Taxpayer Staying In India For Less Than 182 Days As Per Exp 1(A) To Sec 6(1) Of I-T Act, Entitles To 'Non-Resident' Status: Mumbai ITAT

While opining that even if the taxpayer has left India for the purpose of business or profession, the same shall be considered for purpose of employment outside India under Explanation 1(a) to Section 6(1) of Income tax Act, 1961, the Mumbai ITAT held that assessee has rightly claimed to be a 'non-resident' as he stayed in India only for a period of 176 days during the year which entitles him to non-resident status as per Explanation 1(a) to Section 6(1).

Rejecting AO's argument that since the assessee went to Mauritius on an occupation permit to stay and work in Mauritius as an investor and not as an employee, Explanation 1(a) to Section 6(1) shall not be applicable to the assessee, the ITAT opined that even if it is accepted that the assessee went to Mauritius as an investor in Firstland Holdings Ltd., Mauritius in which he holds 100% shareholding, he still is entitled to claim the benefit of the extended period of 182 days under Explanation 1(a) to Section 6(1).

The ITAT Coram comprising of Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member), observed that “Since it is undisputed that the assessee has stayed in India only for a period of 176 days during the year, which is less than 182 days as provided in Explanation 1(a) to section 6(1) of the Act, the assessee has rightly claimed to be a “Non-Resident” during the year for the purpose of the Act”. (Para 14)

As per the brief facts, the assessee, an individual, was served with notice under Section 153A pursuant to search and seizure procedure under Section 132/133A on in the case of Matix Group (Nishant Kanodia). The assessee in his return filed in response to Section 153A notice, claimed his residential status to be non-resident and accordingly did not offer his global income to tax in India. The assessee submitted that as he stayed in India only for 176 days in the AY 2013-14, and left India for the purpose of employment in Mauritius, his residential status shall be determined as non-resident as the period of 60 days under section 6(1)(c) shall be substituted with 182 days as per Section 6(1) Explanation 1(a). The AO however, rejected assessee's application on the ground that, as per the work permit issued by the Government of Mauritius, the assessee went to Mauritius on an occupation permit to stay and work in Mauritius as an investor with Firstland Holdings Ltd. and not as an employee. Accordingly, the AO determined assessee's residential status to be 'resident', and thereby made addition towards assessee's global income.

On appeal, the CIT(A) deleted the said addition and held that the assessee was away from India for the purpose of employment outside India and therefore entitled to take the benefit of Explanation 1(a) to Section 6(1). Challenging the same, the AO approached the ITAT.

Considering the AO's argument that the assessee left India not for the purpose of employment but as an Investor on a business visa to Mauritius, and thus Section 6(1) Explanation 1(a) is not applicable in the present case, the ITAT observed that an individual is said to be resident in India in any previous year, if he has within four years preceding the relevant year been in India for a period of 365 days or more and is in India for a period of 60 days or more in the relevant year.

The ITAT further observed that there is no dispute that the assessee was in India for a period of 365 days in the four years preceding the relevant year, and clarified that as per the Explanation 1(a) to Section 6(1), period of 60 days is substituted with 182 days in case of a citizen of India who has left India for the purpose of employment outside India.

Considering the summary of the number of days of stay in India along with a copy of the relevant pages of his passport furnished by the assessee, the Coram concurred with the assessee that he stayed in India only for a period of 176 days during the relevant AY.

Thus, the ITAT dismissed the Revenue's appeal and held that the assessee has rightly claimed to be a 'non-resident' during the relevant year.

Counsel for Appellant/ Department: S. Sribivas

Counsel for Respondent/ Assessee: Ajay R. Singh and Akshay A. Pawar

Case Title: Assistant Commissioner of Income Tax verses Nishant Kanodia

Case Number: ITA no.2155/Mum/2023

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