Mr. Madhukar Vinayak Dhavale, Pune V. ITO (Intl.Taxation)-III, Pune, Pune

ITA 17/PUN/2010

• Counselvise Citation: 1724514 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 04-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Keywords: Residential status; Salary income; Services rendered outside India
• Section: 143(3); 5(2); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 17/PN/2010 (ASSTT. YEAR: 2006-07) MR MADHUKAR VINAYAK DHAVALE .. APPELLANT FLAT NO 6, PLOT NO 16, BHOSALE ENCLAVE, BHOSALE NAGAR, PUNE PAN AFJPD0514N VS. INCOME-TAX OFFICER, .. RESPONDENT (INTL. TAXATION)-III, PUNE APPELLANT BY: SHRI M K KULKARNI RESPONDENT BY: SHRI SANJAY SINGH ORDER PER G.S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, PUNE DA TED 8.9.2009 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 26.1 2.2008 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE I NCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESS MENT YEAR 2006-07. 2. THE FIRST DISPUTE IN THIS APPEAL RELATES TO THE ISSUE REGARDING STATUS OF THE ASSESSEE AND THE SECOND ISSUE RELATES TO THE DISALLOWANCE OF COMPONENT OF SALARY UNDER SECTION 5(2) OF THE ACT. 2 3. THE RELEVANT FACTS ARE THAT DURING THE RELEVANT PE RIOD THE ASSESSEE WAS WORKING AS A MASTER OF THE SHIP WITH THE GREAT EASTERN SHIPPING COMPANY LTD. FOR THE ASSESSMENT YEAR UNDER APPEAL, THE RETURN OF IN COME WAS FILED ON 31.7.2006 DECLARING TOTAL INCOME OF RS 92,962/- WHERE IN THE STATUS OF THE ASSESSEE WAS CLAIMED AS NON RESIDENT. DURING THE ASSESSMENT PROCEEDINGS, INFORMATION WAS SOUGHT FROM THE EMPLOYER OF THE ASSESSEE BY THE ASSESSING OFFICER IN ORDER TO VERIFY THE NON-RESIDENT STATUS OF THE ASSESSEE. AS PER THE INFORMATION OBTAINED FROM THE EMPLOYER OF THE ASSESSEE , THE EXACT NUMBER OF DAYS OF SERVICE OF THE ASSESSEE ABROAD WAS FOUND TO BE 15 8 DAYS, WHICH ACCORDING TO THE ASSESSING OFFICER, WAS LESS THAN THE DAYS SPECIFIED IN SECTION 6(1) OF THE ACT FOR BEING TREATED AS A NON-RESIDENT . THE ASSESSEE WAS THUS REQUIRED TO JUSTIFY THE CLAIM OF NON-RESIDENT STATUS. IN SUPPORT OF HIS CLAIM, ASSESSEE FURNISHED COPIES OF PASSPORT, WHICH SHOWED THAT THE PERIOD OF STAY OUTSIDE INDIA DURING THE RELEVANT YEAR WAS 201 DAYS. ON THE BASIS OF THE ENTRIES IN THE PASSPORT OF THE ASSESSEE, THE ASSESSING OFFICER ADOPTED THE STATUS OF THE ASSESSEE AS NON-RESIDENT. 4. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT T HE ASSESSEE HAS RECEIVED SALARY AMOUNTING TO RS 15,33,810/- FROM HIS EM PLOYER IN INDIAN CURRENCY, WHICH WAS CLAIMED TO BE EXEMPT IN THE RETURN O F INCOME FILED ON THE GROUND THAT THE SAME WAS IN THE NATURE OF FOREIGN IN COME. REFERRING TO THE PROVISIONS OF SECTION 5(2) OF THE ACT, THE ASSESSING OFFIC ER HELD THAT THE CLAIM OF THE ASSESSEE WAS NOT CORRECT AS THE SALARY WAS PAID BY AN I NDIAN COMPANY FOR THE SERVICES RENDERED IN INDIA. IT WAS ALSO STATED BY THE ASSESSING OFFICER THAT THE CLAIM OF THE ASSESSEE THAT THE SAID INCOME WAS RECEIVED FROM FOREIGN