2009 (7) TMI 359 - HC - Income Tax

Exemption under section 10(6)(viia)(II) Foreign technician status as non-resident for years before entry into India - the requirements in terms of the statutory provision for exemption u/s 10(6)(viia)(II ) are (1) that the assessee should qualify for the year of entry in terms of the assessee being not a resident in the year in which he is entering and (2) is a person who was not resident in all the four preceding financial years immediately preceding the financial year of his entry. That means if the assessee though he is not a resident in the year of entry was a resident in any of the preceding four financial years he cannot claim the benefit of the provision. - In the present case the assessee claimed the benefit with reference to the date of entry on September 12 1990 the assessment year is 1991-92. Then for the four assessment years commencing from 1991-92 which ends in 1994-95 the assessee is entitled for the benefit in terms of the statutory provision. Held that exemption is available for forty eight months status after entry is not relevant

Summary

Issues:
Interpretation of section 10(6)(viia)(II) of the Income-tax Act, 1961 for claiming exemption for a specific sum received by the assessee during the assessment year 1994-95.

Detailed Analysis:
The Revenue appealed against the order of the Income-tax Appellate Tribunal regarding the assessee's entitlement to exemption under section 10(6)(viia)(II) of the Act for a sum of Rs. 11,74,069 received during the assessment year. The Tribunal had extended the benefit of the provision to the assessee, which the Revenue contested. The provision stated conditions for exemption, including the individual not being a resident in India in the four financial years preceding the year of entry. The assessee entered India in 1990 as a non-resident, claiming exemption based on this entry date. The assessing authority denied the benefit, stating the assessee had entered India earlier and was not a non-resident in the preceding years. The Appellate Commissioner upheld this decision, leading the assessee to appeal to the Tribunal, which ruled in favor of the assessee, considering the initial entry date for exemption eligibility.

The Tribunal's decision was based on the assessee's entry date in 1990, qualifying for the exemption provision. The Tribunal noted that the assessee had not been a resident in India in the preceding four years. The Tribunal's ruling resulted in the correctness of the assessee's return and nullified penalty proceedings. The Revenue challenged this decision, arguing that the assessee did not meet the residency criteria for exemption eligibility. The respondent-assessee's counsel contended that the assessee was not a resident in the four years preceding entry into India. The Court considered both arguments and examined the statutory provision requirements for exemption eligibility.

The Court emphasized that the assessee's chosen entry date determined the eligibility for exemption under the provision. The assessee's status as a non-resident for the preceding four years was crucial for exemption qualification. The Court clarified that the assessee could claim exemption for 48 months from the entry date, regardless of subsequent status changes. The Court affirmed the Tribunal's decision, stating that the assessee's chosen entry date governed the exemption period. The Court dismissed the Revenue's appeal, upholding the Tribunal's ruling in favor of the assessee.

In conclusion, the Court's detailed analysis focused on the interpretation of the statutory provision for exemption eligibility under section 10(6)(viia)(II) of the Income-tax Act, 1961. The Court emphasized the significance of the assessee's entry date and residency status in the preceding years for claiming exemption. The Court's decision upheld the Tribunal's ruling, emphasizing the assessee's right to choose the entry date for exemption eligibility and the consequent 48-month exemption period.