SALIL PUNOOSE Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The appellant-assessee was employed by M/s.Best Foods Asia Ltd., at Hongkong as Managing Director from 1997. During the relevant period, he was also appointed as consultant for M/s.CPC Asia Ltd., an American Company having its office at Hongkong, for which, Marketing Consultancy Agreement dated 10.02.1997 was executed, which continued to be in force during the relevant Assessment year 2002-03. The assessee had received a sum of Rs.47,62,999/- on this account and claimed to be exempted from tax.

(2.) The present appeal relates to the Assessment year 2002-03. The Assessee had filed his return of income for the said assessment year, which was processed under Section 143(1) of the Income Tax Act, 1961 (for short 'the Act') and refund of Rs.7,68,060/- was granted on 27.11.2002. However, the case of the assessee was taken up for scrutiny under Section 143(3) of the Act and vide order dated 11.01.2005, the claim of the assessee, that he was a non-resident Indian, was not accepted, and the further claim that the consultancy fees earned outside India was exempted from tax, was also rejected. It was also held that the assessee was not eligible for deduction under Section 80RRA of the Act. Consequently, the consultancy fees of Rs.47,62,999/-, earned outside India by the assessee, was subjected to tax, which is in dispute.

(3.) Challenging the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). By order dated 01.03.2006, the Appellate Commissioner determined the status of the assessee as non-resident Indian and after holding that the consultancy fees received by the assessee was earned outside India, it was held that in view of the status of the appellant being non-resident Indian, the same was not taxable. In view of the above finding, the Appellate Commissioner did not pass any order with regard to the eligibility of the assessee under Section 80RRA of the Act.