assessee's NRI status and the number of days spent abroad. The AO was directed to reconsider the rectification application under Section 154 in light of the verified facts. The Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the need for a fair and just assessment based on the correct residential status and the actual taxability of income.
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