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CIT Vs. SURESH NANDA
February, 28th 2013
             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                                                ... Respondent

Advocates who appeared in this case:
For the Appellant                 : Mr Sanjeev Rajpal
For the Respondent                : Mr C.A. Sundaram, Sr. Adv. with Mr Ajay Wadhwa,
                                    Mr Sandeep Kapur, Mr Laksh Khanna, Ms Rohini
                                    Musa, Mr Govind Singh Grewal, Advs.

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'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. All

these appeals arise out of the common order passed by the Tribunal on

24.07.2012 in ITA Nos. 1428, 1429 and 1430/Del/2012.







ITA 85/2013, 100/2013 & 87/2013                                             Page 1 of 9
2.      The main issue that is sought to be raised in these appeals is with

regard to the residential status of the respondent/assessee. According to

the learned counsel for the revenue/appellant, the respondent was a

resident of India whereas the Tribunal has erred in holding that the

respondent/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 of
                 the Income-tax Act, 1961 in respect of the
                 assessment year 2002-03;
        (ii)     The addition based on the documents which were
                 allegedly found in the possession of 3rd parties.
                 This was in respect of the assessment years 2002-
                 03 and 2003-04;
        (iii)    The addition with regard to the marriage expenses
                 of the respondent/assessee's daughter pertaining to
                 the assessment year 2002-03;
        (iv)     The addition with regard to the payment made to
                 the respondent/assessee's estranged wife Smt Renu
                 Nanda in respect of the assessment year 2003-04;
        (v)      The addition of Rs.10,51,20,000/- under section 68
                 of the said Act in respect of the assessment year
                 2001-02.




ITA 85/2013, 100/2013 & 87/2013                                        Page 2 of 9
3.      Insofar as the first addition of Rs. 65,85,000/- is concerned, that

matter has been remanded by the Tribunal to the assessing officer for a

consideration afresh. Insofar as the addition based on the documents

found from the third parties are concerned, the Tribunal has also

remanded this aspect of the matter in view of the fact that the

respondent/assessee had not been granted an opportunity of cross-

examining the persons from whom the said documents had been allegedly

recovered. The matter has been remanded to the assessing officer to

examine this issue after giving an opportunity of cross-examination to the

respondent/assessee.

4.      Insofar       as     the   question   of   marriage   expenses      of     the

respondent/assessee's daughter is concerned, that issue has also been

remanded by the Tribunal to the assessing officer for considering the

same afresh. In fact, the revenue has not even proposed any question in

respect of this issue and is not challenging the Tribunal's order insofar as

this remand is concerned.

5.      The addition with regard to the payment made to estranged wife

Smt Renu Nanda, for the assessment year 2003-04, has been deleted by

the Tribunal. This is challenged by the revenue in the appeal pertaining




ITA 85/2013, 100/2013 & 87/2013                                          Page 3 of 9
to the assessment year 2003-04. However, we find that the same has

been concluded by the Tribunal purely on an appreciation of facts. The

Tribunal has noted that the respondent/assessee and his wife Smt Renu

Nanda had separated by way of a deed of settlement dated 04.04.1998

and the payments were based thereon. The Tribunal also noted that the

addition has not been based on any evidence or incriminating material

indicating that any payment had been made outside the books. The

Tribunal observed that the sole basis for the assumption on the part of the

assessing officer was that there was some unwritten understanding

between the respondent/assessee and his estranged wife Smt Renu Nanda.

Therefore, the Tribunal was of the view that the purported basis of the

addition was only a presumption raised by the assessing officer. There

being no other material whatsoever, the Tribunal held that the addition

was liable to be deleted and it ordered accordingly. The Tribunal made it

clear 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 substantial

question of law arises insofar as this issue is concerned.

6.      We are left to consider the addition of Rs. 10,51,20,000/- made

under section 68 of the said Act. Insofar as this addition is concerned, the




ITA 85/2013, 100/2013 & 87/2013                                  Page 4 of 9
decision       with      regard   to   it    would   depend   on     whether       the

respondent/assessee is regarded as a resident or a non-resident. In case he

is regarded as a resident then, obviously, this addition would have to be

made. But, if he is regarded as a non-resident then this addition will have

to be deleted. This is exactly what the Tribunal has done. The Tribunal

considered the case of the revenue as well as that of the

respondent/assessee and determined that the respondent/assessee was a

non-resident and therefore the said addition has been deleted.

