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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER& Ms. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. No. 452/Ahd/2020 (Assessment Year: 2016-17) Pradeep Kumar Joshi (Late) Vs. ITO Represented by his wife and L/H. Ward-1, International Smt. Sangeeta P. Joshi Taxation, Ahmedabad A/10/103 La-habitat, Nr. Aiyana Complex, 100 Ft. Road Opp. Shukun Bungalows Off. S. G. Highway, Thaltej, Ahmedabad- 380059 [PAN No. AAQPJ7981F] (Appellant) .. (Respondent)
Assessee by : Shri Divyang Shah, AR Revenue by : Shri Purushottam Kumar, Sr. DR Date of Hearing 26.10.2021 Date of Pronouncement 29.10.2021 O R D E R PER Ms. MADHUMITA ROY - JM:
The instant appeal filed by the assessee is directed against the order dated 11.03.2020 passed by the Ld. CIT(A)-13, Ahmedabad arising out of the order dated 30.11.2018 passed by the ITO, Ward-1, International Taxation, Ahmedabad under Section 143(3) of the Income Tax Act, 1961(hereinafter referred as to “the Act”) for A.Y. 2016-17with the following grounds:- “1. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) and Ld. AO have erred in holding appellant to be a resident in India for financial year 2015-16?
ITA No.452/Ahd/2020 Pradeep Kumar Joshi (Late) vs. ITO Asst.Year –2016-17 - 2 - 2. Whether, on facts and in circumstances of the case and in law, both the lower authorities have erred in making addition of Rs. 87,31,506/- for salary earned outside India? 3. Whether, on facts and in circumstances of the case and in law, both the lower authorizes have erred in making addition of Rs. 18,21,987/- for FDR Interest earned from NRE Account? 4. Whether, on facts and in circumstances of the case and in law, both the lower authorities have erred in making addition of Rs. 1,999/- as short-term capital gain on mutual fund? 5. Whether, on facts and in circumstances of the case and in laws, Ld. Assessing Officer has erred in levying interest u/s. 234B & 234C of the act? 6. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.”
There is a delay of 124 days in filing the instant appeal before us. The explanation in this regard as made by the Ld. AR is this that the assessee’s legal heir received the order passed by the First Appellate Authority only on 15.03.2020. Immediately thereafter the lock down started on 25.03.2020 due to Covid-19 pandemic and remained for approximately two months all over the country. Hence, “The Taxation and Other Laws (Relaxation and amendments of certain provisions) Act, 2020” passed by the parliament and in terms of Section 3(1)(b) thereof if any appeal lies between 20.03.2020 to 31.12.2020 the date of filing appeal has been extended to 31.03.2021. Taking into consideration this particular aspect of the matter the Ld. AR prayed for condonation of the delay which according to us justifiable and hence the delay is condoned.
We have heard the respective parties and we have also perused the relevant materials available on record.
The assessee is a non-resident Indian and shown income from other source being interest from REC Bonds and savings bank interest. He has also shown dividend income and salary earned from Oil Support Services,
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Dammam (outside India), interest on NRE FDR and LTCG which were claimed as exempt from income tax. The issue raised by the Revenue on the basis of verification of the passport submitted by the assessee relates to the status of the assessee as “Resident” on the basis of calculation of days of stay in India. It has been claimed by the assessee that he stayed in India during the year under consideration for 175 days whereas the case of the Revenue is this that the assessee stayed in India for 184 days. According to the assessee consideration of both the date of arrival and date of departure from India as stayed in India as made by the Revenue is not correct. Rather it has been decided that only date of departure should be considered as “stay in India”. On this aspect the assessee relied upon the judgment passed by the Authority for Advance Rulings, vide an order dated 08.02.1996 in Petition No. 7 of 1995 (1997) 90 taxman 62 (AAR- New Delhi) wherein the following has been held:- “7. It is not possible to accept the contention put forward on behalf of the applicant. The calculation relevant for the purposes of section 6(1)(a) is that of the number of days during the previous year on which the applicant was present in India. For this purpose, the days on which the applicant entered India as well as the days on which he left India have to be taken into account.”
