Wednesday, June 4, 2014

Forced staying period in India on impounding of passport is excludible to determine residential status in India


In order to determine residential status of assessee in India during relevant assessment years, number of days of his forced stay due to untenable impounding of passport was to be excluded.

Facts:


a)Consequent to search operations carried out on assessee, the department had found evidence that assessee was getting huge amount of commission from the companies outside India which was brought into India in the form of FDI.

b)Accordingly, the AO had made additions to the income of assessee in respect of unexplained investment. The assessee contending that for relevant assessment years his status in India was that of non-resident as his stay in India had exceeded 182 days during the year because of illegally impounding of his passport by the Govt. agencies.

c)The CIT(A), however, confirmed the order of AO. He, however, partly deleted the additions made by the AO on merits. The aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1)The assessee's over stay in India was neither attributable to his volition nor free will and was because of untenable actions of impounding of his passport by executive orders which were quashed by the highest Court.

2)In these circumstances, the literal meaning of the provisions led to a manifest absurdity in as much as by untenable actions of executive, a taxpayer was exposed to the perils of losing his valuable right under taxation law, i.e., retaining his NRI status.

3)The legislature in its wisdom might not have envisaged such a situation wherein a person was forced to become a resident due to wrongful restraint in absence of eligibility to travel outside India.

4)Therefore, assessee's case was fit where doctrine of forced meajure might be applied as it was impossible for the assessee to move out of country and, therefore, doctrine of impossibility of performance was also applicable.

5)The stay of assessee was to be calculated after exclusion of days of wrongful impounding of his passport, which constituted forced stay in India. Thus, assessee's residential status was to be held as 'non-resident'. – SURESH NANDA V. ACIT [2014] 45 taxmann.com 269 (Delhi - Trib.)
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