Income Tax Appellate Tribunal - Bangalore
Mr. Ziaulla Sheriff vs Asst. Commissioner Of Income-Tax, ... on 23 March, 2007
Equivalent citations: (2008)116TTJ(BANG)76
ORDER
A. Kalyanasundharam, Senior Vice President
1. The assessee individual has filed this appeal against the order of the Commissioner of Income-tax (Appeals)-IV, Bangalore, dt. 14.3.2005, for the assessment year 2001-02.
In this appeal the assessee has challenged the order of the Commissioner of Income-tax (Appeals) by which he has held the status of the assessee as 'Resident'. The assessee has also challenged the order for not permitting filing of additional evidence. The assessee has also challenged the inclusion of the income from property at Primrose Road as deemed let out and the rent being taken on notional basis and not allowing the claim of the assessee Under Section 23(3) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act'). The assessee has also challenged the order of the Commissioner of Income-tax (Appeals) that no appeal lies against the determination of quantum of interest Under Section 244A of the Act.
The assessee has filed two additional grounds. The first of it being that the assessee having been held to be a Resident, the ACIT (International Taxation), Circle-19(1) did not have the jurisdiction and the second being with regard to levy of surcharge on the assessee, as the same is not payable by a non-resident for the assessment year in appeal. In support of the admission of additional grounds, the assessee has stated that the assessee was in India only for 1 80 days is clearly recorded in the order of the Assessing Officer and this going to the root of the matter, the same may be admitted.
2. Appearing for the assessee, the learned counsel, Mr. S. Ramasubramanian submitted the facts of the case. He submitted that the assessee is a partner in a firm in India known in the name and style of M/s. Sheriff Constructions. The counsel for the assessee submitted that the assessee had an intention of exploring business propositions outside India and he, accordingly, applied for permission to Reserve Bank of India, The Reserve Bank of India, vide its letter of 5,1.2001 has categorically stated that any Resident Indian can continue to be a partner in a firm on becoming a non-resident Indian and that permission of Reserve Bank of India is no longer required. Accordingly, the assessee had been going to various countries starting from March 2000 to March 2001 and on that basis, he was out of India for 1 85 days.
At this point, he drew our attention to the order of the Assessing Officer at page 2 where under the caption 'Residential Status', the Assessing Officer had clearly noted that the assessee had stayed in India during the financial year 2000-01 for 180 days only. He submitted by drawing our attention to the provisions of Section 6(1)(a) of the Act, that a person would be a Resident of India only if he is in India for 182 days or more. He submitted that by virtue of this provision, the assessee having been in India for just 180 days, he does not qualify to be a resident. He submitted that the Assessing Officer applied Sub-clause (c) of Sub-section (1) of Section 6 of the Act and observed that in the preceding four financial years the assessee was in India for more than 360 days. He, accordingly, concluded that the status of the assessee is 'Resident'.
He drew our attention to Explanation to Sub-section (1) of Section 6 which reads as under:
Explanation.--In the case of an individual,-
(a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in Clause (18) of Section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of Sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty-two days" had been substituted;
(b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to Clause (e) of Section 115C, who being outside India, comes on a visit to India in any previous year, the provisions of Sub-clause (c) shall apply in relation to that year as if for the words "sixty days" occurring therein, the words "one hundred and eighty-two days" had been substituted.
He referred to the words "for the purposes of employment outside India". He submitted the meaning of the expression "would have to be taken as any gainful employment outside India", need not necessarily be restricted to seeking refuge or work under an employer. He submitted that the employment could mean any kind of work not necessarily where the employee-employer relation subsist. At this juncture, he drew our attention to the decision of the Supreme Court in CBDT v. Aditya V Birla . He submitted that the issue in the case before Supreme Court was remuneration for services rendered outside India and remuneration received in foreign currency and the claim of relief was made Under Section 80RRA of the Act. He submitted that remuneration necessarily does not engulf salary only but also the amounts paid to a consultant.
He also drew our attention to a Delhi High Court decision in K.R. Pradeep v. CBDT (2006) 282 ITR 526, where the Court held that if the person renders service outside India and receives remuneration in foreign currency, he would be entitled to deduction Under Section 80RRA of the Act.
He also drew our attention to the decision of the jurisdictional High court in A.S. Mani (2003) 264 ITR 5, for the proposition that in order that a person be entitled to deduction Under Section.80RRA of the Act, physical stay out of India is what is more important.
