Sankar Narayan Das Vs. Assistant Director of Income Tax - Court Judgment

Excerpt:
1. all these appeals preferred by the different assessees are directed against the common order passed by the ld. cit(a)-xl, kolkata dated 27^th may, 2005 in the cases of these five appellants for the assessment year 2002-03 and 2003-04.2. since common facts and grounds are involved in all the five abovementioned appeals viz. i.t.a. nos. 1837, 1838, 1839, 1850 & 1851/kol./2005 filed by the different assessees, we, therefore, decide to dispose of the same by a common consolidated order for the sake of convenience.3. the assessees have preferred the following common grounds before us in case of ail five appeals: (i) for that the ld. cit(a)-xl, kolkata without considering the provisions of law and submissions made before him by the appellant, has confirmed the order of the a.o. which is not justice and lawful. (ii) for that the ld. cit(a)-xl, kolkata has confirmed the order passed by the ld. a.o. in respect of the determination of residential status accepting a controversial and subjudice decision of the hon'ble gujrat high court but ignoring an accepted the decision of the hon'ble itat, 'b' bench, kolkata which is arbitrary and unjust. (iii) for that the appellant should be treated as "resident but not resident" for the year in question as per provision of section 6(6)(a) of the act and not a 'resident' as determined by the a.o. misapplying the provision of law and justice.4. facts in brief are that all the assessees are indian citizens, maritime executives and employees of m/s. wallem ship management ltd. the a.o. during the course of assessment proceedings found the following facts in respect to the five assessees:sl. no. name of assessee resident in india no. of days spent1. shri sankar 7 p.ys. 1344 days narayan das2. shri somnath 2 p.ys.(f.y. 1993- 982 days banerjee 94 and 1995-96)3. shri subrata 3 p.ys. (f.ys. 1157 days ranjan das 1992-93, 1993-944. shri subrata basu 2 p.ys. (f.ys. 1471 days 1995-96 and 1998-99)5. shri shantanu 2 p.ys. (f.ys. 1024 days bhattacharjee 1995-96 and 1998- since the assessees had been resident in india for more than one previous years and as their stay in india during the seven previous years preceding the previous year in question were more than 730 days or more, the a.o. concluded that the assessees did not qualify for the status as "not ordinarily resident in india" in the concerned previous year and held that the salaries earned abroad was taxable in india. the a.o. while arriving at this conclusion also relied on the judgment of the hon'ble gujrat high court in case of pradip j. mehta v. cit reported in 256 itr 647.5. being aggrieved, the assessees went in first appeal before the ld.cit(a) wherein it was submitted that the above case law relied by the a.o. did not apply to the fact of their cases as the above ruling of the hon'ble gujrat high court was subjudice before the hon'ble supreme court and, therefore, such decision of the hon'ble gujrat high court had become a controversial ruling. they have also submitted before the ld. cit(a) that in a similar case on the same facts and circumstances; itat, 'b' bench, kolkata vide its order in it.a. no. 2470/kol./2002 dated 27.5.2004 in case of ito, ward-16(4), kolkata v. shri rajat deb has held that salary income earned by shri rajat deb earned by him abroad was not taxable in india. it has accordingly been submitted that the action of a.o. treating the salary earned by them abroad to be taxable in india was not justified and such order of a.o. was liable to be vacated.6. however, the ld. ctt(a) has confirmed the action of a.o. holding that the a.o. has rightly held the above assesses as ordinarily resident in india in view of the plain reading of clause (a) of sub-section (6) of section 6 of income tax act which defines the meaning of not ordinarily resident in india. the ld. cit(a) has accordingly upheld the action of a.o.7. all the assessees are aggrieved with such order of ld. cit(a) and have now come in appeals before us vide the above grounds.8. in appeal before us, the ld. counsel for the assessee has reiterated his submission made before the a.o. and cit(a) and has once again stated that since the above decision of the hon'ble gujrat high court has been challenged by the assessee in above case by filing appeal before the hon'ble supreme court, the same has become a controvertial ruling and, therefore, cannot be relied upon for adjudicating and deciding the residential status of all five assessees. the ld. counsel has further pointed out that ail the live assessees were not ordinarily resident in view of the provisions as laid down in section 6(6)(a) of the act. he has also relied upon the judgment of authority for advance ruling reported in 223 itr 379 (a ar) while disposing the application no. p-5 of 1995, wherein it was held that a person will become "resident" and ordinarily resident only if (a) he has been "resident" in nine out often preceding previous years, and (b) has been in india for at least 730 days in seven preceding previous years, and that he will be treated as "resident but not ordinarily resident if either of these conditions are not fulfilled". it has, therefore, been contended that the action of a.o. and cit(a) not treating the above assessees as not ordinarily resident was not justified.9. in his rival submission, the ld. departmental representative for the revenue has relied heavily on the order of a.o. and cit(a) and has submitted that the ld. cit(a) while adjudicating the issue has passed a speaking order which does not need any interference. he has also relied upon the definition as laid down in section 6(6)(a) and the decision of the hon'ble gujrat high court in case of pradip j. mehta (supra).10. we have given our careful consideration to the