TMI Blog2002 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------------- 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(6)(a) of the Act, the Tribunal noted that the period of stay of the assessee in India during the last seven previous years preceding the year under consideration much exceeded seven hundred and thirty days, and therefore, his case was not covered even by the second part. It was accordingly held that since the assessee did not satisfy the condition of his being treated as "not ordinarily resident" in India, he 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act, 1922 (which corresponded to section 6(6)(a) of the Act of 1961). It was held that, under section 4B(a), what was required to be considered was the assessee's residence in the "taxable territories" and not his residence outside the "taxable territories". If the assessee had been in the "taxable territories" for more than two years in the preceding seven years, then he does not satisfy the second condition laid 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 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 6(6) are required to be looked at only from the angle that they define who is "not ordinarily resident in India". It was contended that the condition in the first part of section 6(6)(a) of the Act required an individual not to be resident in India for nine years in the preceding ten years in order to qualify for being treated as "not ordinarily resident in India". Ordinarily, a question whether a person 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be entitled to claim under section 5(1)(c) of the Act would not be available to him. Under section 5(1)(c), in the case of a person who is "not ordinarily resident" in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India, shall not be included in his total income of the previous year in which he is "not ordinarily resident" in India, unless it is derived from a business 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If during the preceding seven years, an individual is in India for seven hundred and thirty or more days, he is not included in the category of "not ordinarily resident" irrespective of the period during those seven years in which he has been outside the country as held by the Madras High Court in K.M.N.N. Swaminathan Chettiar v. CIT [1947] 15 ITR 418; AIR 1948 Mad 189, 191. In the concurring judgment, Patanjali Sastri J. vividly 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 day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absences (see Levene v. IRC [1928] AC 217 (HL); Union Corporation Ltd. v. IRC [1953] 2 WLR 615 (HL)). Thus, in Levene v. IRC [1928] AC 217, a British subject, who had been ordinarily resident here, returned to this country for periods of between four and five months every year for domestic and other reasons, living in hotels without a permanent place of abode. It was held on the facts that he was resident in this country. A similar decision 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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