He drew our attention to a decision of this Tribunal in Iblex Gallagger P. Ltd., in ITA.2274 to 2278/B/04 for the Assessment Years 1994-95 to 1998-99 for the proposition that it is not for the assessee to confer any jurisdiction on the officer assessing the income. He submitted that the jurisdiction is always conferred on the Assessing Officer on certain basis. He submitted that that the reliance on this particular order would be elaborated by him a little later. He submitted that in view of the decision of the Supreme Court, jurisdictional High Court as well as the Delhi High Court, the meaning of the term contained in the Explanation for the purposes of employment outside India has to be construed as gainful employment not necessarily restricted to employer-employee relationship kind of employment.
He drew our attention to the observation of the Assessing Officer under the caption residential status and submitted that the assessee filed his return of income in the status non-resident of India. He submitted that this was so done by the assessee by considering the order made by the Commissioner of Income-tax (International Taxation), Bangalore, describing the jurisdiction of Range-19, Bangalore. He submitted that this Schedule brings about the jurisdiction to be exercised by Officers of the various Wards. He submitted that the Income-tax Officer, International Taxation, Ward-19, Bangalore, has territorial area covering the urban and rural districts of Bangalore. The person and classes of persons that fall within his purview or jurisdiction would be persons being non-residents. It is on such persons, the functions and powers relating to tax and tax deducted at source can be exercised by the Assessing Officer and the cases or classes of cases are with reference to persons, classes of persons defined. He submitted that with reference to this particular conferment of jurisdiction on the Assistant Commissioner of Income-tax (International Taxation), Ward-19(1), the said officer could assess or it could be stated that such officer has jurisdiction to assess all non-residents including companies. He submitted that this means that Assistant Commissioner of Income-tax (International Taxation), Ward -19(1), Bangalore has territorial jurisdiction of urban and rural districts of Bangalore, is with reference to persons in those areas who are non-residents. It was, accordingly, submitted that the Assistant Commissioner of Income-tax (International Taxation), Ward-19(1) not having been conferred jurisdiction to assess residents, it is not open to the Assistant Commissioner of Income-tax (International Taxation), Ward -19(1) to refuse to give the assessee the status of non-resident, According to the counsel for the assessee, in order that the Assistant Commissioner of Income-tax (International Taxation), Ward-19(1) could proceed with the assessment, he must be impressed with jurisdiction and this jurisdiction is extended to only non-residents. The conferred jurisdiction not being extended to residents, the officer having refused to accept the status of the assessee as non-resident, could not, therefore, proceed with the assessment on a resident. He submitted that the reference made earlier on the order of the Tribunal in Iblex Gallagger P. Ltd., (supra) was for the proposition that exercise of jurisdiction without conferment of the jurisdiction, the order would be invalid in the eye of law. He further submitted that this order also categorically observed that jurisdiction cannot be conferred on an Assessing Officer by the consent of the assessee.
He, accordingly, concluded that the Assessing Officer had no jurisdiction or any authority not to accept the claim of the status of the assessee as non-resident. Alternatively, the Assessing Officer having found that the status as a non-resident claimed by the assessee could not be accepted, he should have transferred the file to the officer who had jurisdiction over the assessee on a territorial basis, or on any other basis prescribed by the Commissioner of Income-tax, Bangalore. He, accordingly, submitted that the order passed by the Assessing Officer was without jurisdiction. He submitted that the Commissioner of Income-tax(A) did not give much importance to the claim of the assessee with regard to the status, but the facts are so apt and clear that a decision in this regard is very much necessary. He submitted that the additional ground number one is covered by the above argument and additional ground number two is a consequential one i.e., on a nonresident, surcharge is not leviable.
3. On the issue on merits, the learned Counsel had challenged the status as also the furnishing of additional evidence. Both these aspects are in connection with certain expenditure that the assessee claimed, namely, interest payments which were not allowed on the reasoning that the borrowed amount was received from the firm in which the assessee was a partner, the income from which firm is not taxable in the hands of the assessee individual.
The claim of the assessee with regard to additional evidence is with reference to the interest on Savings Bank cannot be treated as income from other sources and to that extent the expenditure should be set off which the Commissioner of Income-tax(A) negatived on the reasoning that the assessee did not make the claim of deduction of the expenditure from 'income from other sources'.
The other issue is with regard to including the notional rent of the property at Primrose Road. He submitted that the issue may be remanded to the file of the Assessing Officer for verification and allowing accordingly.
