Law:

Section:

Section 6 [as it stood prior to 1-4-2004] of the Income-tax Act, 1961 - Residential Status - Assessment year 1982-83 - Whether a person will become an ordinarily resident only if (a) he has been residing in India for nine out of ten preceding years; and (b) he has been in India for at least 730 days in previous seven years - Held, yes - Assessee, who was a marine engineer in a foreign shipping company, was posted to work on high seas and was paid abroad for many years - As he was not resident in India for 9 out of 10 previous years, he claimed status of 'not ordinarily resident in India' for relevant assessment year - Whether in terms of section 6(6), assessee could be allowed status of 'not ordinarily resident' as claimed by him - Held, yes Circulars and Notifications : Ministry of Finance (Department of Revenue) Letter No. 4/22/61-IT(AT) , dated 25-11-1961 FACTS The assessee was appointed as a marine engineer by a foreign company. During the course of his employment, he was posted to work on high seas and was paid abroad for many years. As he was not resident in India for 9 out of 10 previous years preceding the relevant assessment year, he claimed the status of 'not ordinarily resident' for the relevant assessment year and excluded income accruing to him outside India under section 5(1)(c). However, the Assessing Officer refused to grant to the assessee the status of 'not ordinarily resident' for the relevant year on the ground that he was a non-resident in India for only three years during the last ten years; and that during the last seven years, he had stayed in India for more than 730 days. The Commissioner (Appeals) as well as the Tribunal upheld the views of the Assessing Officer. On reference, the High Court also refused to grant the status of 'not ordinarily resident' to the assessee holding that section 6(6)(a) contemplates the period of nine years out of ten preceding years of not being a resident in India before an individual could be said to be 'not ordinarily resident' in India. On appeal to the Supreme Court : HELD The Law Commission of India had recommended that the provisions of section 4B of the Indian Income-tax Act, 1922 defining 'ordinary…

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