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TMI Blog2014 (2) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... n enterprise and visit abroad for rendering consultation can be considered for the purpose of examining whether assessee's is resident or not. The Assessing Officer has calculated the period of stay in one particular manner which the learned CIT(A) examined and determined in another manner by excluding the travel to two places which are not supported by evidence to consider for the purposes of employment - going abroad for the purpose of employment only means that the visit and stay abroad should not be for other purposes such as a tourist or for medical treatment or for studies or the like - assessee has visited number of places but in some of the stampings, the visa was granted as 'tourist visa' and some of them are 'pass through visa's. Unless assessee travels on business visa or for the purpose of business/consultation, the entire period of travel abroad cannot be considered as 'going abroad for the purpose of employment' - Since these details have not been examined by the Assessing Officer on the basis of the visas obtained - this aspect requires examination by the Assessing Officer, to verify whether the visits are for the purpose of employment or for the purpose of tou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lationship between assessee and the foreign company. The A.O. therefore, held that assessee was covered by section 6 of the Act and was resident as per that section. A.O. therefore held that the amount received by assessee as consultancy charges from the foreign company had to be brought to tax as the income of assessee for the year. 3. Aggrieved by the Order of the A.O. assessee filed appeal before the CIT(A) on the following grounds that (1) A.O. erred in holding that assessee was a resident of India. (2) A.O. erred in holding that the appellant was not covered within the meaning of the Explanation to section 6(1) of the Act. (3) A.O. is not correct in holding that para 7.3 of Circular No.746 of CBDT is not applicable to assessee. (4) A.O. is not correct in holding that the employment in Explanation (a) is confined to an employer-employee relationship. 4. Before the CIT(A), assessee has made following submissions : (i) "Assessee's case is that in terms of Clause (a) of Explanation to Section 6(1) of the Income Tax Act he was away from India on employment as consultant for more than 182 days during the relevant previous year and therefore the remuneration received by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the certificate under section 80RRA. (3) Assessing Officer erred in not allowing the deduction under section 80RRA on the hyper-technical ground that the claim was not made in the return. (4) the Assessing Officer has a duty to allow all such deductions to which assessee is entitled as per the information available before him and these are to be suo moto allowed by the Assessing Officer even when no claim was made by assessee. 5. The learned CIT(A) held that the issue is against the Assessing Officer on various reasons. The first reason is that assessee has not left India for any period of time in connection with employment abroad as he is continuously resident in India. Therefore, he cannot be considered as 'he left India and stationed outside India for the purpose of employment'. Accordingly, he has to be considered as resident only. Without prejudice to the above, the learned CIT(A) analysed the number of days travelled outside India and foreign trips undertaken and held that the visit of Dusseldorf in Germany, Khartoru in Sudan are not supported by any evidence of employment outside India. Therefore, excluding those days the period accounts to less than 181 days outside Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyage of principles of interpretation to hold that assessee is not covered by explanation (a) to Sec. 6 as claimed. The Supreme Court in the case of CBDT v. Aditya V. Birla (170 ITR 137) held that the word employer in Sec 80RRA means a person who employs the services of any person and it is not used in any technical sense. In fact, in the case of assessee, approval was granted u/s. 80RRA (P 9 of PB) which shows that Thinet International was employer of assessee and assessee was in employment in terms of the decision of the Supreme Court. There is also a recent decision of the Kerala High Court in the case of CIT v. O. Abdul Razak (337 ITR 267) wherein it has been held "that for the purpose of the Explanation, employment includes self employment like business or profession taken up by assessee abroad" (Head Note). In particular, the Kerala High Court considered the Circular No. 346 dt 30-06-1982 on which assessee relied but which the AO held does not apply in the view he has taken of the meaning of the word "employment". 4. On first appeal, the Commissioner of Income Tax (Appeals) - Guntur (CIT(A)) has not concerned herself with the interpretation of the word "employment" as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were provided to Thinet International during each of the travels undertaken by him. The facts that the foreign concern paid huge remuneration and owned having paid for trips to several places indeed provides proof enough of the services provided. Thinet International and assessee are dealing at arm's length and the former can have no reason or motive to accommodate assessee or to make statements which are not true. The foreign concern made huge payments to assessee which goes to prove the professional relationship between the two. Period of stay in India 7. The learned CIT(A) has taken an alternative stand to hold that assessee is in India for more than 182 days. According to the AO assessee stayed in India for 175 days which was computed -- though erroneously according to assessee -- by taking the day of departure as well as day of arrival in India of each of the fifteen foreign travels as stay in India. But the learned CIT(A) went further and calculated the period of stay in India as under : Stay outside India (Page No. 14 of PB) 191days Less: The period of trip abroad from Hyderabad and back to New Delhi for the period 15-10-2001 to 31/10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and then derive the period of stay in India. If assessee left for employment and this is accepted, there is no provision to exclude a part of period outside India by deeming it as stay in India. 11. Even otherwise the whole method of calculation of the period of stay in India is wrong. Firstly, the day of departure and the day of arrival back cannot both be counted as stay in India. Only one of them can be so counted. The learned CIT(A) referred to a ruling of the AAR reported in 223 ITR 462. But the legal precedent is set later by the Bangalore Bench of the Hon'ble Tribunal in the case of Manoj Kumar Reddy v. ITO (International Taxation) 34 SOT 180 dt 01-04-2009. The Hon'ble Bench discussed the issue at length referring to Sec 9 of General Clauses Act, the Delhi High Court judgement and the Law Lexicons. After discussion, the Hon'ble Bench held at para 3.25 as under: "As per the General Clause Act the first day in a series of a day is to be excluded if the word "from" is used. Since for computation of the period one has to necessarily import the word 'from' and therefore, accordingly, the first day is to be excluded". On the basis of the above principle, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistent with the Department's own method for reckoning the period of stay. iv. That the method for calculation of stay in India should include both the days of departure and arrival, although assessee has been in both the countries India and Dubai, Riyadh etc on those days without noticing Sec 9 of the General Clauses Act. Thus period of stay outside India reckoned as 191 days is to be increased by 15 days". 8. Learned DR however, relied on the order of the CIT(A) to submit that CIT(A) has analysed the stay in India and accordingly, the order has to be confirmed. 9. We have considered the issue and examined the contentions. As far as the argument of the learned CIT(A) that assessee did not leave India and stationed outside the country is not material, as no where the section specifies that assessee should leave India permanently so as to reside outside the country. Even visit outside India for a period of or periods accounting in all to 60 days/181 days (as the case may be) will satisfy the condition specified in section 6(1). Since the plain meaning is very clear, the argument of the CIT(A) that assessee has not left India permanently has no meaning. Therefore, that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent like business or profession taken up by assessee abroad." (emphasis supplied) 13. As can be seen from the above, going abroad for the purpose of employment only means that the visit and stay abroad should not be for other purposes such as a tourist or for medical treatment or for studies or the like. Going abroad for the purpose of employment therefore, means going abroad to take-up employment or any avocation as referred to in the circular. As seen from the copies of the passport placed on record, assessee has visited number of places but in some of the stampings, the visa was granted as 'tourist visa' and some of them are 'pass through visa's and many of the stampings marking was in Urdu, for which English translation was not placed on record. As seen from the passport assessee undertook visits on transit visa, business visa and tourist visa. Unless assessee travels on business visa or for the purpose of business/consultation, the entire period of travel abroad cannot be considered as 'going abroad for the purpose of employment'. Since these details have not been examined by the Assessing Officer on the basis of the visas obtained, we are of the opinion that this aspect r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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