rival submission made before us and have perused the orders of tax authorities. we have also considered the paper book filed by the assessees and the case law relied upon. in this case, the contention of the assessee for being assessed in the status of not ordinarily resident of india has been rejected by the a.o. in view of the provision as laid down in section 6(6)(a) of the act which has been confirmed by the ld. ctt(a). the ld.counsel for the assessee while challenging the order of ld. cit(a) has also relied upon the same section and, therefore, we first for the sake of clarity re-produce the relevant portion of section 6(6)(a) which reads as under: a person is said to be "not ordinarily resident" in india in any pervious year if such person is an individual who has been a non-resident in india in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in india for a period of, or periods amounting in all to, seven hundred and. twenty-nine days or less.from the perusal of above definition as laid down in section 6(6)(a), it is apparent that only those individuals can be assessed in the status of not ordinarily resident in india who where non-resident in nine out of ten previous years or has during the seven previous years preceding that year been in india for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less. now while reading the above section with the facts of the stay by the respective five assessees during the last ten years, we find that none of these five assessees were either non-resident in india in nine out of the ten previous years preceding that year, or had during the seven previous years preceding that year, been india for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less as evident from the fact of stay by these five assessees in india for last ten years, which is available at page 1 of the paper book filed by the assessees, which is being re-produced hereunder for the facility of reference:financial year assessment stay inside stay outside remarks year india india1989-90 1990-91 154 days 211 days non-resident1990-91 1991-92 169 days 196 days -do-1991-92 1992-93 210 days 155 days resident but not ordinari1992-93 1993-94 100 days 285 days -do-1993-94 1994-95 365 days1994-95 1995-96 291 days 74 days rbnor1995-96 1996-97 166 days 199 days non-resident1996-97 1997-98 182 days 183 days rbnor1997-98 1998-99 198 days 169 days -do-1999-99 1999-2000 278 days 87 days do-1999-2000 2000-01 186 days 180 days -do-2000-01 2001-02 45 days 320 days non-resident2001-02 2002-03 stayed more rbnor than 182 days since none of the five assessees fulfilled one of the above two conditions as laid down in clause (a) of sub-section(6) of section 6 of income tax act, in our considered opinion the a.o. has rightly treated these assessees as ordinarily resident in india in lieu of non-ordinarily resident in india as claimed by the assessees. even otherwise, we find that the action of a.o. in treating the above assessees as resident in india was well justified in view of the provisions as laid down in sub-section (1) of section (6) of the income tax act, which is re-produced hereunder for the sake of clarity: (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 (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.we observe that all the assessees were complying with the provisions as laid down in section 6, sub-section (1) of the act as evident from the chart of stay inside india as re-produced hereinabove elsewhere in the order as in the order and, therefore, the action of a.o. in treating such asessees as resident in india was rightly justified.11. so far as the case law relied by the ld. counsel of hon'ble authority for advance ruling while disposing the application no. p-5 of 1995 is concerned, we find that hon'ble lordship has rather supported the action of a.o. as they have also relied upon the same provision as laid down in clause (a) of sub-section (6) of section 6 while deciding the status of non-ordinarily resident in india. we also find that the case law relied by the ld. counsel of calcutta tribunal in case of rajat deb (supra) is not identical to the facts involved in the present case before us, wherein the judgment of the hon'ble gujrat high court relied by the revenue in case of pradip j. mehta is squarely applicable wherein their lordship while disposing the identical issues has held as under: held, that the tribunal had found as a fact that the assessee was a resident in india for eight out of the ten preceding years and his case therefore could not full under the first part of clause (a) of sub-section (6) of section 6 of the act. his case would also not fall in the second part of that clause, because in the seven years preceding the relevant previous year, the assessee had been in india for one thousand four hundred and two days, that is, much more than seven hundred and thirty days being the upper limit referred to in that clause. therefore, the tribunal was right in holding that the status of the assessee for the year in question was not that of 'not ordinarily resident' as claimed by him.we, therefore, considering the above facts and circumstances and in the light of above discussion, are of the opinion that the status of the assessees for the year in question was not that of "non ordinarily resident" as claimed by them as none of them satisfied the provisions as laid down in section 6(6)(a) of the act and, therefore, in these circumstances the a.o. was justified in holding that all the above assessees were to be taxed in the status of resident in india and the ld. cit(a) was correct in upholding such action of a.o. we, therefore, uphold such order of ld. cit(a) and reject the grounds raised by all five assessees in this regard.11. in the result, the appeals filed by all the five respective assessees are dismissed.