EMPLOYER REMAINED UNSUBSTANTIATED IN THE ABSENCE OF ANY EVIDENCE TO THE EFFECT THAT SUCH FOREIGN INCOME WAS OFFERED TO TAX IN THE RESP ECTIVE FOREIGN COUNTRY. HOWEVER, THE ASSESSING OFFICER GRANTED THE CLAIM OF EXEM PTION IN RESPECT OF SALARY PAID BY THE EMPLOYER OF THE ASSESSEE, WHICH WAS SHO WN TO HAVE BEEN PAID IN FOREIGN CURRENCY FOR THE SERVICE RENDERED ON B OARD SHIP(S) OUTSIDE INDIA, 3 AMOUNTING TO RS 8,14,760.39. AGAINST THE ABOVE FINDIN GS OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMI SSIONER OF INCOME-TAX (APPEALS). 5. BEFORE COMMISSIONER OF INCOME-TAX (APPEALS), IT WAS CONTENDED THAT THE SUBJECT INCOME BYWAY OF SALARY WAS EARNED BY THE ASSESSEE FOR THE SERVICES RENDERED OUTSIDE INDIA. IT WAS FURTHER STATED THAT TH E TOTAL STAY OF THE ASSESSEE OUTSIDE INDIA DURING THE IMPUGNED YEAR WAS FOR 201 DA YS AT DIFFERENT LOCATIONS IN USA, MALAYSIA, INDONESIA, UAE, KUWAIT, QATAR ETC. AND THE ASSESSEE HAD JOINED THE SHIP AT LOS ANGELIS FOR RENDERING SUCH SERVICES OUTSI DE INDIA AND THE SALARY RECEIVED BY THE ASSESSEE WAS OBVIOUSLY FOR SERVICES RENDERED OUTSIDE INDIA. FURTHER, THE ASSESSEE CONTENDED THAT THE ASSESSEE WAS NOT COMI NG TO INDIA EVERY MONTH FOR RECEIVING SALARY, BUT THE SAME WAS PAI D ON BOARD THE HIP, WHEREVER IT WAS. PLACING RELIANCE ON THE DECISION OF TH E TRIBUNAL, MUMBAI IN THE CASE OF 3 RD ITO V AVTAR SINGH WADHWAN 28 TTJ 3901 (BOM), IT WAS CONTENDED THAT FOR DECIDING TAXABILITY OF INCOME IN CASE OF A NO N-RESIDENT, THE VITAL QUESTION WAS WHERE THE INCOME ACCRUED OR AROSE AND INCOME BY WAY O F WAGES EARNED FOR SERVICES RENDERED OUTSIDE INDIA BY NON-RESIDENT WAS NOT T AXABLE IN INDIA. RELIANCE WAS ALSO PLACED ON THE JUDGMENT REPORTED IN TH E CASE OF BRITISH GAS INDIA P.LTD. 285 ITR 218 (AAR). IT WAS THUS ARGUED TH AT THE SUBJECT INCOME IN CASE OF THE ASSESSEE WAS NOT TAXABLE INCOME, SINCE IT WAS RECE IVED FOR SERVICES RENDERED OUTSIDE INDIA. IT WAS ALSO SUBMITTED THAT HAV ING ADOPTED THE STATUS OF THE ASSESSEE AS NON-RESIDENT, IT WAS NOT FAIR ON THE P ART OF THE ASSESSING OFFICER TO BRING THE INCOME EARNED BY THE ASSESSEE OUTSIDE INDIA. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WITH RE FERENCE TO THE MATERIAL AVAILABLE ON RECORD AND FILED DURING THE PR OCEEDINGS BEFORE HIM, THE COMMISSIONER OF INCOME-TAX (APPEALS), PROCEEDED TO CONSIDE R THE ISSUES, (A) WHAT IS THE STATUS THE ASSESSEE UNDER SECTION 6 OF THE ACT FO R THE YEAR UNDER CONSIDERATION, AND (B) WHETHER THE SALARY INCOME IN QUE STION EARNED BY THE 4 ASSESSEE DURING THE YEAR AS A MEMBER OF CREW OF AN INDIA N SHIP(S) IS TAXABLE IN INDIA. THE COMMISSIONER OF INCOME-TAX (APPEALS) OBSERVED THE TESTS PROVIDED IN SECTION 6(1) OF THE ACT FOR DETERMINING THE RESIDENTIAL STATUS OF AN INDIVIDUAL ARE ALTERNATIVE AND NOT CUMULATIVE. AS PER THE COMMISSIONER OF INCOME-TAX (APPEALS), AN INDIVIDUAL IS SAID TO BE RESIDENT WHEN HE SATISFIES ANY ONE OF THE BASIC CONDITIONS IN CLAUSE (A) OR (C) OF SECTION 6(1) OF TH E ACT. FROM