TMI Blog2007 (3) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction over the assessee. In the instant case, the Assessing Officer having noted from the facts on record and on applying the principles of law that he would not have jurisdiction over the assessee, he may express his reasons therefor in the order sheet, which may form the basis for the Commissioner of Income-tax for transferring the file to the Officer who would have a jurisdiction over him. Since the very crux of jurisdiction is shaken in the instant case, that is the Assessing Officer (International Taxation) having found the assessee to be a resident, he exercised jurisdiction over him. Since he had exercised jurisdiction without authority and without any authorization therefor, the order passed by him suffers from lack of jurisdiction. Such an order would, therefore, become an illegal order and non est in the eye of law. We hold accordingly and quash the order. Though it may not be necessary to go into the merits of the issue before us, namely, inclusion of rent on notional basis and the calculation error in interest under section 244A of the Act, we would, as an abundant precaution cover these two issues also. Working of interest u/s 244A - HELD THAT:- CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clearly recorded in the order of the Assessing Officer and this going to the root of the matter, the same may be admitted. 4. Appearing for the assessee, learned counsel, Mr. S. Ramasubramanian submitted the facts of the case. He submitted that the assessee is a partner in a firm in India known in the name and style of M/s. Sheriff Constructions. Counsel for the assessee submitted that the assessee had an intention of exploring business propositions outside India and he, accordingly, applied for permission to the Reserve Bank of India. The Reserve Bank of India, vide its letter of January 5, 2001, has categorically stated that any resident Indian can continue to be a partner in a firm on becoming a non- resident Indian and that permission of the Reserve Bank of India is no longer required. Accordingly, the assessee had been going to various countries starting from March 2000, to March 2001, and on that basis, he was out of India for 185 days. 5. At this point, he drew our attention to the order of the Assessing Officer at page 2 where under the caption residential status , the Assessing Officer had clearly noted that the assessee had stayed in India during the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that remuneration necessarily does not engulf salary only but also the amounts paid to a consultant. 8. He also drew our attention to the Delhi High Court decision in K. R. Pradeep v. CBDT [2006] 282 ITR 526, where the court held that if the person renders the service outside India and receives remuneration in foreign currency, he would be entitled to deduction under section 80RRA of the Act. 9. He also drew our attention to the decision of the jurisdictional High court in A. S. Mani v. Union of India [2003] 264 ITR 5 (Karn), for the proposition that in order that a person be entitled to deduction under section 80RRA of the Act, physical stay out of India is what is more important. 10. He drew our attention to a decision of this Tribunal in Iblex Gallagger P. Ltd. (I. T. A. Nos. 2274 to 2278/B/04) for the assessment years 1994-95 to 1998-99 for the proposition that it is not for the assessee to confer any jurisdiction on the officer assessing the income. He submitted that the jurisdiction is always conferred on the Assessing Officer on certain basis. He submitted that the reliance on this particular order would be elaborated by him a little later. He submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment, he must be impressed with jurisdiction and this jurisdiction is extended to only non-residents. The conferred jurisdiction not being extended to residents, the officer having refused to accept the status of the assessee as non-resident, could not, therefore, proceed with the assessment on a resident. He submitted that the reference made earlier on the order of the Tribunal in Iblex Gallagger P. Ltd. (I. T. A. Nos. 2274 to 2278/ B/04) was for the proposition that exercise of jurisdiction without conferment of the jurisdiction, the order would be invalid in the eye of law. He further submitted that this order also categorically observed that jurisdiction cannot be conferred on an Assessing Officer by the consent of the assessee. 12. He, accordingly, concluded that the Assessing Officer had no jurisdiction or any authority not to accept the claim of the status of the assessee as non-resident. Alternatively, the Assessing Officer having found that the status as a non-resident claimed by the assessee could not be accepted, he should have transferred the file to the officer who had jurisdiction over the assessee on a territorial basis, or on any other basis prescribed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which, the Commissioner of Income-tax (Appeals) has held that it is not an appealable issue, but an issue for which the assessee should approach the office of the Assessing Officer for rectification. Counsel for the assessee submitted that section 244A talks of refund of any amount due to the assessee. The refund has arisen consequent to the tax levied on the assessee having been reduced and covers one very important element, i.e., the period from which the interest is due to the assessee. He, therefore, submitted that it is no different from the interest that is due to the assessee as has been held by the Karnataka High Court in CIT v. Bharat Motors Service [1987] 163 ITR 843. 18. The learned Departmental representative, Mr. K. P. Rao vehemently contended every issue that was raised by the counsel for the assessee. He referred to the decision of the Andhra Pradesh High Court in Kakunuru Venkata Reddy v. CIT [1979] 118 ITR 917 for the proposition that objection to the jurisdiction should have been raised before the Assessing Officer and could not be raised for the first time in appeal. 