Cit v. Suresh Nanda

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 25.02.2013 +ITA 85/2013+ITA 100/2013+ITA 87/2013 CIT ... Appellant versus SURESH NANDA... RespondentAdvocates who appeared in this case:For the Appellant: Mr Sanjeev RajpalFor the Respondent: Mr C.A. Sundaram, Sr. Adv. with Mr Ajay Wadhwa,Mr Sandeep Kapur, Mr Laksh Khanna, Ms RohiniMusa, Mr Govind Singh Grewal, Advs. CORAM:-HON’BLE MR JUSTICE BADAR DURREZ AHMEDHON’BLE MR JUSTICE R.V.EASWAR JUDGMENT BADAR DURREZ AHMED, J (ORAL) 1.These appeals have been filed by the revenue under section 260A of the Income-tax Act, 1961 (hereinafter referred to as the ‘said Act’) and they pertain to the assessment years 2001-02, 2002-03 and 2003-04. Allthese appeals arise out of the common order passed by the Tribunal on24.07.2012 in ITA Nos. 1428, 1429 and 1430/Del/2012. 2.The main issue that is sought to be raised in these appeals is withregard to the residential status of the respondent/assessee. According tothe learned counsel for the revenue/appellant, the respondent was aresident of India whereas the Tribunal has erred in holding that therespondent/assessee was not residing in India. Apart from the question of residence, certain other issues were examined by the Tribunal.They were as under:- (i)The addition of Rs. 65,85,000/- under section 69 ofthe Income-tax Act, 1961 in respect of theassessment year 2002-03;the Income-tax Act, 1961 in respect of theassessment year 2002-03; (ii)The addition based on the documents which wereallegedly found in the possession of 3[rd]parties.This was in respect of the assessment years 2002-03 and 2003-04;allegedly found in the possession of 3[rd]parties.This was in respect of the assessment years 2002-03 and 2003-04; (iii)The addition with regard to the marriage expensesof the respondent/assessee’s daughter pertaining tothe assessment year 2002-03;of the respondent/assessee’s daughter pertaining tothe assessment year 2002-03; (iv)The addition with regard to the payment made tothe respondent/assessee’s estranged wife Smt RenuNanda in respect of the assessment year 2003-04;the respondent/assessee’s estranged wife Smt RenuNanda in respect of the assessment year 2003-04;(v)The addition of Rs.10,51,20,000/- under section 68of the said Act in respect of the assessment year2001-02.of the said Act in respect of the assessment year2001-02. 3.Insofar as the first addition of Rs. 65,85,000/- is concerned, thatmatter has been remanded by the Tribunal to the assessing officer for aconsideration afresh.Insofar as the addition based on the documentsfound from the third parties are concerned, the Tribunal has alsoremanded this aspect of the matter in view of the fact that therespondent/assessee had not been granted an opportunity of cross-examining the persons from whom the said documents had been allegedlyrecovered.The matter has been remanded to the assessing officer toexamine this issue after giving an opportunity of cross-examination to therespondent/assessee.4.Insofarasthequestionofmarriageexpensesoftherespondent/assessee’s daughter is concerned, that issue has also beenremanded by the Tribunal to the assessing officer for considering thesame afresh. In fact, the revenue has not even proposed any question inrespect of this issue and is not challenging the Tribunal’s order insofar asthis remand is concerned. 5.The addition with regard to the payment made to estranged wifeSmt Renu Nanda, for the assessment year 2003-04, has been deleted bythe Tribunal. This is challenged by the revenue in the appeal pertaining 5.The addition with regard to the payment made to estranged wifeSmt Renu Nanda, for the assessment year 2003-04, has been deleted bythe Tribunal. This is challenged by the revenue in the appeal pertaining to the assessment year 2003-04.However, we find that the same hasbeen concluded by the Tribunal purely on an appreciation of facts. TheTribunal has noted that the respondent/assessee and his wife Smt RenuNanda had separated by way of a deed of settlement dated 04.04.1998and the payments were based thereon. The Tribunal also noted that theaddition has not been based on any evidence or incriminating materialindicating that any payment had been made outside the books.TheTribunal observed that the sole basis for the assumption on the part of theassessing officer was that there was some unwritten understandingbetween the respondent/assessee and his estranged wife Smt Renu Nanda.Therefore, the Tribunal was of the view that the purported basis of theaddition was only a presumption raised by the assessing officer. Therebeing no other material whatsoever, the Tribunal held that the additionwas liable to be deleted and it ordered accordingly. The Tribunal made itclear that this ground was raised only in the assessment year 2003-04.We are of the view that this is a pure finding of fact and no substantialquestion of law arises insofar as this issue is concerned. 6.We are left to consider the addition of Rs. 10,51,20,000/- madeunder section 68 of the said Act. Insofar as this addition is concerned, the decisionwithregardtoitwoulddependonwhethertherespondent/assessee is regarded as a resident or a non-resident. In case heis regarded as a resident then, obviously, this addition would have to bemade. But, if he is regarded as a non-resident then this addition will haveto be deleted. This is exactly what the Tribunal has done. The Tribunalconsideredthecaseoftherevenueaswellasthatoftherespondent/assessee and determined that the respondent/assessee was anon-resident and therefore the said addition has been deleted. 