TMI Blog2019 (10) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee would be a person resident in India as per clause (v) of section 2 of FEMA as he has come to and stays in India in the FY 2014-15 for the purpose of taking up employment in India, etc. Since, the assessee has come and stays in India in the financial year 2014- 15, CIT(A) held that the assessee was a Resident and Ordinarily Resident in India for both income tax purpose and also under FEMA and therefore, he is not eligible for exemption u/s 10(4)(ii) as he does not fulfil the condition required under proviso to the said section, that is, he was a resident outside India in the relevant previous year 2014-15 under FEMA. Since the assessee has come and stays in India during the financial year 2014-15 for 283 days, his residential status under FEMA is a person resident in India only. Therefore, the assessee is not entitled for the deduction U/s.10(4)(ii). The assessee has also not placed any material to dislodge the findings recorded by the ld.CIT(A), before us, i.e., to prove that he is a Resident outside India in the relevant previous year 2014-15 within the scope of the FEMA as well as for income tax purpose, therefore we do not find any reason to interfere with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld.CIT(A) has ignored the fact that since the individuals/ corporate are not allowed to approach the RBI directly, the powers of the RBI are delegated by the RBI to the other banks through various Master Circulars of the Bank which by itself is a Direction specified by the Reserve Bank of India. The Hon'ble CIT(A) has summarily rejected the confirmation letter given by Canara Bank holding that NRE deposits held by the assessee is as per the norms specified in the said RBI directions and invited our attention to the copies of them filed in the paper book. It was submitted that the Hon'ble CIT(A) has erred in his understanding that the assessee being a non-resident as per FEMA 1999 is required to convert the balance in NRE account to RFC (Resident Foreign Currency Account) only based on the period of stay in India without considering the provisos as detailed in Grounds 2 to 4. 3.1 Further it was submitted that the ld.CIT(A) has misled himself on the wrong surmise that since the assessee along with his wife has created goodwill of his 10 LLPs and has created a goodwill for himself a sum of ₹ 62,62,000, had erroneously concluded that the intention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the ld CIT(A) has drawn the following inference: The exemption of interest on Non-Resident (external) accounts - both NRE savings accounts and NRE fixed deposit accounts - is governed by the provisions of section 10 (4) (ii) of the Act. Under those provisions, the interest for the relevant financial year 2014-15 will be exempt only if the assessee is a person resident outside India for the concerned fiscal year under FEMA. FEMA defines a person resident outside India as somebody who is not a person resident in India : The assessee would be a person resident in India as per clause (v) of section 2 of FEMA as he has come to and stays in India in the FY 2014-15 for the purpose of taking up employment in India. It is absolutely clear that it is Reserve Bank of India (RBI)'s intention to treat such a person as 'resident in' India based on the provision made by it under regulation 7 of Schedule 1 to Foreign Exchange Management (Deposit) regulations 2000 dealing with Non-Resident (External) Rupee Account Scheme which clearly provides NRE accounts should be redesignated as resident accounts, or the funds held in these accounts may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's claim of exemption and brought to tax and the CIT(A) upheld it. The assessee relied on the tribunal decision in the case of Rachhpal Singh vs ITO reported in 94 ITD 79 and the relevant portion is extracted as under : 6. I have heard both the parties at some length and given my thoughtful consideration to the rival submissions. I have also examined the facts, evidence and material on record. In fact, the assessment records were called for from the Income-tax Department and examined. In the returns of income filed assessee had claimed exemption in respect of interest on FDRs in non-resident (External) account under section 10(4) of the Income-tax Act. In the returns the assessee had also shown the residential status as 'Resident'. Now the provisions of clause (ii) of sub-section (4) of section 10 read as under: Clause (ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulations Act, 1973 (46 of 1973), and the rules made thereunder. Thus, from a plain reading of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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