Recently Mumbai ITAT in the case of Mr. Nishant Kanodia v/s Asstt. Commissioner of Income Tax ITA no.2155/Mum/2023 order dated 08.01.2024 held as follows:
The case involves an individual assessee whose residential status is under dispute for the assessment year 2013-14. A search and seizure action was conducted in the case of Matix (Nishant Kanodia) Group, and the assessee's case was centralized to the office of the Assistant Commissioner of Income Tax, Central Circle-5(1), Mumbai. The Assessing Officer (A.O.) observed that the assessee claimed non-resident status and did not offer global income to tax in India. The A.O. contended that the assessee left India as an "Investor" on a business visa, making him a resident for tax purposes.
The A.O. held that the assessee's residential status is "resident" and added offshore income of Rs. 28,14,64,628 (equivalent to USD 51,75,000) to the total income. The assessee, on the other hand, argued that he left India for employment in Mauritius and, therefore, qualified as a non-resident under Explanation-1(a) to section 6(1)(c) of the Income Tax Act.
The Commissioner of Income Tax (Appeals) agreed with the assessee, considering the purpose of the assessee's stay in Mauritius for employment. The Revenue filed an appeal against this decision.
The appellate tribunal examined the case, emphasizing section 6(1) of the Income Tax Act, which determines an individual's residential status. The tribunal noted that the assessee had stayed in India for 176 days during the relevant year but claimed non-resident status based on Explanation-1(a) to section 6(1)(c).
The tribunal considered the employment aspect, highlighting the appointment letter from Firstland Holdings Ltd., Mauritius, where the assessee was appointed as Strategist - Global Investment. The tribunal also referred to an Occupation Permit issued by the Government of Mauritius classifying the assessee as an Investor.
The tribunal relied on precedents and concluded that even if the taxpayer went abroad for business or profession, it qualifies as employment outside India under Explanation-1(a) to section 6(1) of the Act. No technical meaning can be assigned to the word employment used in the Explanation and thus going abroad for the purpose of employment also means going abroad to take up self-employment like business or profession. Therefore, the Hon’ble Kerala High Court has interpreted the term employment in wide terms. The Hon’ble Kerala High Court, however, held that the term employment should not mean going outside India for purposes such as tourists, medical treatment, studies, or the like.
Therefore, the extended period of 182 days applies, and since the assessee stayed in India for 176 days, he rightfully claimed non-resident status.
In summary, the tribunal dismissed the Revenue's appeal, upholding the non-resident status of the assessee for the relevant assessment year.
Assisted by: The Article includes input from Riya Bhanushali, Article Assistant, ATMS & CO
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