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Issues:
- Exemption of bank deposits in Non-resident (External) Account under Wealth-tax Act. - Interpretation of Explanation IA and its applicability to NR(E) Account deposits. - Determination of non-resident status under Income-tax Act and Foreign Exchange Regulation Act. - Analysis of the definition of 'non-resident' for the purpose of section 6 of the Wealth-tax Act. Detailed Analysis: The judgment pertains to two groups of appeals consolidated due to a common legal question involving Ana Maria Cardozo and Philip Cardozo's assessments for the years 1977-78 to 1980-81. The issue revolves around the exemption claimed for bank deposits in Non-resident (External) Account (NR(E) Account) under the Wealth-tax Act. The Wealth-tax Officer initially granted exemption but later withdrew it through rectification proceedings under section 35, leading to appeals by the assessees (Ana Maria Cardozo and Philip Cardozo) against the rectification orders confirmed by the Appellate Assistant Commissioner. In assessments for 1978-79 and 1980-81, the Wealth-tax Officer denied the exemption claim, which was upheld by the Appellate Assistant Commissioner, prompting further appeals to the Tribunal. The denial of exemption was based on the insertion of Explanation IA to section 6 by the Finance Act, 1982, effective from 1-4-1982, stating that NR(E) Account deposits were not exempt in the years 1977-78 to 1980-81. The assessees argued that the exemption was available to non-residents even before the insertion of Explanation IA, challenging the authorities' interpretation. The Tribunal delved into the provisions of section 6 of the Wealth-tax Act, emphasizing that the main provision applies to individuals not resident in India or resident but not ordinarily resident in India, including non-resident Indians. The assessees contended that the NR(E) Account deposits fell under clause (ii) of section 6, relating to assets in India represented by loans or debts not included in total income under section 10 of the Income-tax Act. Explanation IA, introduced in 1982, modified section 6 regarding assets in NR(E) Account, defining 'non-resident' as per the Foreign Exchange Regulation Act. The Tribunal analyzed the legislative definitions of 'non-resident' under the Income-tax Act and FERA, highlighting the broader scope under FERA. The insertion of Explanation IA aimed to extend the definition of 'non-resident' to align with FERA's definition, particularly concerning NR(E) Account deposits. The Tribunal concluded that Ana Maria Cardozo and Philip Cardozo would be entitled to exemption if they were non-residents as per the Income-tax Act in the relevant assessment years. Noting discrepancies in the treatment of Philip Cardozo as a resident in certain years, the Tribunal held that the NR(E) Account amounts were not includible in the assessments for 1977-78 and 1980-81. For the assessments of 1978-79 and 1979-80, the matter was remanded to the Wealth-tax Officer to re-examine the non-resident status and extend the exemption under section 6 if applicable. Ultimately, the Tribunal allowed certain appeals, set aside erroneous orders, and directed a reassessment based on the correct interpretation of the non-resident status and exemption eligibility under the Wealth-tax Act.
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