THE DETAILS OF STAY IN INDIA FURNISHED BY THE ASSESSEE WITHIN FOUR YEARS PRECEDING THE YEAR UNDER APPEAL WAS FOR A PERIOD EXCEEDING 365 DAYS AND F OR MORE THAN 60 DAYS DURING THE YEAR UNDER CONSIDERATION. THE COMMISSIONER O F INCOME-TAX (APPEALS) FURTHER FOUND AS A FACT THAT AS PER THE CERTIFICATE ISSUE D BY THE EMPLOYER, THE ASSESSEE HAD STAYED IN FOREIGN WATERS WHILE EMPLOYED ON T HE SHIP(S) FOR ONLY 158 DAYS I.E. LESS THAN 182 DAYS AND, THEREFORE, EXPLA NATION TO CLAUSE (C) OF SECTION 6(1) OF THE ACT WAS NOT APPLICABLE IN THE ASSESSEE S CASE. HOWEVER, ACCORDING TO THE ASSESSEE, AS HE STAYED FOR ONLY 164 DAYS I N INDIA, CLAUSE (C) OF SECTION 6(1) READ WITH EXPLANATION WAS NOT APPLICABLE A ND, THEREFORE, THE ASSESSEE WAS A NON-RESIDENT FOR THE YEAR UNDER CONSIDERATIO N. THE COMMISSIONER OF INCOME-TAX (APPEALS) DID NOT FIND ANY MERIT IN THIS CONTENTION OF THE ASSESSEE. AFTER TAKING INTO CONSIDERATION THE CERTIFICAT E ISSUED BY THE EMPLOYER AS ALSO THE PROVISIONS OF SECTION 2(25A) OF THE ACT, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THE ASSESSEES STATUS AS RESI DENT UNDER CLAUSE (C) OF SECTION 6(1) OF THE ACT. 7. THE COMMISSIONER OF INCOME-TAX (APPEALS) NEXT PROCEED ED TO CONSIDER AS TO WHETHER THE SALARY INCOME IN QUESTION EARNED BY THE ASSESSEE DURING THE YEAR UNDER APPEAL AS A MEMBER OF THE CREW OF AN INDIAN SH IP(S) WAS TAXABLE IN INDIA. THE RELEVANT DISCUSSION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS TO BE FOUND IN PARA 5.2 OF HIS ORDER, WHICH IS EXTRACTED AS UNDER FOR THE SAKE OF BREVITY: 5.2 WITHOUT PREJUDICE TO THE ABOVE THAT THE STATUS OF THE APPELLANT IS RESIDENT U/S 6(1) OF THE INCOME TAX ACT, 1961, EVEN ASSUMING FOR A WHILE THAT THE STATUS IS NON- RESIDENT AS CLAIMED BY THE APPELLANT, THE SALARY R ECEIVED BY THE APPELLANT AS MEMBER OF CREW OF INDIAN SHIP IS STILL TAXABLE IN INDIA. SECT ION 5(2) STATES THAT THE TOTAL INCOME OF ANY PREVIOUS YEAR OF A NON RESIDENT SHALL INCLUDE ALL I NCOME FROM WHATEVER SOURCE DERIVED 5 WHICH IS RECEIVED BY HIM IN INDIA AND ACCRUES TO HI M IN INDIA. THUS, UNDER SECTION 5(2), IN THE CASE OF A NON RESIDENT, INCOME WHICH ACCRUES OR ARISES TO HIM IN INDIA OR WHICH IS RECEIVED BY HIM IN INDIA IS TAXABLE. IN THE CASE OF THE APPELLANT, THE CONTRACT OF EMPLOYMENT HAS BEEN ENTERED INTO IN INDIA AND SINCE ALL RIGHTS FLOWING FROM THE CONTRACT ARE ALSO ENFORCEABLE IN INDIA, THE SALARY HAS ACCRU ED OR ARISEN TO THE APPELLANT IN INDIA. THEREFORE, UNDER THE GENERAL PRINCIPLES, THE INCOME HAS ACCRUED OR ARISEN IN INDIA AND THE DEEMING PROVISIONS OF SECTION 9(1) CAN BE RESOR TED TO ONLY WHEN THE INCOME IS NOT NORMALLY TO BE CONSIDERED AS HAVING ACCRUED OR ARIS EN TO THE APPELLANT IN INDIA. IN THIS REGARD, REFERENCE CAN BE MADE TO THE DECISION OF TH E ITAT, MUMBAI (TM) IN THE CASE REPORTED IN 81 ITD 203 WHEREIN IT IS HELD THAT ALT HOUGH ASSESSEE IS A NON-RESIDENT, THE SALARY THAT ACCRUES OR ARISES TO HIM INDIA AS THE C ONTRACT OF EMPLOYMENT WAS ENTERED IN