The Delhi Tribunal extends the benefit of 182 days for determination of residential status for self-employed professionals going abroad
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The Delhi Tribunal extends the benefit of 182 days for determination of residential status for self-employed professionals going abroad

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Recently, the Delhi Bench of the Income-tax Appellate Tribunal, in the case of Jyotinder Singh Randhawa (the taxpayer), granted the benefit of extending stay period from 60 days to 182 days......

Recently, the Delhi Bench of the Income-tax Appellate Tribunal, in the case of Jyotinder Singh Randhawa (the taxpayer), granted the benefit of extending stay period from 60 days to 182 days treating an Indian citizen who leaves India for the purpose of employment as a non-resident under the Income-tax Act, 1961. The taxpayer was a self-employed professional.

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  • 1. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG FLASH NEWS KPMG in INDIA The Delhi Tribunal extends the benefit of 182 days for determination of residential status for self-employed professionals going abroad 16 June 2014 22 21 February 2013 Background Recently, the Delhi Bench of the Income-tax Appellate Tribunal (the Tribunal), in the case of Jyotinder Singh Randhawa 1 (the taxpayer), granted the benefit of extending stay period from 60 days to 182 days treating an Indian citizen who leaves India for the purpose of employment as a non-resident under the Income-tax Act, 1961 (the Act). The taxpayer was a self-employed professional. 2 As per the Act, an individual is said to be resident in a given financial year if his stay exceeds 60 days in that year, together with 365 days or more in the four years preceding that year. Further, the 60 days may be extended to 182 days in case of an Indian citizen who leaves India in any previous year as a member of the crew of an Indian ship or for the purposes of employment. __________________ 1 Jyotinder Singh Randhawa v. ACIT. (ITA No. 4895/Del/2012, AY 2009-10) 2 Explanation (a) to Section 6(1)(c) of the Act Facts of the case  The taxpayer had filed his India tax return for the Assessment Year (AY) 2009-10 as non-resident. He claimed to be a non-resident as per the Act. His stay in India was for 167 days for the said AY.  The Assessing Officer (AO) did not agree with taxpayer’s contention on the basis that the taxpayer could not prove that he was not in India for 365 days during the four years preceding the previous year, and considered the assesse as resident as per the Act.  Accordingly, the AO made an addition of INR 4.77 crores to the taxpayer’s income which was accrued and received by him outside India.  The taxpayer filed an appeal against the AO’s order before the Commissioner of Income-tax (Appeals) [CIT(A)].
  • 2. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.  The CIT(A) referred to the decision of the Kerala High Court ruling in the case of Abdul Razak 3 and observed that going abroad for the purpose of employment also meant going abroad to take up employment or any allocation which takes into account self-employment like business or profession.  The CIT(A) held in favour of the taxpayer that he shall be treated as a non-resident, and accordingly the income accrued and received outside India was not taxable in India.  Aggrieved by the CIT(A)’s order, the Revenue filed an appeal before the Delhi ITAT. Tax department’s contention  The taxpayer’s proposition that he had left India for the purpose of employment and should be entitled to the benefit under the Act is not valid. Accordingly, he should be treated as a resident and the overseas income should be taxed in India. Tribunal’s ruling  The Tribunal observed that the taxpayer is a professional golfer and a ‘self-employed’ professional who carries his talent as a sportsperson by participating in golf tournaments conducted in various countries. Relying upon the High Court’s ruling in the case of Abdul Razak, the Tribunal held that for determining residential status under the Act, going abroad for the purpose of employment also means going abroad to take-up employment or any allocation which takes into account self-employment like business or profession.  In the light of the above, the Tribunal upheld the CIT(A)’s decision that the taxpayer shall be treated as a non-resident during the year under consideration. Our comments This is an important judgment which reiterates the position taken by the Kerala High Court in the case of Abdul Razak. It is expected to provide support to self-employed professionals leaving India for work purposes. ______________________________ 3 CIT v. Abdul Razak [2011] 337 ITR 350 (Ker)
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