7.      That leaves us with the issue with regard to the residential status of

the 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 India
                 in any previous year, if he-

                 (a) is in India in that year for a period or periods
                 amounting in all to one hundred and eighty-two
                 days or more; or

                 (b)      xxx          xxx           xxx           xxx

                 (c) Having within the four years preceding that
                 year 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 days or more in that year.






ITA 85/2013, 100/2013 & 87/2013                                          Page 5 of 9
                 Explanation- In the case of an individual,-

                 (a) Being a citizen of India, who leaves India in
                 any 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 the purposes of employment outside India, the
                 provisions of sub-cluase (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 been substituted;

                 (b) Being a citizen of India, or a person of
                 Indian origin within the meaning of Explanation of
                 clause (e) of section 115C, who, being outside
                 India, comes on a visit to India in any previous
                 year, the provisions 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 been substituted.


        (2)      xxx                xxx                        xxx"

8.      Before we examine the provisions of section 6 it would be

appropriate to set out the number of days of stay of the

respondent/assessee in India. This has been tabulated in the assessment

order. There is a discrepancy between the number of days as computed

by the assessee and the so-called actual number of days as computed by

the assessing officer. The same is given in the chart below:-




ITA 85/2013, 100/2013 & 87/2013                                          Page 6 of 9
         A.Y                 No. of days in India as   Actual   No.     of
                             computed     by     the   days
                             assessee
         2001-02             154                       172
         2002-03             138                       150
         2003-04             158                       176
         2004-05             159                       177
         2005-06             155                       171
         2006-07             158                       176


9.      Whether we take the computation of the respondent/assessee or of

the assessing officer, it is evident that the respondent/assessee has spent

less 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 resident

of 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 question

did he stay in India for 182 days or more.

11.     The learned counsel for the appellant sought to argue that the

respondent/assessee would fall within section 6(1)(c) read with

explanation (b). However, we fail to see as to how that provision would

come to aid of the appellant. Section 6(1)(c) applies to citizens of India as



ITA 85/2013, 100/2013 & 87/2013                                       Page 7 of 9
well as to persons of Indian origin. It also applies to foreigners. Insofar

as foreigners are concerned section 6(1)(c) has the stipulation of stay in

India for a period or periods amounting in all to 60 days or more in the

year in question. However, this is in addition to the condition of total

stay 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 a

particular year has been extended to 182 days as compared to 60 days for

foreigners. This period of 182 days was earlier 150 days and by virtue of

the Finance Act 1994, with effect from 01.04.1995 the word `fifty' has

been substituted by `eighty-two'. In other words, instead of 150 days stay

in India, the period of stay required is 182 days for an individual to be

covered under section 6(1)(c) read with explanation (b), in case he is an

Indian citizen or a person of Indian origin.

12.     In the present case, although, the respondent/assessee has, in the

preceding 4 years been in India for a period in excess of 365 days in

India, in none of years has he been in India for a period in excess of 182

days. Therefore, the Tribunal is absolutely right in concluding that the

respondent/assessee was not a resident of India. This is a pure question of

fact based on a plain reading of the provisions of section 6. All that has




ITA 85/2013, 100/2013 & 87/2013                                  Page 8 of 9
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.             No

substantial question of law arises insofar as this aspect of the matter is

concerned.

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, it

is axiomatic that the addition of Rs. 10,51,20,000/- under section 68

would have to be deleted because it was a transfer from the

respondent/assessee's foreign account to the domestic account.

14.     In view of the foregoing we do not find any substantial question of

law which arises for our consideration in these appeals. The appeals are

dismissed.



                                        BADAR DURREZ AHMED, J



                                              R.V.EASWAR, J
FEBRUARY 25, 2013
kb




ITA 85/2013, 100/2013 & 87/2013                                   Page 9 of 9
 
 
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