Judgment:
1. All these appeals preferred by the different assessees are directed against the common order passed by the ld. CIT(A)-XL, Kolkata dated 27^th May, 2005 in the cases of these five appellants for the assessment year 2002-03 and 2003-04.

2. Since common facts and grounds are involved in all the five abovementioned appeals viz. I.T.A. Nos. 1837, 1838, 1839, 1850 & 1851/Kol./2005 filed by the different assessees, we, therefore, decide to dispose of the same by a common consolidated order for the sake of convenience.

3. The assessees have preferred the following common grounds before us in case of ail five appeals: (i) For that the ld. CIT(A)-XL, Kolkata without considering the provisions of law and submissions made before him by the appellant, has confirmed the order of the A.O. which is not justice and lawful.

(ii) For that the ld. CIT(A)-XL, Kolkata has confirmed the order passed by the ld. A.O. in respect of the determination of residential status accepting a controversial and subjudice decision of the Hon'ble Gujrat High Court but ignoring an accepted the decision of the Hon'ble ITAT, 'B' Bench, Kolkata which is arbitrary and unjust.

(iii) For that the appellant should be treated as "Resident but not Resident" for the year in question as per provision of Section 6(6)(a) of the Act and not a 'Resident' as determined by the A.O. misapplying the provision of law and justice.

4. Facts in brief are that all the assessees are Indian Citizens, Maritime Executives and employees of M/s. Wallem Ship Management Ltd. The A.O. during the course of assessment proceedings found the following facts in respect to the five assessees:Sl. No. Name of assessee Resident in India No. of days spent1.

Shri Sankar 7 P.Ys.

1344 days Narayan Das2.

Shri Somnath 2 P.Ys.(F.Y. 1993- 982 days Banerjee 94 and 1995-96)3.

Shri Subrata 3 P.Ys. (F.Ys.

1157 days Ranjan Das 1992-93, 1993-944.

Shri Subrata Basu 2 P.Ys. (F.Ys.

1471 days 1995-96 and 1998-99)5.

Shri Shantanu 2 P.Ys. (F.Ys.