It is relevant to reproduce the computation made by the assessee regarding counting of days of stay in India which is as follows:- 5.2.2 Computation by the Assessee vide Submission/Paperbook Dated 25.02.2019: Sr. Arrival in India Time of arrival Departure Time of No. of Days No. from India departure of stay in India 1. 31.03.2015 9.05 AM 26.04.2015 9.35 AM 26 2. 12.05.2015 8.15 AM 22.06.2015 4.25 AM 41 3. 22.07.2015 3.15 AM 17.08.2015 15.15 PM 26 4. 16.09.2015 8.10 AM 10.10.2015 15.30 PM 24 5. 09.11.2015 8.20 AM 07.12.2015 22.05 PM 29 6. 06.01.2016 8.25 AM 01.02.2016 19.05.PM 27 7. 04.03.2016 8.25 AM 05.03.2016 23.20 PM 2
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18.03.2016 22.00 PM 22.03.2016 20.55 PM 4 179
5.2.3 Computation by the Assessee vide Submission Dated 11.03.2019: Sr. Arrival in India Time of arrival Departure Time of No. of Days No. from India departure of stay in India 1. 31.03.2015 9.05 AM 26.04.2015 9.35 AM 26 2. 12.05.2015 8.15 AM 22.06.2015 4.25 AM 41 3. 22.07.2015 3.15 AM 17.08.2015 15.15 PM 26 4. 16.09.2015 8.10 AM 10.10.2015 15.30 PM 24 5. 09.11.2015 8.20 AM 07.12.2015 22.05 PM 28 6. 06.01.2016 8.25 AM 01.02.2016 19.07.PM 26 7. 04.03.2016 8.25 AM 05.03.2016 23.20 PM 1 8. 18.03.2016 22.00 PM 22.03.2016 20.55 PM 4 176
In support of the case of excluding the date of arrival in India as made by the assessee, the assessee further relies upon the order passed by the Hon’ble Mumbai Bench in the case of ITO (IT)-1(1) vs. Fausta C Cordeior in ITA No. 4933&4934/Mum/2011.
We find that the Hon’ble Mumbai Bench excluded the date of arrival since it was not a complete day while doing that the Hon’ble Bench was please to observe as follows:- “4. It was the learned DR’s contention that assessee has stayed more than 182 days in India and therefore, income from salary is taxable in India, whereas the learned Counsel relied on the orders of the CIT(A) to submit that the day of arrival is to be excluded. He placed on record the decision of the ITAT Jaipur Bench in the case of R. K. Sharma, Manoj Kumar Reddy’s case (supra), ITO v. Gautam Banerjee (ITAT L. Bench Mumbai) in ITA No. 2374/Mum/2004 dated 18.06.2008. The learned Counsel also placed on record the decision of the Karnataka High Court in the case of DIT International Taxation v. Manoj Kumar Reddy Nare [2011] 201 Taxman 30/12 taxmann.com 326, wherein the ITAT order was upheld. 5. We have considered the rival contentions and examined the facts. As rightly pointed out by the CIT(A), there was a mistake of taking number of days at Item No. 3. Therefore, according to AO’s own method it should be 186 days. Accordingly there is no merit in Revenue appeal. The case law relied is in support of the contention that day of arrival, particularly late in the day should be excluded. If that
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day was excluded the stay in India by assessee was less than 180 days. Therefore, the grounds raised by the Revenue are dismissed and accordingly the appeal is dismissed.”
We have further considered the judgment passed by the Bangalore Bench in the case of M. K. Reddy vs. ITO (International Taxation) Ward- 1(3), Bangalore (supra) as relied upon by the assessee in support of the case made out. While excluding the first date of arrival the Hon’ble Bench was pleased to observe as follows:- “3.20 The second alternate contention of the learned AR is that the assessee arrived in India on 31-1-2005 at 4 A.M. According to the learned AR, the fraction of a day is not to be counted while determining the period. For this proposition, the learned AR has relied on the decision of the Hon'ble Delhi High Court in the case of Praveen Kumar v. Sunder Singh Makkar (sic). The learned AR, therefore, contended that if 31-1-2005 is excluded then the appellant's stay in India from 1-4-2005 to 31-3-2005 is only 59 days and, therefore, the appellant becomes non-resident. 