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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 ..... ew of the Explanation 1 to section 6(1)(c) of the Act and decide the issue in accordance with law. The grounds Nos. 1 to 3 of the appeal of the assessee are accordingly allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the Appellant as a Resident of India and taxed the said dividend income at 30% and also imposed surcharge and cess under the normal provisions of the Act. The surcharge on dividend income is restricted to 15% in case of dividend received by Resident. However, Ld. A.O. erred in levying surcharge at 37%. The said action of the Ld. A.O. is not in accordance with the law and the same may be set aside. III. The Appellant is not liable to pay the surcharge on the tax imposed on dividend income. 5. The Ld. DRP and the Ld. A.O. failed to appreciate that no surcharge is payable by the Appellant on dividend income received from M/s. Saurashtra Freight Pvt. Ltd. being a Non-Resident Indian during the previous year. The Appellant's case is governed by the India-Singapore DTAA and therefore, as per Article 10 of the said DTAA, the Appellant is liable to pay 15% taxes on the Dividend Income in Singapore without levy of any surcharge. Thus, the levy of surcharge by the Ld.A.O. is not justified and the same may be deleted. IV. Levy of interest under section 234A, 234B and 234C of the Act is unjustified. 6. The Ld. A.O. is not justified in levying interest under section 234A, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited 64% 11. Nishant Management Private Limited 27.64% 12. Saurashtra Fuels Private Limited 3.99% 13. Classic Energy (India) Private Limited 14. Hindustan Fuels Private Limited 15. Kutch Coal Carbonisation Private Limited The assessee is also a partner in the firms M/s Magnum Shipping Services, M/s Secretarial and office services. During the year, the assessee has received dividend from M/s Saurashtra Freight Pvt Limited to the tune of Rs 1,47,00,0007- wherein assessee is a director holding 24.5% of the shares. Thus, it is clear that the assessee is having personal and economic relations more closely to India and his vital interests are with India. During the year, assessee has received salary from the company incorporated at Singapore for the period November 2020 to March 2021. Therefore, the contention of the assessee that his personal and economic relations are closer to Singapore is factually incorrect. c. The assessee is an Indian national and hence he shall be deemed to be a resident of India. d. The effective management of the companies and subsidiaries controlled and managed by the assessee is in India and hence, the assessee shall be deemed to be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be deemed to be a resident of the State of which he is a national; 5. if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 1.1. In the opinion of the panel, the assessee remains a resident of India during the relevant assessment year, as per the 'Tie Breaker Rule' and also the provision of Sec.6(1)(c) of the Act. 1.1.1. In light of the above, the objection of the assessee is not tenable and the panel notes that he is a resident of India for the relevant assessment year and, therefore, this objection of the assessee is rejected." 2.1 The consequent to the direction of the Ld. DRP, the Assessing Officer passed the impugned final assessment order on 25.10.2023 and wherein the assessee is treated as non-resident and income was accordingly taxed at the rate provided under the Income-tax Act, 1961 (in short 'the Act'). 3. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 4. We have heard rival submission of the parties and perused the relevant material on record. The sole issue in dispute is in respect of interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupees during the previous year, for the words "sixty days" occurring therein, the words "one hundred and twenty days" had been substituted. Explanation 2.--For the purposes of this clause, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed. (1A) Notwithstanding anything contained in clause (1), an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature. Explanation.--For the removal of doubts, it is hereby declared that this clause shall not apply in case of an individual who is said to be resident in India in the previous year under clause (1)." 4.1 Thus, as per the provisions of section 6(1) of the Act, the assessee shall be residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, was in India for a total period of 176 days. In this regard, the assessee has furnished the summary of the number of days of stay in India along with a copy of the relevant pages of his passport. As per the assessee during the year, he had left India for the purpose of employment with Firstland Holdings Ltd., Mauritius. From the copy of the appointment letter issued by Firstland Holdings Ltd., Mauritius, forming part of paper book pages-97 to 101, we find that the assessee was appointed as Strategist - Global Investment for a period of three years which can be extended as per mutual discussion in due course. As a remuneration, the assessee was offered a salary of USD 1,00,000 per month subject to the deduction of applicable taxes. Further, the assessee was also provided various other benefits, perquisites, allowances, etc. as a Strategist - Global Investment. The roles and responsibilities of the assessee include the following:- (a) business development in India, USA, Africa, and the Middle East; (b) further process of raising money in the Company from. Investor(s) and looking at potential Investors for divesting equity in the Company/ its subsidiaries; (c) raising equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt like business or profession. Therefore, the Hon'ble Kerala High Court has interpreted the term "employment" in wide terms. The Hon'ble Kerala High Court, however, held that the term "employment" should not mean going outside India for purposes such as tourists, medical treatment, studies, or the like. The relevant findings of the Hon'ble Kerala High Court, in the aforesaid decisions, are reproduced as under:- "6. During hearing, learned senior counsel for the revenue has relied on the decision of the Supreme Court in Lakshminarayan Ram Gopal & Son Ltd. v. Government of Hyderabad [1954] 25 ITR 449. We do not think the decision is applicable to the facts of this case. Learned senior counsel for the assessee has relied on the Memorandum explaining the provisions of the Finance Bill introducing the Explanation, contained in 134 ITR 137 (St.) [Para 35 of the Finance Bill], which reads as follows:- "(iii) lt is proposed to provide that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be for the purpose of employment outside India under Explanation-1(a) to section 6(1) of the Act. Accordingly, even if it is accepted that the assessee went to Mauritius as an Investor in Firstland Holdings Ltd., Mauritius, in which he holds 100% shareholding, we are of the considered view that by applying the ratio of aforesaid decisions the assessee is entitled to claim the benefit of the extended period of 182 days, as provided in Explanation-1(a) to section 6(1) of the Act, for the determination of residential status. Since it is undisputed that the assessee has stayed in India only for a period of 176 days during the year, which is less than 182 days as provided in Explanation 1(a) to section 6(1) of the Act, the assessee has rightly claimed to be a "Non-Resident" during the year for the purpose of the Act. Accordingly, we find no infirmity in the findings of the learned CIT(A) on this issue. As a result, the grounds raised by the Revenue are dismissed." 4.2 The assessee submitted that in relevant previous year, he was in India for 132 days only which is less than 182 days and therefore, assessee is not resident as per either of the conditions of section 6(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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