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TMI Blog2010 (9) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer (in short, "AO") during the course of assessment proceedings noticed that the respondent-assessee had not offered his income from abroad for the purposes of taxation for the assessment years 1998-1999 and 1999-2000. The AO further noticed that respondent-assessee had claimed the residential status as "Resident but not ordinarily resident. The AO did not accept the explanation offered by the respondent-assessee in reply to notice under Section 148 of the Act, and held respondent-assessee's residential status as "Resident and ordinarily resident. Consequently, AO made additions by bringing his global income under the net of taxation. 3. Respondent-assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [in short, " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more" "Section 6(6) (Post-amendment): A person is said to "not ordinarily resident" in India in any previous year if such person is- (a) an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or (b) a Hindu Undivided family whose manager has been a nonresident in India in nine out of the ten previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-resident in nine out of ten previous years preceding that previous year; (b) Or where he has not been in India (ie., has been absent from India) for 730 days or more during the seven previous years preceding that year. It will be seen that, if we apply the first of the above two interpretations, the applicant will be resident but not ordinarily resident for the assessment years 1996-97 to 2004-05 as he will have been a "resident" in eight and less number of preceding previous years although his physical stay in India would have exceeded 730 days by the end of the previous year relevant for the assessment year 1998-99. However, if the second of the tests is applied he will be a resident and ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the status of a resident but not ordinarily resident for the assessment years 1996-97 to 2004-05. It is on this assumption that his questions have to be answered and the answers are restricted to the assessment years in respect of which he will be a resident but not ordinarily resident mentioned above."(emphasis supplied) 8. The above section was amended by the Finance, Act 2003, w.e.f 1st April , 2004. After the amendment, the first interpretation as given above by Authority for Advance Ruling has made way for the second interpretation in determining the residential status of an assessee. Therefore, even though the Department‟s Circular No. 7 of 2003 which explains the new section, states that the amendment was made in order to rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income is decided with reference to the residential status. By virtue of this section the assessee acquired a vested right in the form of reduced total income. In regard to statutes dealing with substantive rights, I may refer to the decision of the Hon'ble Supreme Court in the case of Keshavan Madhava Menon vs. State of Bombay, AIR 1951 SC 128 wherein it has been held that a cardinal principle of construction of statutes is that every statute is prima facie prospective operation. This rule is applicable where the object of the statute is to affect vested rights (e.g. in the present case by amendment, a person who hitherto was to be assessed as „resident but not ordinarily resident‟ will be assessed as „resident and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been, but has not been provided for in a statute cannot be supplied by courts, as to do so will be legislation and not construction. In the present case not mentioning of non resident in Section 6(6)(a) is a case of casus omissus which has been corrected by Finance Act, 2003. I may further observe that aid to Notes on clauses can be had only in case of some ambiguity in the section and not otherwise." xxxx xxxx xxxx xxxx 6. We have heard the rival contentions and perused the material on record. As the facts emerge, it has not been disputed that prior to 1.4.2004, there existed ambiguity in ITAs 1362, 1363/2010 Page 8 of 8 Section 6(6). The Lucknow Bench in the above referred case has considered all these aspects and followed similar clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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