K.R. Verma, V. ITO, Ward-25(3),

ITA 1730/DEL/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3706 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 16-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Keywords: Residential status; Question of law; Set aside
• Section: 143(3); 260A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI C.L.SETHI, JM & SHRI R.C. SHARMA, AM I.T. A. NO.1730/DEL OF 2006 ASSESSMENT YEAR: 2001-02 SHRI K.R. VERMA, VS INCOME-TAX OFFICER, A-3/171, PASCHIM VIHAR, WARD 25(3), NEW DELHI. NEW DELHI. APPELLANT RESPONDENT APPELLANT BY: SHRI ROHIT GARG RESPONDENT BY: SHRI M.K. GAUTAM, CIT DR ORDER ER C.L. SETHI, JM: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER PASSED BY CIT DATED 17.3.2006 PASSED U/S 263 OF THE INCOME-TAX ACT, 196 1 (THE ACT) FOR ASSTT. YEAR 2001-02. 2. IN THIS APPEAL, A QUESTION HAD ARISEN AS TO WHAT WOULD BE THE RESIDENTIAL STATUS OF THE ASSESSEE. THE AO, WHILE M AKING THE ASSESSMENT U/S 143(3) OF THE ACT, HAS ACCEPTED THE RESIDENTIAL STA TUS OF THE ASSESSEE AS RESIDENT BUT NOT ORDINARILY RESIDENT IN INDIA. THE CIT IN HIS ORDER U/S 263 HAS TAKEN A VIEW THAT THE STATUS OF THE ASSESSEE IS NOT RESIDENT BUT NOT ORDINARILY 2 RESIDENT IN INDIA, AS ACCEPTED BY THE AO. THE CIT, THEREFORE, EXERCISED HIS POWER U/S 263 OF THE ACT, AND RENDERED THE AOS ORD ER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3. AGAINST THE CITS ORDER PASSED U/S 263, THE ASSE SSEE HAS PREFERRED THIS APPEAL. 4. THIS APPEAL WAS INITIALLY HEARD AND DISPOSED OF VIDE ORDER DATED 23.3.2007 PASSED BY ITAT, DELHI BENCH E, NEW DELH I WHEREBY THE ORDER OF THE CIT PASSED U/S 263 WAS UPHELD AND THE APPEAL FILED BY THE ASSESSEE GOT DISMISSED. 5. BEING AGGRIEVED WITH THE TRIBUNALS ORDER DATED 23.3.07, THE ASSESSEE PREFERRED AN APPEAL U/S 260A BEFORE THE HONBLE HIG H COURT OF DELHI WHERE THE APPEAL WAS REGISTERED AS INCOME-TAX APPEAL NO.1 210 OF 2007. THE APPEAL BEFORE THE HONBLE HIGH COURT HAS BEEN DECID ED VIDE ORDER DATED 18THAUGUST, 2009 WHEREBY THE HONBLE HIGH COURT HAS HELD AND OBSERVED AS UNDER: ADMIT. WE MAY POINT OUT AT THE OUTSET THAT THOUGH THE APPELLANT HAS RAISED AS MANY AS EIGHT QUESTION OF LAW, QUESTION OF LAW NO.6 HAS TO BE DECIDED IN FAVOUR OF THE APPELLANT IN VIEW OF THE JUDGMENT OF SUPREME COURT IN CASE OF PRADEEP J. MEHTA VS CIT (2008) 300 ITR 231 AND EFFECT OF THAT WOULD BE TO ALLOW THIS APPEAL. IN THESE 3 CIRCUMSTANCES, WE TAKE NOTE OF THAT QUESTION OF LAW ONLY WHICH IS AS UNDER: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE TRIBUNAL ERRED IN LAW IN NOT HOLDING THAT THE APPELLANT WAS NOT ORDINARILY RESIDENT IN INDIA IN VIEW OF THE FACT THAT THE APPELLANT WAS NOT RESIDENT IN INDIA IN 9 OUT OF 10 PRECEDING YEARS, ALTHOUGH THE ASSESSEE WAS IN INDIA FOR 730 DAYS OR MORE DURING THE PRECEDING 7 YEARS? IN PRADEEP J. MEHTAS CASE (SUPRA), THE SUPREME COURT HAS DECIDED THE ISSUE HOLDING THAT IF A PERSON HAS BEEN RESIDING IN INDIA IN NINE OUT OF TEN PRECEDING YEARS AND HAS BEEN IN INDIA FOR AT LEAST 730 DAYS IN THE PREVIOUS SEVEN YEARS, HE COULD NOT BE TREATED AS NOT ORDINARILY RESIDENT. FOR COMING TO THIS CONCLUSION, THE APEX COURT HAS RELIED UPON CIRCULAR OF THE DEPARTMENT I.E. W.BS CIRCULAR LETTER NO.J/28320/4A/10/5/58-59 DATED 5 TH DECEMBER, 1962. LEARNED COUNSEL FOR THE RESPONDENT COULD NOT DISPUTE THIS POSITION. ACCORDINGLY, THIS QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. CONSEQUENCE OF THE AFORESAID ORDER WOULD BE TO SET ASIDE THE ORDER OF THE TRIBUNAL ON MERITS. WE MAKE IT CLEAR THAT SINCE ORDER OF THE TRIBUNAL IS SET ASIDE ON MERITS, THE OTHER QUESTION OF LAW REMAIN OPEN INCLUDING THE QUESTION OF REVISIONARY JURISDICTION U/S 263 OF THE ACT. 6. THE APPEAL WAS THEN AGAIN PLACED BEFORE THE BENC H FOR FURTHER ORDER. 4 7. IN THE LIGHT OF THE ORDER OF THE HONBLE HIGH CO URT, REFERRED TO ABOVE, WE, THEREFORE, HOLD THAT THE ASSESSEE WAS NOT ORDIN ARILY RESIDENT IN INDIA DURING THE YEAR UNDER CONSIDERATION, AND THUS, THE AO WAS JUSTIFIED IN ACCEPTING THE ASSESSEES STATUS AS NOT ORDINARILY R ESIDENT IN INDIA. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE LIGHT OF THE ORDER OF THE HONBLE HIGH COURT. 9. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 22 ND JUNE, 2010 IMMEDIATELY AFTER THE HEARING WAS OVER. (R.C. SHARMA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: JUNE, 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-IX, NEW DELHI 5. DR ASSISTANT REGISTRAR