TMI Blog2015 (10) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... er company to US. The assessee was allegedly under bonafide impression that since the deposits are made from NRE A/c, the interest income there from is exempt u/s.10(4), even though the assessee had returned to India and was a resident in India. The FERA, 1973 has been repealed and has been replaced with FEMA, 1999. The corresponding provisions contain in section 2(q) defining 'person resident outside India' in FERA, 1973 are contained in section 2(w) of FEMA, 1999. The 'person resident outside India' and 'persons resident in India' as defined under FEMA, 1999. In the present case, we find that the assessee has not offered interest income for tax due to wrong interpretations of the provisions of the Act and not on account of deliberate c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. During the course of scrutiny assessment, the Assessing Officer observed from the details furnished by the assessee that the assessee had opened a bank account in ICICI Bank and transferred a sum of ₹ 1,68,95,344/- from NRE Fixed Deposit account. The said sum represents maturity of Fixed Deposits of ₹ 87,56,634/- and interest element of ₹ 81,38,700/-. The Fixed Deposits in NRE account were made in the year 2002 that had matured in the year 2009. The interest received by the assessee was not offered to tax in the return of income filed by the assessee for the relevant period. The assessee during the course of assessment proceedings gave explanation that u/s.10(4) of the Act, interest income in the NRE A/c is exempt from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the year 2002 on various dates. The Fixed Deposit accounts matured in January, 2009 and March, 2009. The assessee was under bonafide impression that since the investment has been made from NRE A/c, the interest income thereon is exempt from tax u/s.10(4) of the Act. The belief of the assessee was further fortified by the fact when the bank also did not deduct tax at source on the maturity value of the Fixed Deposits. However, the explanation furnished by the assessee was not accepted by the Assessing Officer. It is not a case where the assessee has concealed any material facts. It is the case of mis-interpretation of legal provisions. The non-disclosure of interest was under the bonafide belief that the same is exempt u/s.10(4) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on a particular assignment by the employer company to US. The assessee was allegedly under bonafide impression that since the deposits are made from NRE A/c, the interest income there from is exempt u/s.10(4), even though the assessee had returned to India and was a resident in India. The FERA, 1973 has been repealed and has been replaced with FEMA, 1999. The corresponding provisions contain in section 2(q) defining 'person resident outside India' in FERA, 1973 are contained in section 2(w) of FEMA, 1999. The 'person resident outside India' and 'persons resident in India' as defined under FEMA, 1999 are re-produced as under: (v) person resident in India means- (i) a person residing in India for more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was in the status of non-resident as per the provisions of FEMA (erstwhile FERA) during the years 2000-01, 2001-02 2002-03. The assessee returned to India in April, 2003. The investment was made by the assessee in NRE Fixed Deposit A/c during January, February March, 2002. The bank also did not deduct tax at source on such interest income. This further gave impetus to the belief of the assessee that the interest income earned by the assessee is not taxable in view of the provisions of section 10(4) of the Act. It is equally un-denying the fact that ignorance of law is no excuse and the assessee cannot escape from tax liability if the deductor has failed to deduct tax at source. 7. In the present case, we find that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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