Law:

Section:

Section 6 of the Income-tax Act, 1961 - Residential status - Assessment year 1989-90 - Whether for purpose of Explanation (a) to section 6(1)(c), 'employment' includes self employment like business or profession taken up by assessee abroad - Held, yes Circulars and Notifications : CBDT Circular No. 346, dated 30-6-1982 FACTS While filing block return for the period 1989-90 to 1999-2000, the assessee claimed his residential status as 'non-resident' for the assessment years 1989-90 and 1990-91, and for all the remaining years, he mentioned his status as 'not ordinarily resident'. The assessee admitted in the course of enquiry that he had gone abroad and took up business there, or in other words, he had not gone there to take up employment under any employer. The Assessing Officer held that since the assessee went abroad on 24-9-1988 and was in India for 177 days in the previous year and for more than 365 days in the 4 years preceding that year, he was 'resident' for the assessment year 1989-90. Even though the assessee sought exception under the Explanation (a ) to section 6(1)(c) contending that since he had gone abroad to take up employment in the previous year, in order to become a resident under the said Explanation, he should have stayed in India for not less than 182 days in that year, that claim of the assessee was turned down by the Assessing Officer for the simple reason that 'employment outside India' covered by the Explanation does not include 'doing business', by oneself and the assessee would be entitled to the benefit of the Explanation (a ) to section 6(1)(c) only if he went abroad in the previous year to take up employment and not for doing business. Accordingly, the Assessing Officer completed the assessment for the assessment year 1989-90 assigning the status of 'resident' to the assessee. On appeal, the Commissioner (Appeals) held that going abroad for doing business also is covered by the Explanation (a )to section 6(1)(c) inasmuch as employment referred to in the above Explanation takes in self employment also. On the revenue's appeals, the Tribunal confirmed the order of the Commissioner (Appeals). On the revenue's appeal to the High Court :…

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