TMI Blog2001 (8) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... l) Account" as per the provisions of the Foreign Exchange Regulation Act, 1947. The status of the assessee under the Act was "non-resident" when the aforesaid account was opened. For the two years under consideration the assessee earned interest of Rs.22,710 and Rs.52,629, respectively, and the said interest was claimed to be exempt under the provisions of section 10(4A) of the Act. For the assessment year 1977-78, the claim was accepted by the Income-tax Officer while for the assessment year 1978-79 the claim was rejected. For the first year, i. e., the assessment year 1977-78, the Commissioner of Income-tax, under section 263 of the Act, directed the Income-tax Officer to include the interest earned by the assessee in the taxable income on the ground that the exemption provided by section 10(4A) of the Act was not available to an assessee who was "not ordinarily resident". The assessee preferred an appeal before the Tribunal against the aforesaid order under section 263 of the Act. For the second year the assessee's appeal before the Appellate Assistant Commissioner failed and the assessee preferred a second appeal before the Tribunal. The Tribunal heard both the appeals togeth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the phrase "unless the context otherwise requires" has been used. Shri Akil Kureshi, learned standing counsel appearing on behalf of the respondent-department, has referred to the definition of "non-resident" within the meaning of section 2(30) of the Act and urged that the said definition has to be read in the context of the meaning of "resident" as defined in section 6 and "not ordinarily resident" as defined in section 6(6) of the Act. According to Mr. Kureshi, it was not possible to urge the meaning of "non-resident" as including "not ordinarily resident" for the purposes of section 10(4A) of the Act; as where the Legislature intended such inclusion it had specifically provided and for this purpose our attention was drawn to the mention of sections 92, 93 and 168 of the Act in the definition clause 2(30) of the Act defining the term "non-resident". Mr. Kureshi further submitted that there was nothing in the context of section 10(4A) of the Act which would permit reading the term "not ordinarily resident" so as to mean "non-resident"; that section 10(4A) specifies two conditions and only on fulfilment of the said conditions, did an assessee qualify for the exemption grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his income by way of interest on moneys standing to his credit in a non-resident account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1947, and any rules made thereunder. The intention underlying this provision has been to provide the exemption in respect of interest only on funds which are repatriable outside India. In order to bring out this intention, section 10(4A) of the Income-tax Act has been amended by the Finance Act, 1968. Under the amended provision, the exemption will be available only in respect of interest on moneys standing to the credit of a non-resident in a 'Non-resident (External) Account' in any bank in India in accordance with the Foreign Exchange Regulation Act, 1947, and any rules made thereunder. The Rules in this behalf will be made and notified by the Reserve Bank of India. This provision takes effect, prospectively, from the assessment year 1969-70" [Circular No.6-P (LXXVI-66) of 1968, dated 6th July, 1968]." Thus the legislative intent underlying the provisions is to provide exemption in respect of interest earned only on funds which are repatriable outside India. It is further clear that the exemption will be availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a within the meaning of the provisions of section 2(q) of the Foreign Exchange Regulation Act, 1973, and thus was eligible to open and operate a "Non-resident (External) Account" as per the rules and the scheme framed by the Reserve Bank of India. The effect of this situation is that by virtue of the aforesaid circular dated July 6, 1968, the assessee who fulfils the eligibility conditions under the scheme framed by the Reserve Bank of India was entitled to operate "Non-resident (External) Account" and in the light of the same he would be entitled to the benefit of being treated as "non-resident" for the purposes of the Act as specified in the circular issued by the Central Board of Direct Taxes. The provision of section 10(4A) as was effective from April 1, 1969 up to March 31, 1982, reads as follows: "(4A) in the case of a non-resident, any income from interest on moneys standing to his credit in a Non-resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1947 (7 of 1947), and any rules made thereunder;" The amended provision as substituted with effect from April 1, 1982, by the Finance Act, 1982, reads as under: "(4A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and incorporates the provisions of the Foreign Exchange Regulation Act and the Rules framed thereunder by the Reserve Bank of India in section 10(4A) of the Act. Thus, those provisions should be applicable to a person claiming exemption under section 10(4A) of the Act and in this situation also the context requires that the term "non-resident" should be read so as to include the definition of the non-resident as under stood under the provisions of the Foreign Exchange Regulation Act and the Rules thereunder. During the course of hearing we were addressed at great length by both the sides on the applicability or otherwise of doctrine of promissory estoppel. However, without going into that aspect of the matter we feel that the matter should be approached from another angle as stated by this court in the case of Taiyabji Lukhmanji v. CIT [1981] 131 ITR 643, wherein it was observed that: "In our opinion, the Tribunal ought to have considered the question as regards the legality and propriety of levying penalty under section 271(1)(c) of the Act in the light of the instructions given by the Board in the advertisement referred to above. Whether or not it amounted to promissory esto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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