INDIA AND THE RIGHTS ARISING FROM SUCH CONTRACT OF EMPLOYMENT ARE ENFORCEABLE IN INDIA. THEREFORE, IN THE CASE OF THE APPELLANT, BY VIRTUE OF CONTRACT OF EMPLOYMENT WITH THE EMPLOYER IN INDIA, IT IS NOT NECESSARY TO EXAMINE T HE QUESTION WHETHER THE SALARY IS DEEMED TO ACCRUE OR ARISE TO THE APPELLANT BY APPLY ING PROVISIONS OF SECTION 9 AND THE EXPLANATION THERETO. THE RELIANCE PLACED BY THE APP ELLANT ON THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF AVTAR SINGH WADHWAN REPORTED IN 28 TTJ (BOM) 390 DOES NOT COME TO THE AID OF THE APPELLANT IN VIEW OF THE SUB SEQUENT DECISION OF A LARGER BENCH OF ITAT, MUMBAI IN THE CASE CITED ABOVE (81 ITD 203). 5.2.1 THEREFORE, IN THE CASE OF THE APPELLANT, EVEN PRESUMING THAT APPELLANT IS A NON- RESIDENT DURING THE YEAR, THE ENTIRE SALARY INCOME RECEIVED BY VIRTUE OF THE CONTRACT OF EMPLOYMENT WITH THE INDIAN SHIPPING COMPANY IS TAXA BLE IN INDIA. IN VIEW OF THE ABOVE FINDINGS, THE COMMISSIONER OF INCO ME-TAX (APPEALS) FINALLY CONCLUDED THAT THE STATUS OF THE ASSESSEE IS RESIDENT DUR ING THE YEAR UNDER APPEAL AND THE SALARY RECEIVED BY OR ACCRUED TO THE ASSE SSEE IN INDIA OR OUTSIDE INDIA FOR THE SERVICES RENDERED IN INDIA OR OUTSIDE IND IA DURING THE YEAR UNDER APPEAL IS TAXABLE IN INDIA. ACCORDING TO THE COMMISSIONE R OF INCOME-TAX (APPEALS), EVEN ASSUMING THAT THE STATUS OF THE ASSESSEE IS NON-RESIDENT AS CLAIMED BY THE ASSESSEE, SINCE THE SALARY HAS ACCRUED TO TH E ASSESSEE IN INDIA FOR THE REASONS AS DISCUSSED IN PARA 5.2 OF THE IMPUGNE D ORDER, WHICH HAS BEEN EXTRACTED BY US ABOVE, THE SAME IS TAXABLE IN INDIA. ACCO RDINGLY, THE COMMISSIONER OF INCOME-TAX (APPEALS) REJECTED BOTH THE CONTENTIONS OF THE ASSESSEE, NAMELY, THAT THE APPELLANT IS A NON-RESIDENT F OR THE YEAR AND SALARY HAS ACCRUED FOR THE SERVICES RENDERED OUTSIDE INDIA AND, TH EREFORE, NOT TAXABLE IN INDIA. AGAINST THESE FINDINGS OF THE COMMISSIONER OF IN COME-TAX (APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 8. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE VEHE MENTLY ARGUED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN TR EATING THE STATUS OF THE 6 ASSESSEE AS RESIDENT, WHEN IT WAS CLEAR FROM THE PASSPORT DE TAILS THAT ASSESSEE HAD STAYED OUTSIDE INDIA FOR A PERIOD OF 201 DAYS IN T HE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS POINTED O UT THAT THE ASSESSEE WAS EMPLOYED AS A MASTER OF THE SHIP WITH GREAT EASTERN SHIPPING CO. LTD., AND HIS STAY OUTSIDE INDIA WAS 201 DAYS. THE LEARNED COUNSEL VEHEMENTLY POINTED OUT THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS WRONGLY RELIED UPON THE CERTIFICATE ISSUED BY THE EMPLOYER, WHICH STATED THAT THE ASSESSEE WAS ABROAD ONLY FOR 158 DAYS DURING THE PREVIOUS YEAR RELEVANT T O THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE COURSE OF HIS SUBMISSIONS, RELIANCE HA S BEEN PLACED ON THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF DKI (INTERNATIONAL TAXATION) V. PRAHLAD VIJENDRA RAO 10 