COMMISSIONER OF INCOME TAX Vs. ABDUL RAZZAK

JUDGEMENT

(1.) The short question that arises for our decision in the appeal filed by the Revenue is whether the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal were justified in declaring the status of the Respondent Assessee as a "nonresident" for the assessment year 1989-1990.

(2.) We have heard learned senior counsel Shri. P.K.R. Menon appearing for the Appellant Revenue and learned senior counsel Dr. Shri. K.B. Mohammed Kutty appearing for the Respondent assessee.

(3.) The Assessee s residential status for assessment arose for the assessment year 1989-90 in the course of completion of block assessment for the period 1989-90 to 1999-2000. While filing return, the Assessee claimed his residential status as "nonresident" for the assessment years 1989-90 and 1990-91, and for all the remaining years, he mentioned his status as "not ordinarily resident". The Assessee admitted in the course of enquiry that he had gone abroad and took up business there, or in other words, he had not gone there to take up employment under any employer. The Assessing Officer therefore held that since the Assessee went abroad for the first time on 24/09/1988 and though he was in India for only 177 days, he will be covered by Section 6(1)(c) of the Income Tax Act (hereinafter referred to as the Act for short), which declares a person as a resident in India for any assessment year, if he was in India in the previous year for 60 days or more and was in India for 365 days or more in the 4 years immediately preceding that previous year. Since the Assessee went abroad on 24.9.1988 and was in India for 177 days in the previous year and was in India for more than 365 days in the 4 years preceding to that year, the Assessing Officer declared the Assessee s status as 'resident' for the assessment year 1989-90. Even though, the Assessee sought exception under explanation (a) to Section 6(1)(c) contending that since he had gone abroad to take up employment in the previous year in order to become a resident under the said explanation, he should have stayed in India for not less than 182 days in that year, this claim of the Assessee was turned down by the Assessing Officer for the simple reason that "employment outside India" covered by the explanation does not include "doing business", by oneself. In other words, the Assessing Officer was of the view that the Assessee will be entitled to the benefit of explanation (a) to Section 6(1)(c) of the Act only if such Assessee went abroad in the previous year to take up employment and not fordoing business. Even though the Assessing Officer completed the assessment for the assessment year 1989-90 assigning the status of "resident" to the Respondent Assessee bringing into tax in India his global income, in the appeal filed by the Assessee, the CIT (Appeals) held that going abroad for doing business also is covered by explanation (a) to Section 6(1)(c) of the Act in as much as employment referred to in the above explanation takes in self employment also. On second appeals filed by the Respondent Assessee and the Revenue, the Tribunal confirmed the order of the CIT (Appeals), against which this appeal is filed.