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2015 (5) TMI 938

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..... how that an individual intended or had the animus of residing in India for the minimum prescribed duration. If the record indicates that – such as for instance omission to take steps to go abroad, the stay can well be treated as disclosing an intention to be a resident Indian. Equally, if the record discloses materials that the stay (to qualify as resident Indian) lacked volition and was compelled by external circumstances beyond the individual’s control, she or he cannot be treated as a resident Indian. We do not agree with the contention of the Revenue that Section 6(1)(a) of the Income Tax Act shall be a strictly constructed or that it does not permit exceptions. The case at hand itself is a good example why a literal interpretation of the relevant statutory clause is not commended for such course might not only lead to unjust, unfair or absurd consequences but also be prone to abuse. While executive action resulted in his passport being unjustifiably impounded, this rendered if impossible for the assessee to leave India. He virtually became an unwilling resident on Indian soil without his consent and against his will. His involuntary stay during the period that followed till .....

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..... t of the contentions that were urged before the CIT(Appeals) by the assessee in his appeal against the order of the AO while the second appeal relates to the contentions of the Revenue in its cross appeal. ITA No. 715 of 2014, on the other hand, pertains to AY 2008-09. 5. Since the above-mentioned appeals for both the said AYs had converged before the ITAT which heard and decided them through the common order, impugned before us, it is proper to take note of the background facts as culled out therein for present discussion. 6. It has been the case of the Revenue that the Department of Income Tax having received information about involvement of the assessee in brokering defence deals for Department of Defence Production and Supplies in the Ministry of Defence of the Government of India against government s policy, search operations were carried out under Section 132 of the Act on 28.02.2007 against him by the concerned authorities. It appears from the record that earlier action was taken in the nature of impounding of passport of the assessee on 10.10.2006 to preclude him from leaving India. It is claimed that the searches and seizures resulted in evidence coming to the fore a .....

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..... t of foreign remittance taxable in India (AY 2008-09). 10. Feeling aggrieved, the assessee filed appeals against both assessment orders before the CIT(Appeals). His appeal No. 82/11-12 for AY 2007-08 resulted in order dated 18.03.2013 of CIT(Appeals). Similarly, the appeal No. 121/11-12 respecting AY 2008-09 was decided by CIT(Appeals) by order dated 22.05.2013. 11. As mentioned earlier, the AO had treated the assessee as a resident Indian for the two AYs on account of his presence in India for periods exceeding 182 days, in terms of Section 6(1)(a) of the Income Tax Act. The assessee contended before the CIT(Appeals) that he has been assessed as non-resident consistently since 1985 and his stay in India during the periods under consideration had exceeded 182 days because of reasons beyond his control since his passport had been impounded by the government agencies rendering him unable to travel from India. The CIT(Appeals) rejected this contention and affirmed the view taken by the AO holding the assessee to be a resident for purposes of the two AYs. 12. The CIT(Appeals), however, deleted some of the additions made by the AO upholding certain others on protective basis . .....

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..... e Hon'ble Delhi High Court. By order dated 5.2.2007 Hon'ble Delhi High Court reversed this order of Ld Special Judge, CBI. Against the order of Hon'ble Delhi High Court the assessee approached Hon'ble Supreme Court and Hon'ble Supreme Court vide order dated 24.1.2008 ordered for release of passport. Ironically before the passport could be physically released consequent to Supreme Court order, the Passport Authorities again impounded the passport on 25.3.2008 under some other provisions. Against the later order of Pass Port Authorities the assessee again approached Hon'ble Delhi High Court against impounding of passport vide order dated 5th October, 2010 was pleased to order for release of Passport with a condition that assessee will take permission of the Trial Court before seeking to travel abroad. 44. The assessee then filed application for permission to travel abroad for two months which was dismissed by the Trial Court vide its order dated 25th October, 2010. Against this order, the assessee again approached Hon'ble Delhi High Court and Hon'ble Court vide order dated 21.9.2011 directed the Trial Court to permit the assessee to go to London for .....

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..... assport was released pursuant to Court orders, only on 21.09.2011. Thus, the assessee was in India continuously and uninterruptedly from 28.09.2006 to 21.09.2011. This would mean that he was on Indian soil for 185 days during the financial year 2006-07 (corresponding to AY 2007-08) and throughout during financial year 2007-08 (corresponding to AY 2008-09). 18. By above account, a strict interpretation and enforcement of the rule contained in Section 6(1)(a) of the Income Tax Act would render the assessee a resident. The plea raised, however, is that this would not be just or fair nor in consonance with the intention of the legislature. 19. It is trite that plain or literal interpretation of a statutory provision is not to be adopted if it produces manifestly unjust results or absurdly unreasonable consequences which could never have been intended. To obviate injustice flowing from mechanical interpretation and to bring about rationality, it is permissible, even in the field of taxation, to prefer such construction as results in equity over such literal meaning as is unjust. In taking this view, we draw strength from law laid down by the Supreme Court, inter alia, in the cases .....

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..... counted adverse to his chosen course or interest, particularly if it is brought about under compulsion or, to put it simply, involuntarily. There has to be, in the opinion of this Court, something to show that an individual intended or had the animus of residing in India for the minimum prescribed duration. If the record indicates that such as for instance omission to take steps to go abroad, the stay can well be treated as disclosing an intention to be a resident Indian. Equally, if the record discloses materials that the stay (to qualify as resident Indian) lacked volition and was compelled by external circumstances beyond the individual s control, she or he cannot be treated as a resident Indian. 24. We do not agree with the contention of the Revenue that Section 6(1)(a) of the Income Tax Act shall be a strictly constructed or that it does not permit exceptions. The case at hand itself is a good example why a literal interpretation of the relevant statutory clause is not commended for such course might not only lead to unjust, unfair or absurd consequences but also be prone to abuse. 25. While executive action resulted in his passport being unjustifiably impounded, this .....

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