TAXMANN.COM. 23 8 (KAR) TO POINT OUT THAT SALARY EARNED BY THE ASSESSEE DURING HIS STAY OUTSIDE INDIA ON ACCOUNT OF WORK DISCHARGED ON BOARD OF A SHIP WHICH WAS OUTSIDE THE SHORE S OF INDIA WAS NOT LIABLE TO BE TAXED IN INDIA. IN SUM AND SUBSTANCE, THE PRIMARY PLEA OF THE ASSESSEE IS THAT THE RESIDENTIAL STATUS IN TERMS OF SECTION 6 (1) OF THE ACT IS LIABLE TO BE CONSTRUED AS A NON-RESIDENT DURING THE PREVIOU S YEAR RELEVANT TO THE YEAR UNDER CONSIDERATION. 10. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE, APPEARING FOR THE REVENUE HAS PRIMARILY REITERATED SIMILAR REA SONING AS TAKEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN ORDER TO DEFEN D THE STAND OF THE REVENUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE SPE CIFICALLY POINTED OUT THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS CONSIDERED T HE STATUS OF THE ASSESSEE AS RESIDENT IN TERMS OF SECTION 6(1)(C) OF THE ACT, BECAUSE THERE WAS NO MATERIAL BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE W AS ABROAD FOR THE PRESCRIBED PERIOD FOR THE PURPOSES OF EMPLOYMENT, DURIN G THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. T HE SUM AND SUBSTANCE OF THE CONTROVERSY RELATES TO DETERMINATION OF THE RESIDENTIAL STATUS OF 7 THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE A SSESSMENT YEAR UNDER CONSIDERATION. IN THIS REGARD, SECTION 6(1) WHICH IS RELEV ANT FOR THE PURPOSE OF DETERMINATION OF RESIDENTIAL STATUS, READS AS UNDER: 6. FOR THE PURPOSES OF THIS ACT, -- (1) AN INDIVIDUAL IS SAID TO BE RESIDENT IN INDIA I N ANY PREVIOUS YEAR, IF HE (A) IS IN INDIA IN THAT YEAR FOR A PERIOD O PERIOD AMOUNTING IN ALL TO ONE HUNDRED AND EIGHTY-TWO DAYS OR MORE OR (B) . (C) HAVING WITHIN THE FOUR YEARS PRECEDING THAT YEA R 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 D AYS OR MORE IN THAT YEAR. EXPLANATIONIN THE CASE OF AN INDIVIDUAL,-- (A) BEING A CITIZEN OF INDIA, WHO LEAVES INDIA IN A NY PREVIOUS YEAR AS A MEMBER OF THE CREW OF AN INDIAN SHIP AS DEFINED IN CLAUSE (18) OF SECTION 3 OF THE MERCHANT SHIPPING ACT, 1958 (44 OF 1958), OR FOR TH E PURPOSES OF EMPLOYMENT OUTSIDE INDIA, THE PROVISIONS OF SUB-CLA USE (C) SHALL APPLY IN RELATION TO THAT YEAR AS IF THE WORDS SIXTY DAYS, OCCURRING THEREIN, THE WORDS ONE HUNDRED AND EIGHTY-TWO DAYS HAD BEEN SUBSTITU TED; (B) BEING A CITIZEN OF INDIA, OR A PERSON OF INDIAN ORIGIN WITHIN THE MEANING OF EXPLANATION TO CLAUSE (E) OF SECTION 115C, WHO, BEI NG OUTSIDE INDIA, COMES ON A VISIT TO INDIA IN ANY PREVIOUS YEAR, THE PROVI SIONS OF SUB-CLAUSE (C) SHALL APPLY IN RELATION TO THAT YEAR AS IF FOR THE WORDS SIXTY DAYS, OCCURRING THEREIN, THE WORDS ONE HUNDRED AND EIGHTY-TWO DAYS HAD BEE N SUBSTITUTED 11. AS PER SECTION 6(1)(A) OF THE ACT, AN INDIVIDUAL IS SAID TO BE RESIDENT IN INDIA IN ANY PREVIOUS YEAR IF HE IS IN INDIA IN THA T YEAR FOR A PERIOD OR PERIODS AMOUNTING IN ALL TO 182 DAYS OR MORE. SECONDLY, IN T ERMS OF SECTION 6(1)(C) OF THE ACT,HE CAN BE