In regard to the other ground of inclusion of notional rent, he submitted that the Assessing Officer included the notional rent by applying the provisions of Section 23(2) of the Act. He submitted that it is not in dispute that the assessee had a residential house in his name. His daughter did not permit him to enter the house and, therefore, he was compelled to stay with his son. The property is, therefore, such that it could not be occupied by the owner because of the circumstances. He submitted that, therefore, inclusion of the notional income is improper and, therefore, must be deleted.
The last of the issue is with regard to claim of raising of the issue of correct quantification of interest Under Section 244A of the Act which, the Commissioner of Income-tax(A) has held that it is not an appealable issue, but an issue for which the assessee should approach the office of the Assessing Officer for rectification. The counsel for the assessee submitted that Section 244A talks of refund of any amount due to the assessee. The refund has arisen consequent to the tax levied on the assessee having been reduced and covers one very important element i.e., the period from which the interest is due to the assessee. He, therefore, submitted that it is no different from the interest that is due to the assessee as has been held by the Karnataka High Court in Commissioner of Income-tax v. Bharat Motor Service .
4. The learned DR, Mr. K.P. Rao vehemently contended every issue that was raised by the counsel for the assessee. He referred to the decision of the Andhra Pradesh High Court in Kakunuru Venkata Reddy v. Commissioner of Income-tax for the proposition that objection to the jurisdiction should have been raised before the Assessing Officer and could not be raised for the first time in appeal.
The learned DR also drew our attention to the decision of the Gauhati High Court in Smt. Sohani Devi Jain v. ITO for the same proposition that the Officer had rightly assumed the jurisdiction. He submitted by drawing our attention to the provisions of Section 6 Explanation (a) that the words 'for the purposes of employment outside India' has not been defined in Explanation or in the Section to have a wider import, that is to cover situation as to assessee is, namely, even business for which the assessee went out of India would be covered by the term 'employment.
He submitted that when the income from the firm in the hands of a partner is not included in his total income, it is something on which the assessee does not pay tax. The assessee could not claim deduction of any expenditure because allowing of expenditure would have to be necessarily with reference to the income that is included in the total income. When no amount is included in the total income, allowing of deduction of expenditure would further reduce the taxable income, which is not the intention of the Act. He submitted that the alternative claim of the assessee could be verified by the Assessing Officer. Insofar as the claim of higher amount of interest Under Section 244A of the Act is concerned, he submitted that it is purely a matter of calculation and, therefore, the Commissioner of Income-tax(A) was justified in not entertaining the same.
5. The contention of the parties have been brought out in the earlier paragraphs. The case laws relied upon have also been noted at the relevant paragraphs. The above submissions of both the parties have been very carefully considered and in the following paragraphs we give our conclusion on the various grounds as raised by the assessee.
6. In ground No. 2, the assessee has raised the issue of being assessed in the status of 'Resident' and in ground No. 3, the refusal of the Commissioner of Income-tax(A) to admit additional evidence which is connected with ground No. 2 is mentioned. Ground No. 1 is general in nature. The additional ground that has been raised by the assessee is with regard to the status and is with reference to the jurisdiction of the officer assessing the assessee and the other additional ground is that surcharge is not leviable on a 'non-resident'.
7. The accepted fact is that the assessee filed this return of income before the ACIT (International Taxation), Circle-19(1), Bangalore. This return was so filed by the assessee on the premise that the assessee was in India during the relevant previous year for 180 days only. The additional evidence that the assessee sought for admission before the Commissioner of Income-tax(A) is the letter dated 5.1.2001 from Reserve Bank of India, Exchange Control Department, Central Office, Mumbai to M/s. India Builders Corporation in which the assessee is a partner. This was in reply to the letter from the firm dated 4.9.2000, addressed to the Chief General Manager, Exchange Control Department of Reserve Bank of India. The letter of the firm and the reply from the Reserve Bank of India, being relevant for the issue, are reproduced below:
I. Letter of India Builders Corporation dt. 4.9.2000 addressed to the Chief General Manager, Exchange Control Department, RBI, Mumbai:
We wish to inform you that we are a firm carrying on the business of development of Real Estate. One of our partners, Mr. Ziaulla Sheriff has informed us that he has become a person resident outside India. We understand that as per Section 6(5) of Foreign Exchange Management Act, 1999, the said Mr. Ziaulla Sheriff can continue to be a partner and make investments in the partnership firm.
