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TMI Blog1983 (11) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... ik GMBH, Frankfurt, West Germany. The latter, under a contract with Mysore Petro Chemicals Ltd. (MCPL) in connection with setting up Phthalic Anhydride Plant at Raichur had lent the services of the assessee to MCPL. The assessee was in India from 27-8-1975 to 9-12-1975 and again from 7-1-1976 to 6-4-1976. Thus, in all, in the financial year 1975-76, the assessee stayed in India for 190 days. On this basis, i. e., the financial year as the previous year, the assessee was taxable on an income of Rs. 2,54,995 for the assessment year 1976-77. However, the assessee's agents, viz., MCPL filed two returns for the assessment years 1976-77 and 1977-78 declaring incomes of Rs. 1,51,405 and Rs. 1,39,342 under the head 'income from other sources' on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, the Commissioner held that declaration of the calendar year as the previous year was an afterthought to avoid taxability. He, accordingly, set aside the orders of the ITO for the two years in question and directed him to assess the entire income of Rs. 2,54,995 under the head 'Salaries' in the assessment year 1976-77 alone. The assessee is in appeal. 3(i). Shri Soli, E. Dustur, the learned counsel for the assessee, submitted that the Commissioner in his order had admitted that there was no contract of service between the assessee and MCPL. As such it followed, there was no employer-employee relation between the two. The Explanation added to section 9 of the Act deeming that amounts of the type received by the assessee for service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following lines : According to Article II(g), a resident in the Federal Republic of Germany will not be a resident in India and vice versa. Article XII(3) prescribes that an individual, who is resident of the Federal Republic of Germany shall not be taxed in India on the profits or remuneration referred to in paragraph (1) if he is temporarily present in India for a period or periods not exceeding in the aggregate 183 days during a relevant previous year. This means that a person who is a resident in the Federal Republic of Germany will not be taxed in India unless his stay in India exceeded 183 days, i. e., if a person is to be taxed in India his stay here should exceed 183 days. Since the previous year for the assessee has to be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the ITO and the order of the Commissioner under section 263 should be set aside. 4. The learned departmental representative urged that the assessee himself had submitted a return showing the remuneration received from MCPL under the head 'Salaries' and the previous year as the financial year. MCPL was not authorised to revise the returns as the power of attorney in their favour did not give them this authority. He submitted that the facts in S. G. Pgnatale's case were different. In S. G. Pgnatale's case the Indian company paid the French company who paid their employees in return, while, in the present case, the Indian company has made the payment to the assessee abroad. The liability to pay could be said to arise in India under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India. He submitted that the order of the Commissioner should be upheld. 5. We have given careful consideration to the arguments advanced on both sides. Article II(1)(g) reads as follows : "Article II --- (1) In the present Agreement, unless the context otherwise requires : (g) the terms 'resident of the Federal Republic' and 'resident of India' mean, respectively, a person who is resident in the Federal Republic for the purposes of Federal Republic tax and not resident in India for the purposes of Indian tax, and a person who is resident in India for the purposes of Indian tax and not resident in the Federal Republic for the purposes of Federal Republic tax. A company shall be regarded as resident in the Federal Republic, if it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily present in India for a period or periods not exceeding in the aggregate 183 days during a relevant 'previous year', (b) the services are rendered for or on behalf of a resident of the Federal Republic, (c) the profits or remuneration are subject to Federal Republic tax, and (d) the profits or remuneration are not deducted in computing the profits of an enterprise chargeable to Indian tax." Even taking the calendar year for purposes of determining the residence in both the countries, let us take a case where an assessee has stayed in India for 182 days. Article XII(3) prescribes that such a person will not be taxed in India since his period of stay in India does not exceed 183 days although according to the Indian law, he will b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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