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TMI Blog2019 (10) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... Ordinarily Resident' in the relevant previous year 2014-15. On the interest income earned from NRE FD account of Rs. 1.10 crore, he claimed exemption u/s 10 (4)(ii) in the return of income. The AO rejected the assessee's claim for exemption and brought it to tax. Aggrieved, the assessee filed an appeal before the CIT(A) and the ld.CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal. 3. The learned AR submitted that the learned CIT(A) has ignored the assessee's submissions relating to the fact that the period of stay of 182 days outside India is not applicable if anyone of the following conditions are satisfied: a. Employment outside India or b. Carrying on business or vocation outside Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count) only based on the period of stay in India without considering the provisos as detailed in Grounds 2 to 4. 3.1 Further it was submitted that the ld.CIT(A) has misled himself on the wrong surmise that since the assessee along with his wife has created goodwill of his 10 LLPs and has created a goodwill for himself a sum of Rs. 62,62,000, had erroneously concluded that the intention of the assessee is to carry out business in India, had ignored the fact that the said 10 LLPs are predominantly managed by his wife and that the assessee holds only about 2.2% of shares and no activity has been carried out in the said 10 LLPs from the date of incorporation of LLP till date and the same is evident from the financials. The ld.CIT(A) has errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01-01-2016 in which it is mentioned that residents can maintain NRE account. Therefore, this letter from Canara bank manager does not certify the fulfilment of condition prescribed under proviso to section 10(4)(ii). e) For the above reasons, the interest earned by the assessee from NRE account is to be assessed under head Other Sources as per section 56 of the Act. 4.1 On appeal against the order of the AO, the ld DR submitted that the ld CIT(A) has drawn the following inference: The exemption of interest on Non-Resident (external) accounts - both NRE savings accounts and NRE fixed deposit accounts - is governed by the provisions of section 10 (4) (ii) of the Act. Under those provisions, the interest for the relevant financial year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits) earned by an individual is exempt from tax in India, provided the individual qualifies as a "person resident outside India" under the exchange control law i.e., FEMA. The rules for determination of residential status under the exchange control law are different from those under the Income Tax law. Under the exchange control law, when a person leaves India for another country for the purpose of employment or for carrying on business or' for any either purpose indicating his intention to stay outside India for an uncertain period, he may be considered as a "person resident outside India". Further, when a person is returning to India permanently, he may be considered as a "person resident in India". Therefore, the ld CIT(A) held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urns of income filed assessee had claimed exemption in respect of interest on FDRs in non-resident (External) account under section 10(4) of the Income-tax Act. In the returns the assessee had also shown the residential status as 'Resident'. Now the provisions of clause (ii) of sub-section (4) of section 10 read as under: "Clause (ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulations Act, 1973 (46 of 1973), and the rules made thereunder." Thus, from a plain reading of the aforesaid sub-section it is clear that income by way of interest on money standing to the credit in a Non-Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f taking up employment in India, etc. Since, the assessee has come and stays in India in the financial year 2014- 15, the ld.CIT(A) held that the assessee was a Resident and Ordinarily Resident in India for both income tax purpose and also under FEMA and therefore, he is not eligible for exemption u/s 10(4)(ii) as he does not fulfil the condition required under proviso to the said section, that is, he was a resident outside India in the relevant previous year 2014-15 under FEMA. Since the assessee has come and stays in India during the financial year 2014-15 for 283 days, his residential status under FEMA is a 'person resident in India' only. Therefore, the assessee is not entitled for the deduction U/s.10(4)(ii). The assessee has also not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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