CONSTRUED TO BE RESIDENT OF INDIA IF HE HA S BEEN IN INDIA FOR A PERIOD OR PERIODS AMOUNTING IN ALL TO 365 DAYS OR MOR E WITHIN THE FOUR PRECEDING YEARS AND IS IN INDIA FOR A PERIOD AMOUNTING IN ALL T O 60 DAYS OR MORE IN THE RELEVANT PREVIOUS YEAR. AS PER EXPLANATION (A), IF T HE INDIVIDUAL LEAVES INDIA AS A MEMBER OF THE CREW OF AN INDIAN SHIP AS DEFINED IN THE MERCHANT SHIPPING ACT 1958 (44 OF 1958) OR LEAVES INDIA FOR PURPOSES OF EMP LOYMENT OUTSIDE INDIA, THE CONDITION OF 60 DAYS OR MORE IN CLAUSE (C) OF SECTION 6(1) OF THE ACT HAS TO BE READ AS 182 DAYS OR MORE. 8 12. THE CASE SET-UP BY THE ASSESSEE TO SAY THAT HE IS NON -RESIDENT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSI DERATION IS THAT HE IS EMPLOYED ON A SHIP AND HAS REMAINED ABROAD FOR A PE RIOD EXCEEDING 182 DAYS, I.E. FOR 201 DAYS DURING THE PREVIOUS YEAR RELEVANT T O THE ASSESSMENT YEAR UNDER CONSIDERATION AND, THEREFORE, HE QUALIFIES TO BE A NO N-RESIDENT FOR THE YEAR UNDER CONSIDERATION. HOWEVER, THE COMMISSIONER OF INCOME-TAX ( APPEALS) HAS MADE OUT A CASE THAT AS PER SECTION 6(1)(C), THE ASSESSEE HAS BEE N IN INDIA FOR A PERIOD EXCEEDING 365 DAYS IN THE FOUR YEARS PRECEDING THE YEA R UNDER CONSIDERATION AND THEREFORE, THE ASSESSEE IS REQUIRED TO ESTABLISH THAT DU RING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION HE H AS BEEN IN INDIA FOR A PERIOD LESS THAN 182 DAYS SO AS TO QUALIFY TO BE A NON- RESIDENT. ACCORDING TO THE COMMISSIONER OF INCOME-TAX (APPEALS), THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT ASSESSEE HAS REMAINED ABROAD FOR THE PURPOS E OF EMPLOYMENT FOR A PERIOD EXCEEDING 182 DAYS AND, THEREFORE, IT FOLLOW S THAT ASSESSEE IS A RESIDENT WITHIN THE MEANING OF SECTION 6(1)(C) READ WITH EXPLAN ATION (A) THEREOF. IN THIS REGARD, WE FIND THAT AS PER THE CERTIFICATE OF EMPLOYM ENT ISSUED BY THE ASSESSEES EMPLOYER, THE ASSESSEE HAS SPENT 158 DAYS IN FOREIGN WATERS WHILE BEING EMPLOYED ON THE SHIP DURING THE PREVIOUS YEAR R ELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THIS IMPLIES THAT THE ASSESSEE IS A RESIDENT IN TERMS OF SECTION 6(1)(C) READ WITH EXPLANATION (A) THEREOF. HOW EVER, AS PER THE ASSESSEE ON THE BASIS OF THE DETAILS AS PER HIS PASSPORT, HIS STAY AB ROAD DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSI DERATION IS 201 DAYS AND THUS HIS STAY IN INDIA IS FOR 164 DAYS THEREBY DEMON STRATING THAT IN TERMS OF SECTION 6(1)(C) READ WITH EXPLANATION (A) THEREOF THE ASSESSEE IS A NON-RESIDENT. IN OUR VIEW, THE CRUCIAL POINT IS THE PRESENCE OF THE WO RDS LEAVES INDIA IN ANY PREVIOUS YEAR AS MEMBER OF THE CREW OF AN INDIAN SHIP... ..OR FOR THE PURPOSES OF EMPLOYMENT OUTSIDE INDIA . IN EXPLANATION (A) TO SECTION 6(1)(C) OF THE ACT. I N TERMS OF THE AFORESAID EXPLANATION THE ASSESSEE HAS TO E STABLISH THAT HE WAS OUTSIDE INDIA AS A MEMBER OF THE CREW OF AN INDIAN SHIP OR FOR THE PURPOSES OF 9 EMPLOYMENT FOR A PERIOD OF 182 DAYS OR MORE DURING T HE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION