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2024 (3) TMI 608 - ITAT AHMEDABADIncome accrues or arises or deemed to accrue or arise in India - Unexplained foreign income - residential status of the assessee - as submitted assessee has stayed in India during the previous year for 166 days (which exceeds 60 days) and more than 365 days in preceding four years thereby completely becoming a resident in India as per the provisions of Section 6(1)(c) - claim of the assessee that he has left for employment outside India and therefore stay of 182 days in the previous year are required for becoming the resident - whether CIT(A) wrongly held that the assessee as non-resident under the provisions of section 6? - HELD THAT:- As per the provision of clause (c) of sub-section 1 to section 6 the assessee shall be treated as resident under the Act. Further, the contention of the revenue that the provisions of explanation (1)(a) below section (6)(1) provides that “citizen of India leaves India for the purpose of employment outside India, the word 60 days under clause (c) of subsection shall be replaced with 182” cannot be applied in the case of the assessee as there is no evidence submitted by the assessee establishing that the assessee leaves India for employment purpose. Before going into specific contention of the revenue, we note that the AO himself, while finalizing the assessment order, has treated the assessee as non-resident. Therefore, in our considered view there no dispute remains on this issue. Hence, as per the provision of section 5 of the Act only those income which accrues or arises or deemed to accrue or arise in India will be brought to tax under this Act. Protective addition made on account of the expenses incurred on the accommodation, tuition fee and utility bills in Singapore - CIT(A) deleted addition - We note that wife of the assessee has admitted having incurred impugned expenses out of the loan taken from the companies incorporated in the Singapore in which the assessee and his wife are shareholders and directors. The AO, in the case of wife, has not accepted the explanation and added the loan amount to her total income by holding that the companies from which loan claimed to be taken are loss making. On appeal by her to the first appellate authority, the learned CIT(A) accepted the source of the loan amount and deleted the addition on merit of case. Once the substantive addition deleted on merit of the case the consequent addition on protective does not hold ground. In holding, so we draw support and guidance from the judgment of Panchmukhi Management Services (P.) Ltd. [2022 (9) TMI 1331 - DELHI HIGH COURT] where it was held as this Court by a separate order in a batch of appeals has upheld the order of the Tribunal deleting the substantive addition on merit made in different concerns, consequently, the issue of protective addition in the hand of the respondent-assessee does not arise. Thus, no infirmity in the order of the learned CIT(A) with respect to protective addition deleted by him. Moreover, once the assessee has been accepted as Non-resident by Revenue, then the addition in the hands of the cannot be made unless there it is accrued or arose/ deemed to accrue and arise India. Addition on account of deposit in the bank account of the assessee in Singapore - The fact that assessee has business operation in Singapore through multiple companies incorporated by him in Singapore was doubted. The bank account in question is also maintained in Singapore. The assessee is also a non-resident. Thus, considering the status of the assessee and his business operation in Singapore, the deposit made/amount credited in bank account maintained outside India cannot be taxed in India unless the revenue brings corroborative material that the amount deposited outside India were accrued or arose or deemed to accrue or arise to the assessee in India. However, no such material has been brought on record by the AO. Hence the learned CIT(A) rightly deleted the addition. Investment in the shares of companies based in Singapore - we note that the assessee during the assessment proceeding furnished copy of financial statement of Singapore companies. All these documents were also submitted by the assessee before “Accounting and Regulatory Authority Singapore”. The AO also made independent inquiry by referring to Competent Authority of India in Singapore. However, no adverse material resulted from such enquiry for holding the investment made by the assessee was sourced from the income accrued or arose in India. There was no material before us brought by the learned DR contrary to finding of the learned CIT(A). Therefore, considering categorical finding of the learned CIT(A) and the status of the assessee being non- resident the investment made outside India cannot be brought to tax in India - Decided against revenue. TDS u/s 194C - disallowance of land filling expense on account of non-deduction of tax at source - Assessee submitted that the assessee was not subject to the provisions of audit u/s 44 AB for the immediately preceding assessment year and therefore the assessee cannot be held as assessee in default on account of non-deduction of TDS - HELD THAT:- The above contention of the assessee has nowhere been doubted by the CIT-A. As such the order of CIT(A) on the contention raised by the assessee is silent. Thus, we can presume that the assessee was not subject to the provisions of section 44AB of the Act in the immediately preceding year and therefore the assessee cannot be made liable to deduct the TDS u/s 194C of the Act on account of land levelling expenses. Accordingly, we set aside the finding of learned CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed.
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