2006 (11) TMI 123 - HC - Income Tax

Assessee came to India for 85 days when his job in foreign got terminated in this case he is held to be resident not a non-resident as he has stayed in India for more than 60 days relaxation of 90 days given in section 6 (1)(c) can not be given to him as he was not on leave or vacation he cannot be excluded from the category of resident as during disputed time he was in India because of Job termination

Summary

Issues:
1. Whether the assessee can be considered a non-resident for the assessment year 1980-81.
2. Whether the assessment framed was in contravention of specific provisions of the Income Tax Act, 1961.

Analysis:

Issue 1:
The assessee was employed in Hong Kong from 24.10.1978 to 15.7.1979 and then in Jordon from 1.11.1979 to 28.2.1980. The contention was that the assessee, being a nonresident during the accounting period ending 31.3.1980, should be assessed accordingly. However, the Assessing officer, CIT(A), and Tribunal rejected this claim. The relevant provision under section 6(1)(c) of the Income Tax Act, 1961, states that an individual is considered a resident if they have been in India for 365 days in the preceding four years and for 60 days or more in the relevant year. The explanation to this provision extends the stay period to 90 days for individuals rendering services abroad on leave or vacation. Since the assessee was in India for less than 90 days and was not on leave or vacation, he could not claim non-resident status. Thus, the assessee was deemed a resident as per section 6(1)(c) of the Act.

Issue 2:
Section 2(30) of the Act defines "non-resident" as someone who is not a resident, including a person not ordinarily resident under section 6(6) of the Act. The assessee's case falls under section 6(1)(c) of the Act, making him a resident. Therefore, the claim of the assessee to be assessed as a non-resident was rejected. The judgment was in favor of the revenue, and the reference was disposed of accordingly.

In conclusion, the High Court ruled against the assessee, upholding the decision that the assessee could not be considered a non-resident for the assessment year 1980-81. The assessment was deemed to be in accordance with the provisions of the Income Tax Act, 1961, and the reference was disposed of in favor of the revenue.