We are intimating you through this letter of the fact that Mr. Ziaulla Sheriff is a person resident outside India. We are enclosing a copy of the Partnership Deed.
II. Letter of Reserve Bank of India, Exchange Control Department. Central Office, Mumbai addressed to M/s. India Builders Corporation, dated 5.1.2001:
Please refer to your letter dated 4th September 2000 on the above subject.
We advise that in terms of Section 6(5) of FEMA 1999, a Resident Indian can continue as a partner in a partnership firm on becoming a Non-resident Indian and for this RBI permission is not required. However, you may please not that all his investment by way of capital contribution in the partnership firm as a resident will be on non-repatriation basis. For Investments in the Partnership Firm/Proprietory concern engaged in real estate business, we advise that NRIs are not permitted to make any fresh investment towards capital contribution in the firm either on repatriation or on non-repatriation basis. Accordingly, a resident on becoming NRI, cannot contribute to the share capital of the firm either on repatriation or on non-repatriation basis.
Incidentally, you may also let us know the Country of residence of Mr. Ziaulla Sheriff and his date of becoming NRI. Further, you may also advise whether he has contributed any further capital after his becoming an NRI.
The contention of the assessee as noted earlier was that the assessee had gone out of India to explore business probabilities and hence, he was in India for just 180 days. He submitted that the Reserve Bank of India was informed of this by the firm in which the assessee was a partner. The assessee had further contended that Section 6(1) of the Income-tax Act, 1961, which described in the case of an individual, the circumstances under which he would be treated as a resident. This being essential for this particular case, we are reproducing the same for the sake of facility:
Section 6(1): An individual is said to be resident in India in any previous year, if he--
(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or
(b) --
(c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.
Explanation - In the case of an individual,-
(a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in Clause (18) of Section 3 of the Merchant Shipping Act, 1958 (44 of 1958 or for the purposes of employment outside India, the provisions of Sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty-two days" had been substituted;
(b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to Clause (e) of Section 115C, who being outside India, comes on a visit to India in any previous year, the provisions of Sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty two days " had been substituted.
The other parts of the Section, namely Sub-section (2) applies to HUF, Company and so on and they not being relevant to the issue, are not reproduced above.
The contention of the assessee was that Clause (a) of the said Section would treat the assessee as the resident only if he had been in India for 182 days or more and since the assessee was in India for just 180 days, he is not a resident. The assessee then submitted that the assessee in the preceding four years was no doubt in India for a period that exceeded 365 days, and that in the preceding year he was no doubt in India in excess of 60 days, but the Explanation (a) gives him a reprieve from the rigors of 60 days and 182 days. Since he was in India just for 1 80 days in the previous year, he would satisfy this condition also.
The further contention of the assessee was that the words used "being a citizen of India, who leaves India in any previous year for purposes of employment outside India" would have to be taken as covering a person going for business exploration outside India. It is in this connection that he had also relied upon certain decisions with reference to remuneration received for services outside India as contained in Section 80RRA of the Act.
Section 6 of the Act, as it stands had provided alternatives. The first of the alternative was that a person would be a resident if he is in India for 182 days or more. The second alternative was that if he had been in India for the preceding four years for 365 days or more and in the relevant previous year for 60 days or more. The Explanation as reproduced earlier talks of an individual who being a citizen of India leaves India in any previous year as a member of the crew of an Indian ship and to this proposition, an alternative proposition has been provided as "or for purposes of employment outside India". The assessee wants us to read the words employment as including a business. The Cambridge International Dictionary of English defines the term employee as a person who is paid for working for some one else. The same Dictionary when it comes to employment refers to the term employment as a job or business. The same Dictionary defines the term 'business' as an activity of buying and selling goods and services or work in general rather than mere pleasure.
The Section as it was amended by the Direct Tax Laws (Second Amendment) Act, 1989, perhaps was oblivious to the present day situation at which point of time, India has been into global business. The global business was started from the year 1997 onwards. Considering this feature, we are not in a position accept the claim of the assessee that the term 'employment outside India' would also include business outside India.
Various authors on Jurisprudence, Interpretation of Statutes, as well as the Courts over the years have been very conscious of certain rules of interpretation of a statute and one of them is the Rule of ejusdem generic. The rule applies when "(a) the statute contains an enumeration of specific words; (2) the subjects of enumeration constitute a class or category; (3) that class or category is not exhausted by the enumeration; (4) the general terms follow the enumeration; and (5) there is no indication of a different legislative intent.