3.21 On the other hand, the learned PR submitted that there is no provision under the Act that fraction of a day is to be excluded. Section 6(l)(c ) provides that he should be in India for a period or period amounting in all to 60 days or more in that year. In case, the fraction of a day is to be ignored when a person who is coming to India on different occasions during the previous year then such fraction of day. i.e., day of arrival and day of departure will have to be excluded. This is not the case and the intention of the Legislature when it has provided the period or periods amounting in all to 60 days or more. 3.22 We have heard both the parties. The Hon'ble Delhi High Court in the case of Praveen Kumar (supra] had an occasion to consider as to whether the suit was filed in time. In that case, deed of performance was stipulated as 30-7-2002. In case the deed of performance was to be excluded then the limitation will commence from the next date, i.e., 31-7-2005. The Hon'ble Delhi High Court referred to section 9 of the General Clauses Act. If the word 'from' is used then the first day in a series of days will stand excluded and if the word 'to' is used, then it will include the last day in a series of days or any other period of time. The Hon'ble Delhi High Court at para 28 observed as under:— "It is well-known maxim that the law disregards fractions. By the Calender the day commenced at midnight and most nations reckon in the same manner. The English do it in this manner. We too have adopted the same. In the space of a day all the twenty four hours are usually reckoned, the law generally rejecting all fractions of a day, in order to avoid disputes. If anything is to be done within a certain time of, from, or after the doing or occurrence of something else, the day on which the first act or occurrence takes place is to be excluded from computation. (Williams v. Burzess [1840]
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113 E.R. 955) unless the contrary appears from the context. (Hare v. Gocher F1962I2 Q.B. 641). The ordinary rule is that where a certain number of days are specified they are to be reckoned exclusive of one of the davs and inclusive of the other (R.V. Turner, supra p. 359)." 3.23 The word 'day' has been defined as under in the Law Lexicon by Venkatramaiah's 1983 Edition :— "Day, generally speaking, is the period from midnight to midnight: the law admits not of fractions in time but, in case of necessity. [Louis Dreyfus & Co. v. MehrchandFattechand'61.C. 886]. In Chick\. Smith ri8401 bowl. 340 : 8 D.P.C. 337: 4 Jur. 86, Patterson. J.. said: The good sense of the matter is that where it is necessary to show which was the first of two acts, the Court is at liberty to consider fractions of a day. The rule of law would be otherwise absurd". The day on which a legal instrument is dated begins and ends it midnight. It is not necessary to consult the calendar to ascertain when it commences and ends. [Anderson: Law Dictionary]. The proviso in a will required the devisee to be personally present in the house devised for 168 days in each year: if the owner be personally present at the house for any part of one day, that will be sufficient residence for that day - Walcot v. Botfield 69E.R. 226." 3.24 Thus, there are two views in respect of ignoring the fraction of a day. However, we can look at the issue from a different angle. When one has to compute the period for which an assessee is in India, one has to start the counting from a particular day and to end the same with specific day. The period is to be counted from the date of arrival of the assessee in India to the date he leaves India. Thus, the words 'from' and 'to' are to be inevitably used for ascertaining the period though these words are not mentioned in the statute. Section 9 of the General Clauses Act is as under — _ "(1) In any (Central Act) or Regulation made after the commencement of this Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time to use the word "from", and, for the purpose of including the last in a series of days or any other period of time, to use the word "to". (2) This section applies also to all (Central Acts) made after the third day of January 1868. and to all Regulations made on or after the fourteenth day of January, 1887." 3.25 As per the General Clauses Act, the first day in a series of a day is to be excluded if the word from is used. Since for computation of the period, one has to necessarily import the word 'from' and, therefore, accordingly, the First day is to be excluded. In the instant case, if the first day, i.e., 31-1-2005 is excluded then the period of stay will be 59 days. Since the period of stay will be less than 60 days, therefore, section 6(1)( c) will not be applicable and the status of the assessee will be non-resident. We, therefore, accept the second alternate contention of the appellant and hold that the status of the assessee will be non-resident.”
