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TMI Blog2002 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... elow: ---------------------------------------------------------------------------- Sl. No. Financial year Stay in India ---------------------------------------------------------------------------- (1) 1980-81 91 (2) 1979-80 62 (3) 1978-79 272 (4) 1977-78 50 (5) 1976-77 197 (6) 1975-76 365 (7) 1974-75 365 (8) 1973-74 365 (9) 1972-73 365 ---------------------------------------------------------------------------- The Income-tax Officer observed that, in view of the provisions of section 6(6) of the said Act, the assessee was required to fulfill either of the following two conditions to claim the status of "not ordinarily resident": (1) in nine out of ten previous years, he should not be resident in India, or (2) he should not have stayed in India for a period of seven hundred thirty days or more during the last seven previous years. It was noted that, during the last nine previous years, the assessee was non-resident for only three years and during the last seven previous years, he had stayed in India for a period of 1,402 days. It was, therefore, held that the status claimed by the assessee of "not ordinarily resident" was not acceptable. During the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have been assessed as "resident but not ordinarily resident" and was, therefore, rightly assessed in the status of ordinarily resident. It was contended by learned counsel appearing for the assessee that the intention of the Legislature in enacting the provisions of section 6(6)(a) of the Act was that if the individual was not a resident in nine out of ten previous years, or if during the preceding seven years, he had not been in India for more than seven hundred and thirty days, he should be treated as "not ordinarily resident" in India. It was argued that, in the present case, the assessee had not been resident in India for two years out of ten preceding years and, therefore, he was resident in India in eight years out of ten preceding years, which means he was not a resident in India in nine out of ten preceding years. Since the assessee was not a resident in India in nine out of ten years but only eight out of ten years, he, according to learned counsel, fell in the category of "not ordinarily resident" in India. In support of his contentions, learned counsel referred to the following decisions: (a) The decision of the Patna High Court in C.N. Townsend v. CIT [197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down in section 4B(a) and would, therefore, not be "not ordinarily resident" in the taxable territories. In that case, the assessee was living in Africa for four years out of the preceding seven years and he was in the "taxable territories" for about three years and the question was whether he was "not ordinarily resident" in the "taxable territories" under the second part of section 4B(a) and it was held that, he did not satisfy the second condition. (d) The decision of the Travancore-Cochin High Court in P.B.I. Bava v. CIT [1955] 27 ITR 463 was cited to point out that, in the context of section 4B(a) of the Indian Income-tax Act, 1922, the High Court had held that a person was not ordinarily resident in any year unless he satisfies both of the conditions of the said provision which make a person ordinarily resident, namely, (i) the condition that he must have been resident in nine out of ten years preceding that year, and (ii) the condition that he must have been here for periods of more than two years during the seven years preceding that year. It was held that a person is "not ordinarily resident" in India in the previous year if he has not been "resident" in nine out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson is or is not a resident in India, is a question of fact for the decision of the Appellate Tribunal. When such question is referred to the High Court, it may be assumed that the opinion is sought as to whether, in the context of the facts found, the assessee is "not ordinarily resident" in India or "resident". Section 6 entitled "residence in India" corresponds to section 4A of the Act of 1922 which defined "residence in the taxable territories" for the purposes of that Act. Section 4B of the Act of 1922 entitled "ordinary residence" was inserted by the Income-tax (Amendment) Act, 1939, and corresponded to sub-section (6) of section 6 of the said Act. Sub-section (6) of section 6 of the Act of 1961, as it operated at the relevant time and which falls for our consideration, reads as under: "6. (6) A person is said to be 'not ordinarily resident' in India in any previous year if such person is (a) an individual who has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more; or ((b)... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss controlled in or a profession set up in India. The short contention raised for the assessee was that section 6(6)(a) was applicable to this assessee who must be treated to be "not ordinarily resident" in India, because, he was resident in India in eight out of ten years preceding the previous year 1981-82 and not nine out of ten years. In other words, he would be an individual who is "not ordinarily resident" in India even if for all the remaining eight years he is a resident in India within the meaning of section 6(1) of the Act. Only if the assessee has been resident in India for nine out of ten years, he will be ordinarily resident in India, otherwise he will be "not ordinarily resident" in India. This contention though appearing to be attractive at first blush, is not at all warranted by the provisions of section 6(6)(a) of the Act. Section 6(6) does not define "ordinarily resident in India" but describes "not ordinarily resident" in India. It resorts to the concept of "resident in India" for which the criteria are laid down in section 6(1) of the Act. On its plain construction clause (a) of section 6(6) would mean that if an individual has in all the nine out of ten previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illustrated the matter by observing as under: "A person by adopting the simple expedient of being absent, say, in a neighbouring Indian State for 3 1/2 months every year during the seven years period referred to in the section, could relieve himself of his status as an 'ordinarily resident', however close in quality and preponderating in duration his connection with British India may be. This, it seems to me, could not have been intended by the Legislature, and a construction which would lead to such repugnant results should not be readily accepted." For being a resident in India, clause (c) of section 6(1) requires that the individual should have been in India for a total of three hundred sixty-five days in the preceding four years besides sixty days in the relevant previous year (as may be varied by the Explanation to clause (c) in cases where it applies). Under the second part of clause (a) of sub-section (6) of section 6, during the seven preceding years, if any individual has not for seven hundred and thirty or more days been in India, he would qualify for being treated as "not ordinarily resident" in India in the relevant previous year. It would, therefore, be strange to tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision was given in CIR v. Lysaght [1928] AC 234 (HL), where the facts were not so strongly in favour of the crown; in that case a citizen of the Irish Free State came to English company, and stayed in hotels for a week on the occasion of each visit. The Special Commissioners found as a fact that he was resident in the United Kingdom, and the House of Lords (Viscount Cave L.C. dissenting) refused to interfere with their finding. This case shows that the motive of presence here is immaterial; it is a question of quality which the presence assumes. The foreign income of every resident even when it is not brought into the country is chargeable to tax except when the resident is "not ordinarily resident" in India. For an individual including a resident in order to be "not ordinarily resident" so as to escape tax on his foreign income, it must be shown that the position is covered by clause (a) of sub-section (6) of section 6 of the Act. When an individual has been a resident in India for nine out of ten preceding years, then in order to escape tax on his foreign income, he must not have been in India for seven hundred and thirty days or more in the aggregate during the preceding seven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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