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Even a few hours extra can be taxing
June, 26th 2008

Times are tough for income-tax officers. The intense pressure being brought upon them by the finance ministry to increase tax collections is forcing many officers to adopt strange and quirky ways of squeezing out money, even for trivial transgressions.

Gautam Banerjee, a marine engineer working in the US, was on a late-night flight to the US on March 28, 2000. He reached the airport well before midnight, and had completed 181 days in India on that day.

However, by the time the security check was completed, it was past midnight, and hence the immigration stamp on the passport showed the time and date as 1.30 am, March 29.

The delay resulted in a change in his status, from that of a non-resident Indian to a resident, and Mr Banerjee was informed by the income-tax department that he had overshot the 181-day limit in India. The I-T officer, on the basis of the date of departure stamped on his passport, held that Mr Banerjee had overstayed, and is, therefore, liable to pay tax as an Indian resident.

Under I-T rules, a person is considered as a resident of India, if he stays in the country for 182 days or more, and non-resident if he stays out for 182 days or more. A resident Indian is liable to pay tax in India, while a non-resident is exempt, since he would be paying tax in the country of his residence.

The delay could have proved costly for the professional, had he not approached the appellate authority. Mr Banerjee, represented by lawyer Jignesh R Shah, argued that he did not complete an additional day in India, as an hour-and-half more stay could not be construed as a full day.

The Commissioner (Appeal), the first appellate body on tax matters, ruled in his favour. The department, however, was unrelenting and appealed against the order.

Last week, the Income-Tax Appellate Tribunal (ITAT) ruled in favour of Mr Banerjee.

The tribunal held that for all practical purpose, he was in India only for 181 days, as is evident from the documents that showed that Mr Banerjee reached Sahar International Airport well before midnight on the day of departure. The documents also stated that he joined duty in the US on March 29.

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