1024 days Bhattacharjee 1995-96 and 1998- Since the assessees had been resident in India for more than one previous years and as their stay in India during the seven previous years preceding the previous year in question were more than 730 days or more, the A.O. concluded that the assessees did not qualify for the status as "not ordinarily resident in India" in the concerned previous year and held that the salaries earned abroad was taxable in India. The A.O. while arriving at this conclusion also relied on the judgment of the Hon'ble Gujrat High Court in case of Pradip J. Mehta v. CIT reported in 256 ITR 647.

5. Being aggrieved, the assessees went in first appeal before the ld.CIT(A) wherein it was submitted that the above case law relied by the A.O. did not apply to the fact of their cases as the above ruling of the Hon'ble Gujrat High Court was subjudice before the Hon'ble Supreme Court and, therefore, such decision of the Hon'ble Gujrat High Court had become a controversial ruling. They have also submitted before the ld. CIT(A) that in a similar case on the same facts and circumstances; ITAT, 'B' Bench, Kolkata vide its order in IT.A. No. 2470/Kol./2002 dated 27.5.2004 in case of ITO, Ward-16(4), Kolkata v. Shri Rajat Deb has held that salary income earned by Shri Rajat Deb earned by him abroad was not taxable in India. It has accordingly been submitted that the action of A.O. treating the salary earned by them abroad to be taxable in India was not justified and such order of A.O. was liable to be vacated.

6. However, the ld. CTT(A) has confirmed the action of A.O. holding that the A.O. has rightly held the above assesses as ordinarily resident in India in view of the plain reading of Clause (a) of Sub-section (6) of Section 6 of Income Tax Act which defines the meaning of not ordinarily resident in India. The ld. CIT(A) has accordingly upheld the action of A.O.7. All the assessees are aggrieved with such order of ld. CIT(A) and have now come in appeals before us vide the above grounds.

8. In appeal before us, the ld. Counsel for the assessee has reiterated his submission made before the A.O. and CIT(A) and has once again stated that since the above decision of the Hon'ble Gujrat High Court has been challenged by the assessee in above case by filing appeal before the Hon'ble Supreme Court, the same has become a controvertial ruling and, therefore, cannot be relied upon for adjudicating and deciding the residential status of all five assessees. The ld. Counsel has further pointed out that ail the live assessees were not ordinarily resident in view of the provisions as laid down in Section 6(6)(a) of the Act. He has also relied upon the judgment of authority for Advance Ruling reported in 223 ITR 379 (A AR) while disposing the Application No. P-5 of 1995, wherein it was held that a person will become "Resident" and ordinarily Resident only if (a) he has been "Resident" in nine out often preceding previous years, and (b) has been in India for at least 730 days in seven preceding previous years, and that he will be treated as "Resident but not Ordinarily Resident if either of these conditions are not fulfilled". It has, therefore, been contended that the action of A.O. and CIT(A) not treating the above assessees as not ordinarily resident was not justified.

9. In his rival submission, the ld. Departmental Representative for the Revenue has relied heavily on the order of A.O. and CIT(A) and has submitted that the ld. CIT(A) while adjudicating the issue has passed a speaking order which does not need any interference. He has also relied upon the definition as laid down in Section 6(6)(a) and the decision of the Hon'ble Gujrat High Court in case of Pradip J. Mehta (supra).

10. We have given our careful consideration to the rival submission made before us and have perused the orders of tax authorities. We have also considered the paper book filed by the assessees and the case law relied upon. In this case, the contention of the assessee for being assessed in the status of not ordinarily resident of India has been rejected by the A.O. in view of the provision as laid down in Section 6(6)(a) of the Act which has been confirmed by the ld. CTT(A). The ld.Counsel for the assessee while challenging the order of ld. CIT(A) has also relied upon the same Section and, therefore, we first for the sake of clarity re-produce the relevant portion of Section 6(6)(a) which reads as under: A person is said to be "not ordinarily resident" in India in any pervious year if such person is an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and. twenty-nine days or less.

