LI Network
Published on: January 18, 2024 at 12:30 IST
The Mumbai Income Tax Appellate Tribunal (ITAT) has clarified that if a taxpayer stays in India for less than 182 days, even after leaving for business or profession abroad, they are entitled to ‘non-resident’ status.
The ITAT emphasized that the taxpayer rightly claimed ‘non-resident’ status, having stayed in India for only 176 days during the relevant year, as per Explanation 1(a) to Section 6(1) of the Income Tax Act, 1961.
Rejecting the argument of the Assessing Officer (AO), who contended that the taxpayer went to Mauritius as an investor and not as an employee, the ITAT stated that even if the taxpayer went to Mauritius as an investor in Firstland Holdings Ltd., Mauritius, where he holds 100% shareholding, he is still entitled to the extended period of 182 days under Explanation 1(a) to Section 6(1).
The ITAT observed that since the taxpayer stayed in India for only 176 days, less than the 182 days provided in Explanation 1(a) to Section 6(1) of the Act, the taxpayer rightly claimed ‘Non-Resident’ status for the relevant year.
The case involved an individual taxpayer, Nishant Kanodia, who was served with a notice under Section 153A due to a search and seizure procedure.
The taxpayer claimed ‘non-resident’ status and did not offer global income to tax in India. The AO rejected the claim, stating that the taxpayer went to Mauritius as an investor.
However, the ITAT upheld the taxpayer’s claim, holding that he left India for the purpose of employment outside India.
The ITAT dismissed the Revenue’s appeal, affirming the taxpayer’s ‘non-resident’ status for the relevant year.
Case Title: Assistant Commissioner of Income Tax vs. Nishant Kanodia