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2019 (10) TMI 195 - AT - Income TaxExemption u/s 10(4)(ii) - whether the interest income from NRE account of the assessee is taxable in India or exempt u/s 10(4)(ii) as claimed by the assessee? - HELD THAT:- The assessee had an NRE account in Canara Bank in India. Although the assessee was non-resident earlier, he became a 'Resident and Ordinarily Resident' in the relevant previous year 2014-15. On the interest income earned from NRE FD account of ₹ 1.10 crore, the assessee claimed exemption u/s 10 (4)(ii) in the return of income. AO rejected the assessee's claim of exemption and brought to tax and the CIT(A) upheld it. CIT(A) held that 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 2014-15 will be exempt only if the assessee is a person "resident outside India" for the concerned fiscal year under FEMA. FEMA defines a "person resident outside India" as somebody who is not a "person resident in India". The assessee would be a "person resident in India" as per clause (v) of section 2 of FEMA as he has come to and stays in India in the FY 2014-15 for the purpose of taking up employment in India, etc. Since, the assessee has come and stays in India in the financial year 2014- 15, 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 placed any material to dislodge the findings recorded by the ld.CIT(A), before us, i.e., to prove that he is a Resident outside India in the relevant previous year 2014-15 within the scope of the FEMA as well as for income tax purpose, therefore we do not find any reason to interfere with the order of the ld.CIT(A) and hence the assessee’s corresponding appeal grounds are dismissed.- Decided against assessee.
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