The other Rule is noscitur a sociis. This rule as explained by Lord Macmillan means: "The meaning of a word is to be judged by the company it keeps. As stated by the Privy Council" "It is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them. It is a rle wider than the rule of ejusdem generic; rather the latter rule is only an application of the former; The rule has been lucidly explained by Gajendragadkar J. in the following words: " This rule, according to Maxwell, means that when two or more words which are susceptible of analogous meaning are coupled together, they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. The same rule is thus interpreted in Words and Phrases--'Associated words take their meaning from one another under the doctrine of noscuntue a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim ejusden generis'. In fact the latter maxim 'is only an illustration or specific application of the broader maxim nosuntur a sociis. It must be borne in mind that noscuntur a sociis, is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied.
Going by the above proposition and the manner in which the words 'for the purposes of employment outside India' has been used, it has to be taken to mean as in search of work for which the assessee would receive salary or remuneration. The insistence of the assessee that the word remuneration as contained in Section 80RRA of the Act has been interpreted widely should be imported into the Section, we are unable to accept for the reason that Section 6 does not contain the term 'remuneration'. All that it contains is 'employment'. It is, therefore, not possible to import therulings or meanings as contained in Section 80RRA of the Act into the Section 6 of the Act. In view of the above, the status of the assessee for the relevant previous year would be that of a resident.
The contention of the assessee with reference to the above have been so considered in the conclusions arrived at with reference to his claim of filing the return in the status of non-resident with Asst. Commissioner of Income-tax (International Taxation), Ward-19(1), Bangalore.
The basic ground of the assessee is with reference to the fact that the return having been filed with the Asst. Commissioner of Income-tax (International Taxation), Ward-19(1), that particular officer has jurisdiction to assess lion residents in that status only. In support of his claim, he had filed a copy of the jurisdiction of the Asst. Commissioner of Income-tax (International Taxation), Circle-19 (1), Bangalore, especially the jurisdiction of Range-19, Bangalore, as item No. 3 delineates the powers of the ITO (International Taxation). The Income tax Officers shall exercise powers and functions as mentioned below:
The ITO (International Taxation), Ward -19(1) has been given territorial area of urban and rural districts of Bangalore. Such exercise of power is over persons, classes of persons, namely, persons being nonresidents including foreign companies that have permanent establishments in terms of applicability of Double Tax Avoidance Agreement or having business connection or having source of income accruing or arisen or due to arise in the areas falling within the territorial area of urban and rural districts of Bangalore. The powers and functions are powers as an Assessing Officer under the Act relating to tax deduction at source covering all persons as mentioned above.
The cases or classes of cases are that the Assessing Officer shall exercise powers in respect of persons mentioned above and the only classification is alphabetic classification. Since there are more than one Ward, Ward -19(1) is limited to a to m, Ward -19(2) starts with n and ends to z. The claim of the assessee was that the Assessing Officer, International Taxation could assess only persons who are non-residents. The assessee has filed the return of income in the status of non-resident and, therefore, if the Assessing Officer was of the view that the status of the assessee could not be a non-resident then he does not acquire jurisdiction. He, therefore, pleaded that the officer does not get any power to change the status from non-resident to resident and the consequence is that the present assessment is without jurisdiction.
The list of jurisdiction as above also states that the Deputy/Assistant Commissioner (International Taxation), Circle-19(1) will have concurrent jurisdiction with the International Taxation, Ward-19(1) and 19(2), Bangalore. The contention of the DR was that the primary duty of any officer is to verify the status of a person who has filed a return. In the instant case, the assessee had filed a return as a nonresident and the Assessing Officer had verified the same and found that the claim was not acceptable and the consequence was that the assessee has to be treated as a resident.
5. The DR had referred to the decision of Smt. Smt. Sohani Devi Jain (supra) where the assessment proceedings on one assessee by two different officers were found to be valid--. It was submitted that the consequence of treating the assessee as a non-resident would not create a situation as claimed by the assessee that the Officer had no jurisdiction. The delineation of jurisdiction of the Asst. Commissioner of Income-tax (International Taxation) that was brought out in the earlier paragraph makes no bones and does not extend the jurisdiction of the Assessing Officer (International Taxation) to persons who are residents. All persons who are residents falling within the urban and rural area districts of Bangalore are, therefore, outside the purview of Assessing Officer (International Taxation). This is because, the persons who are classified as residents are not part of persons or classes of persons on whom the Assessing Officer (International Taxation) had been delegated the power of exercising under the Income-tax Act.
