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TMI Blog1987 (3) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... re claimed to be exempt under section 6 of the Wealth-tax Act in the assessments under consideration. In assessment years 1977-78 and 1979-80, the Wealth-tax Officer granted exemption in the regular assessments passed. This is the situation in the case of both Ana Maria Cardozo and Philip Cardozo. The Wealth-tax Officer, thereafter, took up rectification proceedings under section 35 and withdrew the exemption. Such rectification orders were passed in the case of both Ana Maria Cardozo and Philip Cardozo. Aggrieved by the same, the assessee had appealed and the Appellate Assistant Commissioner confirmed the rectification orders. Aggrieved by the same, the appeals for 1977-78 and 1979-80 are filed by the assessees. 4. In the assessments for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the property belonging to the communion of husband and wife. 6. We would like to put on record facts found in income-tax proceedings. Philip Cardozo was treated as non-resident in the individual income-tax assessments for 1977-78 and 1980-81. The deposits in the NR(E) Account were the property belonging to the communion. In respect of the income from deposits, the ITO had made an assessment in the status of BOI, but, however, treating the husband and wife as ' non-resident '. The reason is because the assessee was residing at Abu Dhabi and had made remittances to India as permitted by the Foreign Exchange Regulation Act. 7. In the individual income-tax assessments against Philip Cardozo for assessment years 1978-79 and 1979-80, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, if any, payable on such loans or debts is not to be included in the total income of the assessee under section 10 of the Income-tax Act ; " (stress is ours) Now coming to Explanation I, it directs that an individual shall be deemed to be a non-resident in India or resident but not ordinarily resident in India if in respect of that year he was not resident in India or resident but not ordinarily resident in India, as the case may be, within the meaning of IT Act. 9. Explanation IA, which came on the statute book on 1-4-1982, reads as follows : " Where in the case of an individual the value of an asset in India is represented by any debt owing to him, being any moneys to his credit in a Non-resident (External) Account, the interest pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ordinarily resident for the purpose of section 6 if he fits in to the definition of ' non-resident or resident not ordinarily resident' as defined in Income-tax Act. 12. A ' non-resident ', ' resident ' and ' resident but not ordinarily resident ' are legislatively defined in Income-tax Act. A ' non-resident ' is a person who is not a resident or a resident not ordinarily resident.---see section 2(3). ' Resident ' is defined in section 6. ' A resident but not ordinarily resident ' is also indicated in section 6(6). So, if an individual is to be a non-resident for the purpose of Income-tax Act, he should not be an individual falling within the definition in section 6. If we compare this with section 2(q) of the Foreign Exchange Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of IT Act. There is sufficient indication in Explanation IA to hold that amount in the NR(E) Account is a ' debt ' for the purpose of section 6. Therefore, the amounts standing to the credit of Ana Maria Cardozo and Philip Cardozo are to be hold as ' debts ' for the purpose of section 6(ii). 16. If the assessees (,Ana Maria Cardozo and Philip Cardozo) were ' non-residents ' within the meaning of its definition under the IT Act, they would be entitled to exemption claimed under section 6 in the light of Explanation I. While an assessee has to show that he is a non-resident according to the Income-tax Act in order to claim exemption earlier to 1-4-1982 in respect of amount in NR(E) Account, it is enough if he is non-reside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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