2013 (3) TMI 77 - HC - Income Tax

Residential status of the assessee - as per revenue the assessee was a resident of India whereas the Tribunal held assessee to be Non resident of India - Held that - Although, the assessee has, in the preceding 4 years been in India for a period in excess of 365 days in India, in none of years has he been in India for a period in excess of 182 days. Therefore, the Tribunal is absolutely right in concluding that the respondent/assessee was not a resident of India. This is a pure question of fact based on a plain reading of the provisions of section 6. All that has to be seen is the number of days that the respondent/assessee has spent in India in the year in question as also in the preceding 4 years. No substantial question of law arises insofar as this aspect of the matter is concerned - in favour of assessee. Unaccounted investments - additions made on the basis of documents allegedly found in the possession of 3rd parties - Held that - Tribunal has rightly remanded this aspect of the matter in view of the fact that the respondent/assessee had not been granted an opportunity of cross examining the persons from whom the said documents had been allegedly recovered. The matter has been remanded to the assessing officer to examine this issue after giving an opportunity of cross-examination to the respondent/assessee. Payment made to the assessee s estranged wife - addition deleted by the Tribunal - Held that - Tribunal purely on an appreciation of facts & on noting that the assessee and his wife Smt Renu Nanda had separated by way of a deed of settlement dated 04.04.1998 and the payments were based thereon deleted the addition as it has not been based on any evidence or incriminating material indicating that any payment had been made outside the books. The Tribunal observed that the sole basis for the assumption on the part of the assessing officer was that there was some unwritten understanding between the assessee and his estranged wife. Thus the purported basis of the addition only a presumption is not acceptable - in favour of assessee. Addition u/s 68 - Cash credit - Held that - As the Tribunal has correctly decided that the assessee was not a resident in India in the years in question, it is axiomatic that the addition under section 68 would have to be deleted because it was a transfer from the respondent/assessee s foreign account to the domestic account - in favour of assessee.

Summary

Issues:
Residential status of the respondent/assessee for assessment years 2001-02, 2002-03, and 2003-04.

Analysis:
1. The main issue raised in the appeals pertains to the residential status of the respondent/assessee. The revenue contended that the respondent was a resident of India, while the Tribunal held otherwise. Various specific issues were examined by the Tribunal, including additions under different sections of the Income-tax Act, such as sections 69, 68, and others, for different assessment years.

2. The Tribunal remanded certain matters back to the assessing officer for fresh consideration. For instance, the addition of Rs. 65,85,000 under section 69 for the assessment year 2002-03 was remanded for reconsideration. Similarly, the addition based on documents found with third parties was also remanded as the respondent/assessee was not given an opportunity for cross-examination.

3. The Tribunal also remanded the issue of marriage expenses for the respondent/assessee's daughter and the payment made to the estranged wife for fresh consideration. The addition related to the payment to the estranged wife was deleted by the Tribunal for the assessment year 2003-04 based on factual findings.

4. The significant addition of Rs. 10,51,20,000 under section 68 was contingent upon the residential status of the respondent/assessee. The Tribunal determined the respondent/assessee as a non-resident, leading to the deletion of this addition.

5. The critical aspect of the judgment revolved around the residential status of the respondent/assessee as per section 6 of the Income-tax Act. The Tribunal correctly determined that the respondent/assessee did not qualify as a resident based on the number of days spent in India, thereby justifying the deletion of the substantial addition made under section 68.

6. The Court analyzed the provisions of section 6 and the stay duration of the respondent/assessee in India, emphasizing the distinction between residents and non-residents based on the specified criteria. The Tribunal's decision on the respondent/assessee's residential status was upheld, leading to the dismissal of the appeals.

7. Ultimately, the Court found no substantial question of law warranting further consideration in the appeals, and consequently dismissed the appeals challenging the Tribunal's decision on the respondent/assessee's residential status and the related additions under the Income-tax Act.