6. In the instant case, as the facts stand the assessee claimed the status of a non-resident for the reasons brought out in the earlier paragraph and had filed it with the Assessing Officer (International Taxation), Ward-19(1), Bangalore. In view of specific delegation of exercising the power as an Assessing Officer only on persons who could be called non-residents, the Assessing Officer (International Taxation), on finding that the assessee does not satisfy the conditions of a nonresident. The proper course of action that was expected of him is to transfer the file to the Assessing Officer who had territorial jurisdiction over the assessee as a resident or to such officer who would have jurisdiction over the assessee.
The question that came up during the course of hearing was, is the Assessing Officer (International Taxation) expected to pass an order with reference to his finding on the claim of status of the assessee. Normally, the status of a person is a part of the assessment order. In the instant case, the Assessing Officer having noted from the facts on record and on applying the principles of law that he would not have jurisdiction over the assessee, he may express his reasons therefor in the order sheet, which may form the basis for the Commissioner of Income-tax for transferring the file to the Officer who would have a jurisdiction over him. The question is whether this opinion so expressed by the Assessing Officer forming part of the order sheet and the basis on which it is passed, is an order or not. This question is with reference to whether it would result in assessee filing of appeal against the said conclusion of the Assessing Officer.
In order to appreciate this point it would be necessary to go to the provisions of Section 246 of the Act. Section 246(a) of the Act provides that a person could file an appeal against an order because the assessee denies his liability to be assessed under this Act or the extent of income assessed or to the status under which he is assessed. From that point of view, it looks that the opinion expressed by the Assessing Officer would become an order against the assessee in regard to the status. But since the additional words used are the status under which he is assessed, mere expression of status which is the starting point for framing of an assessment would be incomplete if assessment is not framed. From that point of view perhaps appeal may not lie.
7. Be that as it may, the right of appeal could still be available to the assessee in regard to the status even when the assessment is transferred to an officer having jurisdiction as noted above. Since the very crux of jurisdiction is shaken in the instant case, that is the Assessing Officer (International Taxation) having found the assessee to be a resident, he exercised jurisdiction over him. Since he had exercised jurisdiction without authority and without any authorization therefor, the order passed by him suffers from lack of jurisdiction. Such an order would, therefore, become an illegal order and non-est in the eye of law. We hold accordingly and quash the order.
8. Though it may not be necessary to go into the merits of the issue before us, namely, inclusion of rent on notional basis and the calculation error in interest Under Section 244A of the Act, we would, as an abundant precaution cover these two issues also.
9. The fact that the assessee owned the house is accepted. The claim of the assessee is that the assessee is under occupation of his daughter and, therefore, he was deprived of using that house by himself and that such deprivation may be considered in the manner in which it has been so stated in Section 23(2)(b) of the Act. The contention of the assessee is that the house could not be occupied by reason of his employment, business or profession and that he was compelled to reside with his son though in the same city. On this, Section 23(2) of the Act, is reproduced below for the sake of facility:
Section 23(2): Where the property consists of a house or part of a house which-
(a) is in the occupation of the owner for the purposes of his own residence; or
(b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house or part of the house shall be taken to be nil.
The reading of the above section says, a person who owns a house and in view of the fact that his employment, business or profession required his presence at any other place, and he has to reside in a building not belonging to him, in that case, the annual letting value of the property shall be taken to be nil.
10. In the instant case, the assessee was in Bangalore, living with his son and his property is also in Bangalore in which his daughter is residing. Therefore, his claim that the notional rent should not be included as a part of the total income is not acceptable and is, accordingly rejected.
11. Insofar as the working of interest Under Section 244A of the Act is concerned, the Commissioner of Income-tax (Appeals) may not be said to be justified in not accepting the claim. The assessee has claimed that interest is payable for a longer period, goes to the very root of chargeability of interest in favour of the assessee and, therefore, it is only proper he should have considered the same and it is not an isolated ground from the other grounds. Since it is raised alongwith the other grounds, the same should have been considered. However, since it is a matter of examination and calculation also, the Assessing Officer is directed to examine the same and rework the same in accordance with the provisions of law.
12. The second part of the additional ground, namely, that surcharge is not leviable on a non-resident becomes infructuous in view of the fact that the assessee is a resident. The assessment not being in accordance with law is quashed, subject to our observations as above.
13. In the result, the appeal is allowed.