From the perusal of above definition as laid down in Section 6(6)(a), it is apparent that only those individuals can be assessed in the status of not ordinarily resident in India who where non-resident in nine out of ten previous years or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less. Now while reading the above section with the facts of the stay by the respective five assessees during the last ten years, we find that none of these five assessees were either non-resident in India in nine out of the ten previous years preceding that year, or had during the seven previous years preceding that year, been India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less as evident from the fact of stay by these five assessees in India for last ten years, which is available at page 1 of the paper book filed by the assessees, which is being re-produced hereunder for the facility of reference:Financial Year Assessment Stay inside Stay outside Remarks Year India India1989-90 1990-91 154 days 211 days Non-Resident1990-91 1991-92 169 days 196 days -Do-1991-92 1992-93 210 days 155 days Resident but not Ordinari1992-93 1993-94 100 days 285 days -Do-1993-94 1994-95 365 days1994-95 1995-96 291 days 74 days RBNOR1995-96 1996-97 166 days 199 days Non-Resident1996-97 1997-98 182 days 183 days RBNOR1997-98 1998-99 198 days 169 days -Do-1999-99 1999-2000 278 days 87 days Do-1999-2000 2000-01 186 days 180 days -Do-2000-01 2001-02 45 days 320 days Non-Resident2001-02 2002-03 Stayed more RBNOR than 182 days Since none of the five assessees fulfilled one of the above two conditions as laid down in Clause (a) of Sub-section(6) of Section 6 of Income Tax Act, in our considered opinion the A.O. has rightly treated these assessees as Ordinarily Resident in India in lieu of Non-Ordinarily Resident in India as claimed by the assessees. Even otherwise, we find that the action of A.O. in treating the above assessees as Resident in India was well justified in view of the provisions as laid down in Sub-section (1) of Section (6) of the Income Tax Act, which is re-produced hereunder for the sake of clarity: (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 (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.

We observe that all the assessees were complying with the provisions as laid down in Section 6, Sub-section (1) of the Act as evident from the chart of stay inside India as re-produced hereinabove elsewhere in the order as in the order and, therefore, the action of A.O. in treating such asessees as Resident in India was rightly justified.

11. So far as the case law relied by the ld. Counsel of Hon'ble Authority for Advance Ruling while disposing the Application No. P-5 of 1995 is concerned, we find that Hon'ble Lordship has rather supported the action of A.O. as they have also relied upon the same provision as laid down in Clause (a) of Sub-section (6) of Section 6 while deciding the status of Non-Ordinarily Resident in India. We also find that the case law relied by the ld. Counsel of Calcutta Tribunal in case of Rajat Deb (supra) is not identical to the facts involved in the present case before us, wherein the judgment of the Hon'ble Gujrat High Court relied by the Revenue in case of Pradip J. Mehta is squarely applicable wherein their Lordship while disposing the identical issues has held as under: Held, that the Tribunal had found as a fact that the assessee was a resident in India for eight out of the ten preceding years and his case therefore could not full under the first part of Clause (a) of Sub-section (6) of Section 6 of the Act. His case would also not fall in the second part of that clause, because in the seven years preceding the relevant previous year, the assessee had been in India for one thousand four hundred and two days, that is, much more than seven hundred and thirty days being the upper limit referred to in that clause. Therefore, the Tribunal was right in holding that the status of the assessee for the year in question was not that of 'not ordinarily resident' as claimed by him.

We, therefore, considering the above facts and circumstances and in the light of above discussion, are of the opinion that the status of the assessees for the year in question was not that of "non ordinarily resident" as claimed by them as none of them satisfied the provisions as laid down in Section 6(6)(a) of the Act and, therefore, in these circumstances the A.O. was justified in holding that all the above assessees were to be taxed in the status of resident in India and the ld. CIT(A) was correct in upholding such action of A.O. We, therefore, uphold such order of ld. CIT(A) and reject the grounds raised by all five assessees in this regard.

11. In the result, the appeals filed by all the five respective assessees are dismissed.