Bombay High Court
Second Income-Tax Officer vs K. Y. Patel. on 25 April, 1990
Equivalent citations: [1990]33ITD714(MUM)
ORDER
Per G. K. Israni, Judicial Member - This appeal by the revenue is directed against the order of the learned CIT (A) dated 6-2-1986 for the assessment year 1983-84.
2. The appeal raises the following grounds. viz. :
"1. On the facts and in the circumstances of the case, the learned CIT (A) erred in directing the ITO to change the status of the assessee from resident to non-resident, relying on clause (a) of the Explanation to section 6(1) of the Act which is effective from 1-4-1983.
2. On the facts and in the circumstances of the case, the learned CIT (A) while giving the above direction failed to appreciate (i) that clause (a) of the Explanation to section 6(1) of the Act is applicable only to the persons leaving India for the purpose of employment outside India, and (ii) that there is neither anything on the record to show that the assessee had an employment outside India during the period he was away, nor did he adduce any evidence to this effect even at the appellate stage."
3. The assessee in his return of income claimed the status of non-resident and appended a note to the effect that he left India on 14-4-1982 for the purpose of employment outside India. He was out of India during the previous year for 218 days. He further noted that since the salary income was paid to him in India it was not exempt. In the return the assessee gave the dates of his departure and arrival in India. These particulars showed that the assessee had undertaken 12 trips abroad during the relevant previous year. The ITO assessed the assessee in the status of resident. This part of the ITOs order was challenged in appeal. The learned CIT (A) has held that since the assessee was not in India for a minimum of 182 days during the relevant previous year and left for employment outside India, he was not a resident within the meaning of clause (c) of sub-section (1) of section 6 and the Explanation (a) there to. In this view of the matter, he directed the ITO to treat the assessee as a non-resident. Being aggrieved the revenue has filed the present appeal.
4. The arguments of the learned Departmental Representative and the learned counsel for the assessee were heard.
5. The particulars given by the assessee of his trips abroad show that he had been out of India on 12 occasions for a total period of 218 days. His stay abroad on those occasions had ranged from 4 days to 56 days. It is an admitted position that the assessee was paid his salary in India and was employed by an employer in India. The question then arises as to whether or not the assessee falls in the category of a person covered by clause (c) of sub-section (1) of section 6 read with the Explanation (a) to that clause. In this connection, the learned counsel for the assessee brought to our notice the clarification at serial 7.3 of page 737 claimed to have been issued by the Central Board of Direct Taxes and published in the publication known as Law of Income-tax. With the help of this clarification the learned counsel for the assessee discussed the implications of the aforesaid provisions of section 6 and contended that since the assessee had left India for the purposes of employment outside India for a total period 218 days during the relevant previous year, he was not a resident within the meaning of section 6 and, therefore, ought to have been assessed in the status of a non-resident. After careful consideration of the relevant provisions of the I. T. Act and the case-law on the subject, we have come to the conclusion that the learned CIT (A) clearly erred when he directed the assessee to be treated as a non-resident. It is an admitted position that the assessee was employed by an employer in India and had received his salary in India. The fact that he had been out of India in connection with his employment for a total period of 218 days during the relevant previous year will, therefore, not have any material consequence. This finding of ours is based on a number of reasons. Firstly, the assessee had not gone out of India for the purposes of employment outside India. He was already employed in India and was entitled to a salary for his employment from his employer in India. His stay abroad was in connection with his employment in India and not for the purposes of his employment outside India. The assessee had been outside India during the relevant previous year on as many as 12 occasions. It could not, therefore, validly be claimed that on every such occasion he left India for the purposes of employment outside India. Secondly the context in which the word leaves has been used in the Explanation (a) to clause (c) of sub-section (1) of section 6 can have only a restricted and well defined meaning inasmuch as leaving should not only be physical one but also with the intention of staying abroad on a permanent or semi-permanent basis. Merely undertaking tours abroad in connection with ones employment in India cannot attract the application of Explanation (a) so as to convert a resident into a non-resident. In this connection, a profitable reference may also be made to the decision of the Special Bench of the Tribunal in the case of ITO v. Abbott Laboratories (P.) Ltd. [1989] 31 ITD 183. In that case, the phrase any period of employment outside India had come up for consideration before the Special Bench and it was decided that it is only a permanent or temporary posting outside India which would fall in the purview of such phrase and any tour or stay abroad in connection with ones employment in India could not be treated as equivalent of employment outside India. In the case in hand, we find that the assessee had not left India for the purposes of his employment outside India and, therefore, he is not covered by the Explanation (a) to clause (c) of sub-section (1) of section 6 so as to claim the status of a non-resident. In this view of the matter, the revenue succeeds in this appeal.
6. In the result, we allow this appeal set aside the impugned order of the learned CIT (A) and direct that the assessee shall be treated as a resident. The appeal is allowed accordingly.