Case Law Details
CASE LAWS DETAILS
DECIDED BY: AUTHORITY FOR ADVANCE RULINGS (INCOME TAX) NEW DELHI,
IN THE CASE OF : Anurag Chaudhary, In Re, AAR No. 839 of 2009, DECIDED ON: February 11, 2010
RELEVANT PARAGRAPH
This application is filed by an individual assessee under section 245Q of the Income Tax Act. In the application, the applicant has claimed his status as ‘non-resident’ . It is stated in the application that the applicant left India for USA for employment purposes on 318t March, 2008 and came back on 29th November, 2008 i.e. he was in India for 122 days (243 day s outside India) in the previous year 2008-2009. A copy of letter dated 27th March 2008 from NUT Technologies Limited posting the applicant to the US Company as Software Engineer has been enclosed. Apparently, the applicant was assigned by NUT Technologies Limited, an Indian company, to work in its group company in USA, NUT Technologies Inc., for sometime. A copy of statement of full and final settlement’ prepared by NUT Technologies Ltd has also been filed. The dates of his joining and leaving NIIT Tech Inc. USA are mentioned therein.
2. With these facts the applicant sought ruling on the question: “Am I non-resident in India in previous year 2008-09?”
As the question was defective, it was re- cast as follows:
Whether the income earned by the applicant by way of salary from his employment in USA in the previous year 2008- 09 (assessment year 2009- 10) Is liable to be taxed under section 5(1 )(c) or any other provision of the Income Tax Act, 1961 on the basis that the applicant’s status was that of a ‘resident’ during that year?
5. From a reading of Section 5(1 )(c) it is clear that for the income earned by the applicant on account of employment in USA to be taxable in India, the applicant should have been resident of India during the relevant previous year. In other words, if the applicant is held to be a ‘resident’ of India during the financial year 2008-09, then, his salary income from employment in USA would be taxable under the Income-tax Act, 1961. Section 6 sub-section (1), which determines the residential status of an individual, requires that either the applicant should have been in India for 182 days [vide clause (a)] or for 60 days or more, if he was in India for 365 days or more in four preceding years [(vide clause (c)]. The Explanation to this sub-section provides that a citizen of India who leaves India for the purpose of employment outside India can be considered as resident of India, if he has been in India for 182 days or more even though he may have been in India for more than 365 days in 4 preceding years. The net effect of section 6(1) read with the Explanation is that for an individual who has left India for employment outside India, he should be treated as resident of India only if he was in India during the relevant period/year for 182 days or more. In other words, if an individual has spent less than 182 days in India during a previous year and was outside India for the purposes of employment, then regardless of his being in India for 365 days or more during 4 preceding previous years, he cannot be treated as a resident of India.
6, There is no information regarding applicant’s stay in India during 4 preceding years. If the applicant was not present in India for more than 365 days in 4 preceding years, then clause (a) of sub-section (1) of section 6 would apply and it requires stay of 182 days or more in India to be treated as resident. On the other hand, if the applicant was present in India for 365 days or more during 4 preceding few years, then clause (c) of sub-section (1) to section 6 read with Explanation (a) would apply and it requires stay of 182 days or more for a person who leaves India for employment outside, to be treated as resident of India.
7. From the facts available in the application, the applicant satisfies neither clause (a) nor clause (c) of section 6(1) so as to merit treatment as a resident of India during the relevant period. It necessarily follows that the applicant was a ‘non-resident’ during the relevant period. Consequently his income that accrued outside India in USA by reason of his employment there cannot form part of the total income taxable in India. The Department in its comments dated 28.1.10 has also clarified that the applicant may be treated as NRI as he remained in India for 123 days during the financial year 2008- 09.
8. In the light of the foregoing, the question is answered in the negative. To elaborate, the applicant being a non-resident during the previous year 2008- 09, the income earned by him from his employment in USA can not be taxed under Income Tax Act, 1961.
an assessee being a non-resident during the previous year 2008-09, the income earned by him from his employment in boliviya but recived through indian bank a/c can taxed under Income-tax Act, 1961.?