7.That leaves us with the issue with regard to the residential status ofthe respondent/assessee. Section 6 of the said Act, so far as it is relevant,reads as under:- “6.For the purposes of this Act,- (1)An individual is said to be resident in Indiain any previous year, if he- (a)is in India in that year for a period or periodsamounting in all to one hundred and eighty-twodays or more; or (b)xxxxxxxxxxxx (c)Having within the four years preceding thatyear been in India for a period or periodsamounting in all to three hundred and sixty fivedays or more, is in India for a period or periodsamounting in all to sixty days or more in that year. Explanation- In the case of an individual,- (a)Being a citizen of India, who leaves India inany previous year (as a member of the crew of anIndian ship as defined in clause (18) of section 3 ofthe Merchant Shipping Act, 1958 (44 of 1958), or)for the purposes of employment outside India, theprovisions of sub-cluase (c) shall apply in relationto that year as if for the words “sixty days”,occurring therein, the words “one hundred andeighty-two days” had been substituted; (b)Being a citizen of India, or a person ofIndian origin within the meaning of Explanation ofclause (e) of section 115C, who, being outsideIndia, comes on a visit to India in any previousyear, the provisions of sub-clause (c) shall apply inrelation to that year as if for the words” sixtydays”, occurring therein, the words “one hundredand (eighty-two) days” had been substituted. (2)xxxxxxxxx”8.Before we examine the provisions of section 6 it would beappropriatetosetoutthenumberofdaysofstayofthe respondent/assessee in India. This has been tabulated in the assessment order. There is a discrepancy between the number of days as computedby the assessee and the so-called actual number of days as computed bythe assessing officer. The same is given in the chart below:- 9.Whether we take the computation of the respondent/assessee or of (2)xxxxxxxxx”8.Before we examine the provisions of section 6 it would beappropriatetosetoutthenumberofdaysofstayofthe respondent/assessee in India. This has been tabulated in the assessment order. There is a discrepancy between the number of days as computedby the assessee and the so-called actual number of days as computed bythe assessing officer. The same is given in the chart below:- 9.Whether we take the computation of the respondent/assessee or of the assessing officer, it is evident that the respondent/assessee has spentless than 182 days in each of the three years in question, that is,assessment years 2001-02, 2002-03 and 2003-04. 10.We shall now examine the provisions of section 6. It is apparent that section 6(1)(a) makes it clear that an individual would be a residentof India in any previous year if he was in India in that year for a period or periods amounting in all to 182 days or more. The respondent/assessee,clearly, is not such an individual because in none of the years in questiondid he stay in India for 182 days or more. 11.The learned counsel for the appellant sought to argue that therespondent/assesseewouldfallwithinsection6(1)(c)readwithexplanation (b). However, we fail to see as to how that provision wouldcome to aid of the appellant. Section 6(1)(c) applies to citizens of India as well as to persons of Indian origin. It also applies to foreigners. Insofaras foreigners are concerned section 6(1)(c) has the stipulation of stay inIndia for a period or periods amounting in all to 60 days or more in theyear in question. However, this is in addition to the condition of totalstay in the preceding four years amounting in all to 365 days or more.But, in the case of citizens of India, the length of stay in India in aparticular year has been extended to 182 days as compared to 60 days forforeigners. This period of 182 days was earlier 150 days and by virtue ofthe Finance Act 1994, with effect from 01.04.1995 the word ‘fifty’ hasbeen substituted by ‘eighty-two’. In other words, instead of 150 days stayin India, the period of stay required is 182 days for an individual to becovered under section 6(1)(c) read with explanation (b), in case he is anIndian citizen or a person of Indian origin. 12.In the present case, although, the respondent/assessee has, in thepreceding 4 years been in India for a period in excess of 365 days inIndia, in none of years has he been in India for a period in excess of 182days. Therefore, the Tribunal is absolutely right in concluding that therespondent/assessee was not a resident of India. This is a pure question offact based on a plain reading of the provisions of section 6. All that has to be seen is the number of days that the respondent/assessee has spent in India in the year in question as also in the preceding 4 years.Nosubstantial question of law arises insofar as this aspect of the matter isconcerned. 13.In view of the fact that the Tribunal has correctly decided that the respondent/assessee was not a resident in India in the years in question, itis axiomatic that the addition of Rs. 10,51,20,000/- under section 68would have to be deleted because it was a transfer from therespondent/assessee’s foreign account to the domestic account. 14.In view of the foregoing we do not find any substantial question oflaw which arises for our consideration in these appeals. The appeals are dismissed. BADAR DURREZ AHMED, J FEBRUARY 25, 2013kb R.V.EASWAR, J