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On the contrary, the Ld. DR relied upon the order passed by the First Appellate Authority. The relevant portion whereof is as follows:- “5.4 However it is seen that the appellant himself has computed a stay in India of 175 days as given in the return of income, 179 days as per the paperbook and finally 176 days following the judgment of the ITAT Mumbai in ITA Nos.4933 & 4934/Mum/2011in the case Fausta C. Cordeiro. The said judgment has been perused where the facts were as under: Briefly stated assessee has claimed status of Non Resident in India having worked as employee of M/s Transocean Discoverer and worked on rig Discoverer outside India. Assessee's passport was examined to verify the number of day's assessee was in India and AO noticed that assessee arrived seven times to India for varying periods and listed out them in a table and found that assessee had stayed in India for 187 days and accordingly he considered assessee as Resident and brought the salary to tax. The learned CIT (A) after considering the submissions of assessee accepted assessee's contentions that assessee generally arrived late in the night after completing his work from abroad and attended to the work next day and generally left early in the morning so as to attend the work again after arriving at the destination. Then he analyzed the General Clauses Act and the decision of the ITAT Banglore in the case of Manoj Kumar Reddy vs. Income Tax Officer (IT), 34 SOT 180 (Bang.) and allowed assessee's contention that his stay was less than 180 days in India during the relevant period. The Hon'ble ITAT, Mumbai held that "We have considered the rival contentions and examined the facts. As rightly pointed out by the CIT (A), there was a mistake of taking number of days at Item No.3. Therefore, according to AO's own method it should be 186 days. If we exclude the date of arrival as it is not a complete day, the stay of assessee is less than 182 days. Accordingly there is no merit in Revenue appeal. The case law relied is in support of the contention that day of arrival, particularly late in the day should be excluded. If that day was excluded the stay in India by assessee was less than 180 days. Therefore, the grounds raised by the Revenue are dismissed and accordingly the appeal is dismissed." 5.5 In this regard it is noted that the date of arrival and date of departure are stamped by the immigration Authorities at the Airports on the passport of the person travelling but the time of arrival and time of departure are not mentioned otherwise also the stamping by the Immigration Authority will be few hours after the arrivals (due to deplaning, arrival at lounge & queeing) and few hours before the departure (as passengers arrive about 3 hours before the scheduled departure of plane) and therefore for the purpose the expected time of arrival (ETA) and the standard time of departure (STD) in the tickets have to be taken. As per the relied upon judgement of the ITAT, Mumbai the days of arrival in India has to be ignored for counting of the
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period of stay in India if the arrival is in the late night. It is seen in the table as 5-2-3 that as the appellant is arriving early in the morning, typically around 8 AM to 9 AM and thus the day of arrival cannot be ignored and thus the number of clays of stay in India comes to 182 days as under: Sr. Arrival in Time of Departure from Time of No. of No. India arrival India departure Days of stay in India 1 31.03.2015 9.05 AM 26.04.2015 9.35AM 26 8.15 AM 2 12.05.2015 22.06.2015 4.25 AM 42 3 22.07.2015 3.15AM 17.08.2015 15.15 PM 27 4 16.09.2015 8.10AM 10.10.2015 15.30 PM 25 5 09.11.2015 8.20AM 07.12.2015 22.05 PM 29 6 06.01.2016 8.25 AM 01.02.2016 19.07 PM 27 7 04.03.2016 8.25 AM 05.03.2016 23.20 PM 2 8 18.03.2016 22.00 PM 22.03.2016 20.55 PM 4 182
5.6 It is worth noting that in general the appellant has taken flights from Bahrain for India (Bangalore or Ahmedabad or Mumbai) but the departure on 05.03.2016 from Mumbai is to Bangkok and the arrival on 18.03.2016 is from Bangkok i.e. the absence in India for the period from 05.03.2016 to 18.03.2016 was not for the purpose of work (the place of work being Dammam in Saudi Arabia) but has been undertaken for other purposes and managed for the purpose of reducing the stay of India below 182 days to avoid becoming the resident of India in the said financial year. In this regard it is noted that as perthe existing provisions of Section 6 as applicable in the case no adverse view as to the visit to Bangkok for the purpose other than for the purpose of employment can be drawn because the conditions of maintenance of a dwelling place in India has been done away with.”
It appears that though it has already been held by different benches that while counting days of stay in India for considering the status of “Resident” the days of arrival has to be excluded, the Ld. CIT(A) while counting days of stay in India purportedly counted the date of arrival of the assessee in India without giving any cogent reason thereon which in our considered opinion having no basis.
We do not find any reason to deviate from the ratio laid down by the Honb’le Bangalore Bench as narrated thereinabove and relying upon the
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identical facts in the case in hand we exclude the date of arrival in counting the days of stay in India in the case of the assessee.
We, thus, hold that the assessee stayed in India during the year under consideration for less than 182 days and finally cannot be considered as the resident of India in the year under consideration. In that view of the matter the impugned assessment made against the assessee considering him as the resident of India is not sustainable in the eye of law and thus deleted.
In the result, the appeal preferred by the assessee is allowed. This Order pronounced in Open Court on 29/10/2021
Sd/- Sd/- (WASEEM AHMED) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 29/10/2021 TRUE COPY TANMAY, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 26.10.2021 2. Date on which the typed draft is placed before the Dictating Member 27.10.2021 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 01.11.2021 5. Date on which the fair order is placed before the Dictating Member for pronouncement .10.2021 6. Date on which the fair order comes back to the Sr.P.S./P.S 01.11.2021 7. Date on which the file goes to the Bench Clerk 01 .11.2021 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order……………………………………