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TMI Blog2025 (1) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... d Assessment Year for less than 182 days. It is an undisputed fact that the Appellant was in India for 113 days only during the previous year. 2. Without prejudice to the above, the Ld. DRP failed to appreciate that the Appellant's case is covered by clause (a) to Explanation 1 to section 6(1)(c) of the Act. The Appellant has wrongly been treated as Resident of India without appreciating that the clause (a) to Explanation 1 to section 6(1)(c) provides that where a citizen of India, leaves India in any previous year for the purposes of employment outside India, the provisions of subclause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty two days" had been substituted. The Appellant was in India for 113 days only which is less than 182 days. 3. Thus, the Appellant is a Non Resident as per clause (a) to Explanation 1 to section 6(1)(c) since the period of 60 days, as referred to in section 6(1)(c) of the Act, will get substituted by 182 days. As the Appellant's stay in India during F.Y. 2020-21 was 113 days, being lower than 182 days, the Appellant shall be considered as a Non-Resident as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4C of the Act without appreciating the facts and circumstances of the case. 7. The Appellant seeks leave to add, alter and amend the above grounds whenever required. 2. Briefly stated, facts of the case are that the assessee, an individual, filed return of income in the assessment year under consideration in the status of 'non-resident' declaring income of Rs. 5,45,86,920/-. Subsequently, the assessee revised its return of income on 31.03.2022. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices issued under the Income-tax Act, 1961 (in short 'the Act') were issued and complied with. In view of return of income filed in the status of 'non-resident', the Assessing Officer issued a draft assessment order u/s 144C(1) of the Act on 30.12.2022, wherein he held that under the provisions of DTAA, the assessee is a resident and therefore consequently income of the assessee should be taxed at the rate provided under the provisions of the Act and not the rate applicable under the double taxation avoidance agreement (DTAA) between India and the Singapore. The relevant finding of the Assessing officer is reproduced as under: "5.3.3 The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia and hence, the assessee shall be deemed to be resident of India." 2.1 The assessee filed objection before the Ld. DRP, however, the Ld. DRP also held that as per the provisions of section 6 of the Act, the assessee was a resident during the year under consideration. The relevant direction of the DRP has been reproduced in the impugned order. For ready reference same is extracted as under: "1. Directions of the DRP : 1. The panel has considered the submissions of the Ld.AR and the stance of the Ld. A.O. The panel notes that, the assessee being a citizen of India, having his permanent home in India, as well as his place of effective management in India, should be held as a Resident of India during the relevant Assessment Year. In this regard, it would be pertinent to analyse some of the provisions of Section 6 (Residence in India). The relevant portion of the said provisions is being reproduced hereunder :- "6. For the purposes of this Act, - 1. An individual is said to be resident in India in any previous year, if he- 1. is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or (b) [*] (c) having within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sole issue in dispute is in respect of interpretation of the provisions of DTAA and section 6 of the Act defining the residential status of assessee. The Article 4(1) of the treaty has laid down that the term 'resident of a contracting state' has be decided within the taxation laws of that state and Article 4(2) says that in case of individual, who is resident of both the contracting state, then resident status shall be determined as per sub clause (a) to (d) of Article 4(2) of DTAA. The AO has wrongly invoked the provisions of Article 4 of DTAA for determination of residential status of the assessee, mainly taking into account the permanent home and business activities of the companies in which the assesee invested. Since, before us the assessee has submitted that the assessee is resident of Singapore and not resident of India, the relevant provisions of Indian Income-tax are reproduced as under: "6. For the purposes of this Act,- (1) An individual is said to be resident in India in any previous year, if he- (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or (b) [***] (c) having within the four years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfies any of the two conditions, firstly, as per section 6(1)(a) in the relevant assessment year if he is in India for 182 days or more, then he shall be resident of India. The assessee submitted that during relevant previous year he was India for 132 days, thus, the assessee does not fulfill this condition. Secondly, as per section 6(1)(c) of the Act, if an individual, in preceding four years in India for 365 days or more , then if in relevant previous year, he stayed in India for more than 60 days, he shall be treated as resident of India. But under the Explanation to said sub section, it is provided that if a person goes out of India for Employment purposes than, 60 days shall be substituted by 182 days. Therefore, according to second condition if assessee has remained in India in last four years for more than 365 days and in relevant previous year for more than 182 days, then only shall be treated as non-resident. Before us, the Ld. counsel for the assessee relied on the decision of the ITAT in ITA No. 2155/Mum/2023 in the case of Shri Nishant Kanodia. The relevant finding of the Tribunal is reproduced as under: "9. Therefore, under section 6(1) of the Act, an individual is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, expansions, upgrading, diversifications etc.; and (d) such other similar duties as the Board may assign to you from time to time. 11. Further, the assessee has placed on record the Occupation Permit issued by the Government of Mauritius as an Investor. As per the assessee, he was an employee in Mauritius with Firstland Holdings Ltd. starting from August 2012 to March 2013 and had filed his return of income with Mauritius Revenue Authorities for the calendar year 2013, declaring a total income of Mauritian Rupee ("MUR") 2,44,48,000 and tax deduction of MUR 36,67,200, for the period from January 2013 to march 2013. Further, the assessee also filed his return of income with Mauritius Revenue Authorities for the period from August 2012 to December 2012 declaring a total income of MUR 1,65,12,353 and a tax deduction of MUR 24,76,852, against the same. The Revenue however, did not agree with the submissions of the assessee and on the basis of the status as "Investor" in the Occupation Permit issued by the Government of Mauritius as well as the business visa issued to the assessee concluded that the assessee had left India not for the purpose of employment but as an Investor. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will be that the 'test' of residence in (c) above will stand modified to this extent in such cases." Similarly the Central Board of Direct Taxes issued Circular No. 346, dated 30- 6-1982, which reads as follows: "7.3 With a view to avoiding hardship in the case of Indian citizens, who are employed or engaged in other avocations outside India, the Finance Act has made the following modifications in the tests of residence in India: (i) & (ii) ** (iii) Where an individual who is a citizen of India leaves India in any year for the purposes of employment outside India, he will not be treated as resident in India in that year unless he has been in India in that year for 182 days or more. The effect of this amendment will be that the test of residence in (c) above will stand modified to that extent in such cases." 7. What is clear from the above is that no technical meaning is intended for the word "employment" used in the Explanation. In our view, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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