19. The learned Departmental representative also drew our attention to the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assistant Commissioner of Income-tax (International Taxation), Circle- 19(1), Bangalore. This return was so filed by the assessee on the premise that the assessee was in India during the relevant previous year for 180 days only. The additional evidence that the assessee sought for admission before the Commissioner of Income-tax (Appeals) is the letter dated January 5, 2001, from the Reserve Bank of India, Exchange Control Department, Central Office, Mumbai, to M/s. India Builders Corporation in which the assessee is a partner. This was in reply to the letter from the firm dated September 4, 2000, addressed to the Chief General Manager, Exchange Control Department of the Reserve Bank of India. The letter of the firm and the reply from the Reserve Bank of India, being relevant for the issue, are reproduced below : I. Letter of India Builders Corporation dated September 4, 2000 addressed to the Chief General Manager, Exchange Control Depart ment, RBI, Mumbai : We wish to inform you that we are a firm carrying on the busi ness of development of real estate. One of our partners, Mr. Ziaulla Sheriff has informed us that he has become a person resident outside India. We understa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. Explanation. In the case of an individual, (a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958) or for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words ' sixty days', occurring therein, the words ' one hundred and eighty-two days' had been substituted ; (b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who being out side India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words ' sixty days', occurring therein, the words ' one hundred and eighty two days' had been substituted. 25. The other parts of the section, namely, sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent day situation at which point of time, India has been into global business. The global business was started from the year 1997 onwards. Considering this feature, we are not in a position to accept the claim of the assessee that the term employment outside India would also include business outside India. 30. Various authors on Jurisprudence, Interpretation of Statutes, as well as the courts over the years have been very conscious of certain rules of interpretation of a statute and one of them is the rule of ejusdem generis. The rule applies when (1) the statute contains an enumeration of specific words ; (2) the subjects of enumeration constitute a class or category ; (3) that class or category is not exhausted by the enumeration ; (4) the general terms follow the enumeration ; and (5) there is no indication of a different legislative intent . 31. The other rule is noscitur a sociis. This rule as explained by Lord Macmillan means : The meaning of a word is to be judged by the company it keeps. As stated by the Privy Council it is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return in the status of non-resident with the Assistant Commissioner of Income-tax (International Taxation), Ward-19(1), Bangalore. 34. The basic ground of the assessee is with reference to the fact that the return having been filed with the Assistant Commissioner of Income-tax (International Taxation), Ward-19(1), that particular officer has jurisdiction to assess non-residents in that status only. In support of his claim, he had filed a copy of the jurisdiction of the Assistant Commissioner of Income-tax (International Taxation), Circle-19(1), Bangalore, especially the jurisdiction of Range-19, Bangalore, as item No. 3 delineates the powers of the Income-tax Officer (International Taxation). The Income-tax Officer shall exercise powers and functions as mentioned below. 35. The Income-tax Officer (International Taxation), Ward-19(1) has been given territorial area of urban and rural districts of Bangalore. Such exercise of power is over persons, classes of persons, namely, persons being non-residents including foreign companies that have permanent establishments in terms of applicability of double tax avoidance agreement or having business connection or having source of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who are residents. All persons who are residents falling within the urban and rural area districts of Bangalore are, therefore, outside the purview of the Assessing Officer (International Taxation). This is because, the persons who are classified as residents are not part of persons or classes of persons on whom the Assessing Officer (International Taxation) had been delegated the power of exercising under the Income-tax Act. 40. In the instant case, as the facts stand the assessee claimed the status of a non-resident for the reasons brought out in the earlier paragraph and had filed it with the Assessing Officer (International Taxation), Ward-19(1), Bangalore. In view of specific delegation of exercising the power as an Assessing Officer only on persons who could be called non-residents, the Assessing Officer (International Taxation), on finding that the assessee does not satisfy the conditions of a non-resident. The proper course of action that was expected of him is to transfer the file to the Assessing Officer who had territorial jurisdiction over the assessee as a resident or to such officer who would have jurisdiction over the assessee. 41. The question that came up d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be necessary to go into the merits of the issue before us, namely, inclusion of rent on notional basis and the calculation error in interest under section 244A of the Act, we would, as an abundant precaution cover these two issues also. 45. The fact that the assessee owned the house is accepted. The claim of the assessee is that the assessee is under occupation of his daughter and, therefore, he was deprived of using that house by himself and that such deprivation may be considered in the manner in which it has been so stated in section 23(2)(b) of the Act. The contention of the assessee is that the house could not be occupied by reason of his employment, business or profession and that he was compelled to reside with his son though in the same city. On this, section 23(2) of the Act, is reproduced below for the sake of facility : 23. (2) Where the property consists of a house or part of a house which (a) is in the occupation of the owner for the purposes of his own residence ; or (b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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