2021 (11) TMI 144 - AT - Income Tax

Residence in India - Residential status - Status of the assessee as Resident of India - calculation of days of stay in India - inclusion of date of arrival in counting the days of stay in India - HELD THAT - As already held by different benches that while counting days of stay in India for considering the status of Resident the days of arrival has to be excluded, the Ld. CIT(A) while counting days of stay in India purportedly counted the date of arrival of the assessee in India without giving any cogent reason thereon which in our considered opinion having no basis. No reason to deviate from the ratio laid down in case of MANOJ KUMAR REDDY 2009 (4) TMI 551 - ITAT BANGALORE and relying upon the identical facts in the case in hand we exclude the date of arrival in counting the days of stay in India in the case of the assessee. The assessee stayed in India during the year under consideration for less than 182 days and finally cannot be considered as the resident of India in the year under consideration. In that view of the matter the impugned assessment made against the assessee considering him as the resident of India is not sustainable in the eye of law and thus deleted. - Decided in favour of assessee.

Issues Involved:
1. Determination of the appellant's residential status in India for the financial year 2015-16.
2. Addition of ?87,31,506/- for salary earned outside India.
3. Addition of ?18,21,987/- for FDR interest earned from NRE account.
4. Addition of ?1,999/- as short-term capital gain on mutual fund.
5. Levying of interest under Sections 234B and 234C of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Determination of Residential Status:
The primary issue is whether the appellant should be considered a resident in India for the financial year 2015-16. The Revenue's contention was based on the calculation of days of stay in India, asserting that the appellant stayed for 184 days, thus qualifying as a resident. The appellant argued that only the date of departure should be considered as "stay in India," relying on the judgment by the Authority for Advance Rulings and various ITAT decisions. The Tribunal agreed with the appellant, excluding the date of arrival in India from the count, and concluded that the appellant stayed in India for less than 182 days. Consequently, the appellant was not considered a resident for the year under consideration.

2. Addition of ?87,31,506/- for Salary Earned Outside India:
Given the Tribunal's conclusion that the appellant was a non-resident, the salary earned outside India should not be subject to Indian income tax. The addition of ?87,31,506/- made by the lower authorities was therefore deemed unsustainable and was deleted.

3. Addition of ?18,21,987/- for FDR Interest Earned from NRE Account:
Interest earned from NRE accounts is typically exempt from income tax for non-residents. Since the appellant was determined to be a non-resident, the addition of ?18,21,987/- for FDR interest was also deleted.

4. Addition of ?1,999/- as Short-term Capital Gain on Mutual Fund:
Similar to the other additions, the short-term capital gain on mutual funds amounting to ?1,999/- was also deleted, considering the appellant's non-resident status.

5. Levying of Interest under Sections 234B and 234C:
The interest levied under Sections 234B and 234C was based on the appellant being considered a resident. Since the appellant was determined to be a non-resident, the basis for levying this interest was invalidated, and the interest charges were deleted.

Conclusion:
The Tribunal allowed the appeal filed by the appellant, concluding that the appellant was not a resident in India for the financial year 2015-16. Consequently, all additions made by the lower authorities were deleted, and the interest levied under Sections 234B and 234C was removed. The judgment emphasized the importance of correctly determining the residential status based on the exclusion of the date of arrival in India.

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