SO AS TO QUALIFY TO BE NON-RESIDENT. IN THIS CONNECTION, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS APPRECIATED WHATEVER EVIDENCE WAS ON RECORD, NAMELY, THE CERTIFICATE ISSUED BY THE EMPLOYER OF THE ASSESSEE WHICH CLEARLY DEPICTS THAT THE ASSESSEE WAS OUTSI DE INDIA FOR THE PURPOSE OF EMPLOYMENT ONLY FOR 158 DAYS. THE CLAIM OF THE ASSESSEE THAT HE WAS ABROAD FOR 201 DAYS IS SUPPORTED BY HIS PASSPORT DETAILS, SO HOWEVER, THERE IS NO MATERIAL OR EVIDENCE TO SHOW THAT HIS PRESENCE OUTSIDE I NDIA BEYOND 158 DAYS WAS AS A MEMBER OF THE CREW OF AN INDIAN SHIP OR FOR T HE PURPOSE OF EMPLOYMENT WITHIN THE MEANING OF EXPLANATION (A) READ WITH SECTI ON 6(1)(C) OF THE ACT. THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARA 5.1.3 HAS CATEGORICALLY ASSERTED THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SHO W THAT HE WAS ABROAD DURING THE RELEVANT PERIOD IN CONNECTION WITH OR FOR PURPOSES OF THE PRESENT EMPLOYMENT. EVEN BEFORE US, NO MATERIAL HAS BEEN LAID BY THE ASSESSEE TO NEGATE THE AFORESAID ASSERTION OF THE COMMISSIONER OF IN COME-TAX (APPEALS). UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE ASSESSEE QUALIFIE S TO BE A RESIDENT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UN DER CONSIDERATION ON THE BASIS OF THE TESTS MENTIONED IN SECTION 6(1)(C) READ WITH EXPLANATION (A) THEREOF. THE DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ASPECT IS THEREFORE AFFIRMED. 13. AS A CONSEQUENCE TO OUR AFORESAID DECISION, THE ASSESSING OFFICER IS DIRECTED TO COMPUTE INCOME OF THE ASSESSEE THEREOF IN ACCO RDANCE WITH LAW. 14. IN SO FAR AS THE PLEA RAISED BY THE ASSESSEE ON THE B ASIS OF THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF PR AHLAD VIJENDRA RAO (SUPRA) IS CONCERNED, THE SAME IN OUR VIEW IS CLEARLY INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE CASE BEFORE THE HONBLE HIGH COURT , THE STAY OF THE ASSESSEE OUTSIDE INDIA FOR THE PURPOSES OF EMPLOYMENT EXCE EDED 225 DAYS AND THE ASSESSEE WAS THUS NON-RESIDENT AND IN THIS BACKGROUND, TH E HONBLE HIGH 10 COURT AFFIRMED THE DECISION OF THE TRIBUNAL THAT SALAR Y EARNED BY THE ASSESSEE FOR SUCH PERIOD ON ACCOUNT OF WORK DISCHARGED ON A SHIP ABROAD WAS NOT TAXABLE IN INDIA. ON THE CONTRARY, IN THE PRESENT CASE ON FACTS T HE ASSESSEE HAS NOT BEEN FOUND TO BE A NON-RESIDENT WITHIN THE MEANING OF SECTI ON 6(1)(C) OF THE ACT AND, THEREFORE, THE RATIO OF THE JUDGMENT IN THE CASE OF PRAHLAD VIJENDRA RAO (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 15. RESULTANTLY, THE APPEAL OF ASSESSEE IS DISMISSED. DECISION PRONOUNCED IN THE COURT ON 30 TH DAY OF AUGUST,2011. SD/- SD/- (SHAILENDRAKUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMB ER PUNE: 30 TH AUGUST,2011 B COPY TO:- 1) APPELLANT 2) RESPONDENT 3) THE CIT (A)-I PUNE 4) THE DIT(INT. TAXATION), PUNE 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T.A.T., PUNE. BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE 11